Employees are the force that keeps your business going. They’re the heart, blood, and life of your company. But one day you might end up in a situation with an employee that turns into an employment-related practices lawsuit. The Equal Employment Opportunities Commission estimates that there are at least 100,000 employment practices claims every year. That’s a lot. You might not think that your employees would ever do that to you, and you would never hurt an employee intentionally. But your business could someday be saved by employment practices liability insurance, or EPLI. We’ll go over what EPLI is and why you might want to consider adding it to your business insurance plan.
What does EPLI do?
EPLI insurance protects you against lawsuits that stem from an allegation of wrongful employment practices or conduct. This includes claims of wrongful termination, discrimination, and sexual harassment. EPLI covers claims by past, present, and future employees.
Of course, you might be thinking that the claim that the employee brings against you is completely bogus. And it might very well be completely bogus. The accusations might be false and unfounded. But that doesn’t change the fact that defending your business against such claims in court is expensive. No matter if the claim is bogus or true, EPLI will help you cover the costs of the lawsuit.
What are my business’s employment practices risks?
Some risks that your business faces are very apparent – you know that you need to get general liability and workers’ comp insurance to protect your business from liability. But there are plenty of risks related to employment practices, even though it might be hard to imagine one of your employees ever bringing a lawsuit against your business. Some of the risks include…
- Job application
- Job offers
- Orientation for new employees
- Annual performance reviews
- Enforcement of company policies
The biggest risks are wrongful termination, sexual harassment, and discrimination.
Wrongful termination is the firing of an employee for reasons that aren’t legal or valid.
Sexual harassment is when an employee is the object of unwelcome sexual advances, obscene remarks, or offensive behavior. It can also be the failure to stop such behavior after the issue has been brought to the attention of the employer.
Discrimination is when an employee who is a member of a protected group is not treated the same as other employees or is denied the same opportunities as others.
How can you protect your business from its employment practices risks?
To protect yourself from your employment-related risks, it’s helpful if you have an organized and thorough set of all of the documents related to your employees’ employment. These documents will show that you treat everyone fairly and give everyone equal opportunity, and they can help to stave off lawsuits and ensure the honesty of everyone involved. Records also allow you to keep track of the actions of your employees and your own actions, too.
What’s required to get an EPLI policy?
It’s possible that you’ll need to show proof of having fair employment practices and workplace policies to get an EPLI policy. The underwriter might even want copies of some of these policies to see that you’re managing your employment risks.
The bright side of all of this is that these policies will help you defend your company should you ever find yourself on the receiving end of a nasty lawsuit. Having these policies firmly in place will help you prove that you treat everyone fairly and equally. The underwriter may want to see copies of the following policies (to name a few of them)…
- Sexual harassment
- Equal opportunity
- Employment at-will
- Pregnancy leave
- Hiring and interviewing
- Disability and accommodation
- Performance evaluation
- Alternative dispute
Close the gap in your EPLI insurance.
Employees aren’t the only people that your business comes into contact with, and they’re not the only ones who can sue on the grounds of harassment or discrimination. Your clients, suppliers, and vendors can all bring employment-related charges against you. However, your EPLI might not cover these claims.
A typical EPLI policy is limited to lawsuits brought against your business by a former, current, or prospective employee. So, claims from clients or suppliers aren’t covered there. And most commercial general liability policies don’t cover claims of harassment or discrimination, so these claims aren’t covered there, either.
So…where are they covered? You can add a section that’s called third-party employment practices liability insurance to your policy. This closes the gap that’s left between your typical EPLI policy and your CGL policy. It covers claims of discrimination based on race, religion, gender, age, ethnicity, disability, pregnancy, or sexual orientation. It also covers claims of harassment, which includes unwelcome sexual advances or requests for favors as well as behavior that creates a hostile or threatening environment.
If you’re thinking about getting EPLI, you might want to add the third-party section onto it so that you’re fully covered.
Don’t forget about your employment practices risks when you’re considering yur business insurance plan. Remember, even if your company is in the habit of being scrupulously fair to all employees and clients, you still could wind up the subject of an employment practices lawsuit. It’s important to protect yourself against the possibility that you’ll have to pay legal defense against a claim made by a prospective, current, or past employee.
Do you need business insurance? We can help with that! To get started on your free business insurance quotes, all you need to do is fill out our quote form or call us today. We would be delighted to help you with any of your insurance needs.