Brandon Marchant, Commercial Insurance Agent at Beehive Insurance
It seems like lately you can’t go very long without hearing about some type of discrimination, inequality, or harassment happening in the workplace. Employers are finding they must be more diligent than ever in preventing these types of situations from occurring. Everything from extra training to special awareness campaigns are aimed at making the workplace a more inviting environment for all. Even then, something could still happen and a company might end up facing a lawsuit. This is where an Employment Practices Liability Insurance policy would be especially valuable to an employer.
Employment Practices Liability Insurance (EPLI) covers the employer’s cost of lawsuits brought on by employees, former employees or potential employees.
It covers the cost of lawsuits brought for: alleged discrimination, wrongful termination of employment, sexual harassment and breach of employment contract. It can also cover negligent evaluation, failure to hire or promote, mismanagement of employee benefit plans, wrongful discipline, wrongful infliction of emotional distress, and deprivations of career opportunity. Policies usually cover both the company and its directors and officers.
Premiums for EPLI are based on the number of employees, type of business and other risk factors such as whether the company has a history of being sued by employees. Although the policy covers legal costs, it may not pay fines or cover punitive damages. It’s also important to check your policy to confirm whether or not the insurance company will allow you to use your own attorneys, or if they will choose them for you.
Any company with employees has a need for EPLI, but those most vulnerable are new and fast growing companies because they may have not established clear guidelines for hiring, firing or disciplining employees.
More than ever before, employers are seeing an increase in the amount of lawsuits brought against them from employees. Lawsuits can come anytime during the pre-hiring process and all the way to the exit interview. They can even come from people who were not hired or only worked for a few days. Even if an allegation is groundless, businesses can still incur expenses.
Since you never know when an employment related lawsuit might come up, having an Employment Practices Liability Insurance policy is a good way to add another level of protection for your company.
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