As a business owner, you are faced with many decisions that will impact the longevity of your business and your overall success. One of these decisions is whether to ascertain employment practices liability insurance, also known as EPLI.
In short, when you ask yourself if you need EPLI coverage, the straightforward and most simple answer is a resounding YES! After all, if you have employees, you also have liabilities, and the cost of employment-related lawsuits can be immense with the number of them on the rise.
Read on to learn more about why you might consider adding EPLI coverage:
To put it concisely, it is a type of insurance coverage that protects you as an employer from employee lawsuits. If you hire, manage or terminate employees, you could benefit from this coverage. There are many types of employee lawsuits that fall under the EPLI coverage, including the following that are the most commonly seen examples:
Discrimination
This is currently the leading cause of all employee lawsuits. It includes the withholding of a job offer, a promotion, or the firing of an employee based on sex, race, age, religion, citizenship, disability, or more.
Sexual Harassment
This includes unwanted sexual advances, verbal or physical harassment that is sexual in nature or the request for sexual favors.
Deprivation of Career Opportunities
This involves failing to provide advancement opportunities or training for a job.
Failure to Employ or Promote
If you pass up an employee for a promotion or job based on an improper reason, this is considered promotion discrimination.
Wrongful Termination
This type of claim basically means that an employee feels they were fired for an illegal or unfair reason. This can include contractual breaches.
Wrongful Infliction of Emotional Distress
A lawsuit involving this type of accusation will include an intentional or perceived intentional use of emotion to cause distress in employees. This can include threats or fear of future harm.
Wrongful Discipline
This involves the unfair punishment of an employee.
Breach of Employment Contract
This can happen when one party doesn’t hold up their end of the employment contract bargain.
Why Do You Need Employment Practices Liability Insurance?
If an employee files a lawsuit claiming wrongful conduct falling under any of the above categories and others, this insurance coverage will provide compensation for your legal expenses to defend your business and your reputation. It can include provisions for all the following:
Settlement Costs
If you are forced to pay out to settle out of court, this amount could be more than you have and could break you as a business owner.
Attorney’s Fees
You will obviously need someone on your side fighting for your rights as an employer. So, you will need legal administration.
Administrative and Other Court-Related Costs
Even if you win, you will have court-related and administrative costs you will have to pay.
Legal Judgments
If the ruling goes against you, you could face a big payout.
Another reason you might want to consider adding EPLI coverage is simply that the incidents and claims are growing year in and year out. In fact, there has been a steady increase in claims every year. This means that you have a greater chance now than ever before to find yourself in a situation where you are fighting against an employee’s accusations, fair or not.
This can damage your reputation as a business owner who prides themselves in treating your employees fairly as you will be portrayed as unfair or unjust. It also will basically ruin you financially if you have to fight these charges without insurance coverage providing the tools you need to fight for your business.
Therefore, especially if you own a small business and have little margin for error when it comes to money coming in and going out, you need the protection this coverage can provide.
How Can You Lower Your Employment Practices Liability Risk?
In addition to getting EPLI coverage, it’s also a good idea as a business owner to try to reduce your liability risk altogether. After all, insurance coverage of this type is something you obviously hope to never have to use. Keep the following tips in mind to reduce your risk overall when it comes to dealing with a disgruntled employee who wants to seek legal compensation:
1. Set the Tone
As a strong leader, it is your job as a business owner to set the tone for your organization by enforcing comprehensive work policies that are designed to promote a positive and constructive work environment.
2. Communicate
It’s also important for your employees to know when your company has updated policies or procedures to make things work better. The leadership within your company should inform all employees of any changes that alter how they do their job.
3. Update Handbook
Another crucial way to reduce your employment practices liability risk is to update your employee handbook regularly, as well as update company procedures and policies to create a safer and more positive work environment.
Now is The Time
There has been an exponential increase in EPLI lawsuits over the last two decades. As a result, today’s employers must be extra vigilant when it comes to protecting themselves against discrimination claims.
Contact us at Winter-Dent today to learn more about how EPLI converge can protect your company in today’s modern business arena. We don’t want to see all you have worked for taken away when the right insurance coverage and reduce your risk by following the tips listed above could have prevented it from happening.