Risk & Business Magazine Bowen Miclette & Britt Magazine | Page 8

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. +