Every business that has at least one employee has an employment practices liability risk. Claims can be brought for many reasons and may typically include charges of wrongful termination, discrimination, sexual harassment and retaliation. In many cases the claims are based on “he said – she said” information but must be defended nonetheless. Even though most claims are filed against large corporations, every employer is at risk.
EPLI Provides Coverage against Employee Lawsuits Including Claims Of:
Failure to employ or promote
Breach of contract
Deprivation of opportunity
Infliction of emotional distress
Mismanagement of benefit plans
Typically, policies are rated based on your industry, the number of employees and claims history. The insurance policy is designed to reimburse for defense costs, settlement costs, and court judgments although they will not pay for punitive damages or civil and criminal fines.
Your Insurer Will Help Your Business
Most insurance carriers that offer EPLI will provide resources to the business in order to mitigate claims. If implemented properly, these mitigation resources will assist the business with reducing claims and can result in discounted premiums by:
Creating effective screening and hiring programs
Posting corporate policies in conspicuous areas throughout the workplace and placing them in employee handbooks
Offering a systematic process to file a grievance if the employee believes they have been subjected to sexual harassment or discrimination
Documenting everything that occurs and the process your company is taking to solve and prevent employee disputes
Many business owners make the mistake of purchasing EPLI after an action has been filed and then discover that coverage will not be available while the action is pending. When they are able to purchase coverage after an action has been resolved they will more than likely be surcharged for the previous action whether they were forced to settle or not. Knowing this, it is incumbent on every business owner to make this coverage a part of their insurance portfolio. Most Business Owner Policies offer an endorsement for EPLI; however as an endorsement, the coverage may not be as broad as in a stand-alone policy.
There are many reasons every employer should carry Employment Practices Liability Insurance, particularly in the litigious environment we are living and working in. Although many EPLI cases never make it inside a courtroom, there are, very often, settlements offered by the insurer. Even actions that appear without merit on their face must be responded to by a skilled attorney, which can become very expensive. Your EPLI policy will respond by paying your defense costs so that the company's bottom line doesn't take a hit every time a disgruntled employee claims they were harassed at the workplace or fired for no reason.
Who Should Carry Employment Practices Liability Insurance?
Any employer that answers yes to at least one of the following questions:
Have you ever terminated an employee?
Have you ever interviewed a prospective employee and didn't make a job offer?
Do you currently have at least one employee?
EPLI is a very important coverage for any business with employees. Contact an insurance professional at Skyline Risk Management, Inc. (718) 267-6600 to learn more about protecting your business from your everyday risks.