Employment Practices Liability Insurance is a relatively new type of insurance that you may not have considered as being an essential part of your insurance coverage package. It's easy to understand why coverage for inventory losses, fire, or employee injuries is necessary, but you may wonder exactly what Employment Practices Liability insurance covers. Employees, contractors or customers can file suit alleging all kinds of offenses on your part including:
- Wrongful Termination
- Sexual Harassment
- Failure to Promote
- Religious Discrimination
- Failure to provide ADA accomodations
- Privacy violations on your part
Don't assume that only big companies are subject to such complaints. More than half of all suits filed were against businesses of less than 50 employees. Costs for these lawsuits averaged over $270,000 which is not small change for a small company. Regardless of whether these suits have merit, the expense is real and the time and attention taken away from your business can also be costly. The fallout in bad publicity can also damage your business, easily causing bankruptcy if you don't have the proper insurance coverage.
There are a few things you can do to decrease the likelihood of such suits ever being filed by your employees.
- Have an employee handbook with policies that address these types of issues, as well as all other employee matters such as vacation policies, sick leave, work hours, etc. Be sure all employees bring their complaints directly to you if they feel that they have been wronged.
- Give a copy of the handbook to each employee and have them sign off that they have read and understand the policies.
- ALWAYS follow proper procedures when dealing with employees, whether for disciplinary issues, promotions, hiring, or any other situation. Be sure to document every meeting and investigate carefully. Do not dismiss their complaints out of hand.
- Every employee MUST be subject to the same rules and guidelines. For instance, you can't give a favored employee more vacation time than a less productive employee.
- Be sure you know and understand all the applicable laws and practices so you run less of risk of unintentionally discriminating. Get legal advice sooner rather than later if you are unsure of an issue.
EPL insurance will pay for your legal costs of defending the suit, and often the judgements, claims or settlements of the case. Ordinary business liability often excludes costs associated with these types of lawsuits, so be sure to get the correct insurance product for your business.
Contact us today to ensure you have complete coverage to protect your business investment.
