EMPLOYMENT PRACTICES LIABILITY INSURANCE
Why Your Company Needs
Employment Practices
Liability Insurance
C
onsider the following situation:
you are doing your yearly
performance reviews and one
of your employees becomes
disgruntled with their
poor review (and subsequent loss of a
promotion). The employee immediately
begins to claim that it was done on the
basis of discrimination and begins the
process of suing your company. You know
this claim is false, but that doesn’t make
it go away or make it any less expensive to
defend.
Employment practices liability insurance
(EPLI) is meant to help protect your
business against lawsuits stemming from
administrative actions which lead to
claims based on discrimination, sexual
harassment, wrongful termination, and
some other situations.
HERE ARE A HANDFUL OF THINGS
WHICH MAY OPEN YOUR EYES TO THE
RISK YOU COULD POTENTIALLY BE
FACING:
• Advisen has put out a white paper
outlining defense costs in employment-
related claims, which top out at round
$300,000.
•
According to the same white paper,
the average timeline of resolution for
8
these claims can be between 1.5 and
two years.
you, but generally only in the following
situations (with a few notable exceptions):
• Employers who are using background
checks need to ensure they are
following proper regulations, including
the Fair Credit Reporting Act and state
laws. • wrongful termination – claims
stemming from employees fired for
taking leaves of absence under the
Family and Medical Leave Act or
reporting wrongdoing (whistleblowing)
• Make sure you are treating your
interns like interns, especially if they
are unpaid. “Intern” has a specific
definition according to the Department
of Labor. • harassment – typically sexual
harassment, but also bullying and other
forms of violence
• emotional distress – employees who
feel your business fosters a hostile work
environment or one that causes stress
• breach of contract – violation of the
terms of an employment contract
• discrimination – claims stemming
from age, race, gender, disability, or
national origin
•
•
•
Likewise, ensure your contractors are
contractors and not employees. There
are strict guidelines about this as well.
In the last 20 years, employee lawsuits
have risen around 400 percent.
Currently, the top four types of
claims are pregnancy discrimination,
illegal background checks, unpaid
interns, and genetic discrimination
(based on the Genetic Information
Nondiscrimination Act).
These lawsuits can be significantly worse
than a simple inconvenience. They can
distract you from running the company,
erode productivity, destroy morale, and
be extremely expensive. EPLI will protect
No business owner wants to think
about their employee suing them. The
vast majority of employers wouldn’t do
anything to get themselves sued in this
way. Nonetheless, it is something you
must consider to keep yourself and your
business safe from potential litigation. For
a complete overview of your EPLI policy or
to start the process of getting one, contact
us at 713-880-7100 or bmbinc.com today. +