Navigating the landscape of employer-employee relationships can be tricky, and for small businesses, the financial stakes are high. Employment Practices Liability Insurance (EPLI) offers a safeguard, providing protection against potential employment-related lawsuits. This blog explores what is covered, some compelling reasons (backed by relevant statistics) why small employers should not overlook the importance of EPLI, what employers can do to prevent Employment Practice claims, and what EPLI cost small employers.
What does EPLI Cover:
EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated. The number of lawsuits filed by employees against their employers has been rising. While most suits are filed against large corporations, no company is immune to such lawsuits. Recognizing that smaller companies now need this kind of protection, some insurers provide this coverage as an endorsement to their Businessowners Policy (BOP). An endorsement changes the terms and conditions of the policy.
Other companies offer EPLI as a stand-alone coverage. EPLI provides protection against many kinds of employee lawsuits, including claims of:
- Sexual harassment
- Discrimination
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
- Deprivation of career opportunity
- Wrongful infliction of emotional distress
- Mismanagement of employee benefit plans
The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements. The policy covers legal costs, whether your company wins or loses the suit. Policies also typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies such as workers compensation are excluded from EPLI policies. Without EPLI coverage, you must pay to defend the claim and hope you can successfully defend while running your business.
6 Reasons Small Employers Should Protect their businesses with EPLI
- Skyrocketing Legal Costs: On average, the cost of settling an employment-related lawsuit is around $125,000, and this does not even include potential jury awards which can be significantly higher. EPLI coverage is crucial as it helps cover these exorbitant legal costs, ensuring that a lawsuit does not spell financial disaster for your small business. How much can your business afford in unexpected legal expenses? Secure peace of mind with EPLI protection.
- Frequency of Employment-Related Claims: Studies have shown that around 1 in 5 small businesses will face employment-related litigation at some point. With such a high prevalence, EPLI is not just a wise investment; it’s a necessary one for risk management.
- Access to Legal Expertise: Navigating employment laws can be complex, and mistakes can be costly. EPLI providers offer access to legal experts who specialize in employment law, ensuring that you have knowledgeable guidance when you need it most. This is invaluable, especially considering that small businesses may not have in-house legal expertise. A seemingly small instance can fester into a big problem and an experienced professional can help prevent further issues.
- Protection for Your Reputation: A lawsuit can tarnish your business’s reputation, regardless of the outcome. Research indicates that businesses who handle employment disputes swiftly and fairly are more likely to maintain a good public image. EPLI can facilitate quick resolutions, helping to protect your hard-earned reputation. In a full employment economy, employees are reviewing websites / reviews such as glassdoor.com before accepting offers. If you want to attract, retain and motivate top talent, you have to protect your reputation.
- Promoting Best Practices and Risk Management: EPLI encourages the adoption of best employment practices. Many insurance providers offer resources and training to help minimize the risk of employment-related liabilities. Implementing these best practices not only reduces the likelihood of facing a lawsuit but also contributes to creating a productive and harmonious work environment.
- You cannot control what you employees do or say. While you or you staff may have great intentions and or would never intentionally offend another employee but it happens. An off color joke or email can create major problems. A friendly gesture or accidental move could cause you and your company a major lawsuit.
What Does EPLI Cost?
The cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past. The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements. EPLI is relatively inexpensive when compared to other insurance coverage(s). Call 800-362-2809 to find out how affordable it can be and sleep well at night knowing your business is protected from employment practice related lawsuits.
What can Employers do to Prevent EPL Claims?
To prevent employee lawsuits, educate your managers and employees so that you minimize problems in the first place:
- Create effective hiring and screening programs to avoid discrimination in hiring.
- Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.
- Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Make sure supervisors know where the company stands on what behaviors are not permissible.
- Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.
The numbers don’t lie – Employment Practices Liability Insurance is a crucial investment for small employers. It offers financial protection, legal expertise, and supports a positive work environment, all of which contribute to the long-term stability and success of your business. Don’t leave your business exposed; make EPLI an integral part of your risk management strategy today, ensuring a safer and more secure future for your business and your employees. Call our Protection Specialist at 800-362-2809 to find out how affordable EPLI can be to protect you and your business. You will have the peace of mind knowing you are protected. You can request information at www.cobensrv.com