As a business owner, you strive to be fair and nondiscriminatory in your employment practices. But even a simple misunderstanding could expose you to an employee-related claim or allegation such as sexual harassment, discrimination, abuse or wrongful termination. In today’s litigious business climate, these are damaging claims that can put you out of business. Is your business prepared for these situations with Employment Practices Liability Insurance (EPLI) coverage?
EPLI Claims Scenarios:
Whistleblowing. After an employee is discharged, he files a lawsuit alleging harassment in retaliation for reporting supervisor thefts to corporate headquarters.
Retaliation. An ex-employee alleges he was wrongfully terminated in retaliation for filing a workers compensation claim.
Gender discrimination. A female employee with years of experience at your business files a lawsuit alleging that she was repeatedly bypassed for promotions in favor of male employees.
Improper background checks. A background check conducted on an employee returns a criminal record. Although the company did not provide a “pre-adverse action notice,” the employee is fired. When he received the notice and a copy of the background check, he realizes the check was conducted improperly and the criminal records were not his. He files a lawsuit.
Wrongful Termination. A long-time elderly employee is dismissed after months of performance problems and several warnings. The employee files a lawsuit alleging she was terminated due to her arthritis.
Third Party Racial Discrimination. A group of customers are causing a scene and an employee asks them to leave. The group alleges that they were targeted because of their race and files a lawsuit.
Why Do I Need Employment Practices Liability Insurance?
Business owners typically consider property, general liability and workers compensation as necessary insurance policies to protect their assets. With the incidence of employment-related claims widespread and growing, EPLI should be an important consideration.
- Over the last 20 years, employee lawsuits have risen 400 percent.
- Half of workplace discrimination claims filed with the EEOC are against small and mid-sized employers, with the most common target being organizations with 15 to 100 employees.
- Average court costs and legal defense fees can reach as high as $200,000 and resolution may take 18 to 24 months.
Think it can’t happen to you? Learn about EPLI myths vs. facts.
