You’ve worked hard to create a family-like environment for your employees, and your business is running smoothly. Each person brings their unique characteristics and personality to the job, and, for the most part, there are few complaints among your staff.
Unfortunately, there are times for many businesses when the family gets into a disagreement. For families, that can cause decades-long feuds. In the business world, these disagreements can turn into lawsuits, fines, and penalties.
A Employment Practices Liability Insurance policy from Marine Agency can make all of the difference when your business needs protection against claims of sexual harassment, wrongful termination, a hostile work environment, sexual harassment, or other workplace-related complaints.
Employment practices liability insurance covers employers against a variety of claims from employees. Claims can stem from a number of allegations, including:
- Discrimination because of sex, race, disability, age, etc.
- Wrongful termination or discipline.
- Failure to hire or to promote.
- Hostile work environment or emotional distress.
- Breach of contract.
- Other issues related to employment.
In short, EPLI gives businesses peace of mind and protection against claims that workers’ legal rights were violated. While each policy is different, based on the type of business, risk factors involved in your business, and total number of employees, EPLI policies, for the most part, cover the legal costs, as well as the cost of defending the lawsuit in the courts, the judgements, and settlements. The business does not need to win the suit for the coverage to be enacted.
EPLI does not cover the costs of punitive damages, criminal or civil fines, or liabilities that are already covered under other insurance policies.
Do I need EPLI?
Some studies opens in a new window have shown that most employers are more likely to face an employment practices liability claim than either a property loss or general liability claim.
About three-quarters of litigation against companies today are caused by employment disputes, and of these, more than 40 percent involve companies with fewer than 100 employees.
Small and medium businesses based in the U.S. have a nearly 12 percent chance opens in a new window of facing an employment claim — and the costs can be staggering, with about 20 percent of businesses finding the average cost to defend themselves reaching $125,000. Judgments can exceed $200,000.
While employment practices liability insurance is valuable for all companies, it’s especially vital for small companies that are more likely to be hit with a claim. The propensity for smaller businesses to be more affected is usually because these companies, unlike large corporations, usually have significant employment practices insurance in place, and are better able to defend themselves.
Many of these companies have a legal department or consultant, and have undergone a specific, detailed training about employment rules, laws, and regulations. The larger companies are likely to have a panel counsel to serve this purpose,
Smaller companies, on the other hand, may not have the resources available to retain lawyers or update their materials, and aren’t always as active in staying on top of new labor-related releases and trends.
Any company that hires employees should be covered by an EPLI policy, as claims can be filed even if a candidate isn’t hired. Reduction in benefits, layoffs or cut-backs and other staffing benefits can cause an employment practices liability claim.
Operating Without EPLI
The U.S. Equal Employment Opportunity Commission shows that while the number of lawsuits filed in fiscal year 2015 has gone down, the financial benefits nearly tripled, going from $22.5 million in fiscal year 2014 to $65.3 million in fiscal year 2015.
The financial cost can be a significant blow to many companies, causing them to downsize, declare bankruptcy, or even close. If a company can come through financially, there is still quite a bit of fall-out.
Negative publicity, strained relations between employers and employees, and the extra costs for required trainings and updates can have a rippling aftereffect on the business.
Company leaders can take some measures to protect themselves. Here’s how:
- Develop or update the employee handbook, and include information about attendance, complaints, and discipline.It should also contain policies and procedures, an equal employment opportunity statement, a non-discrimination statement, and an at-will employment statement.
- Give employees detailed, up-to-date job descriptions and regular performance reviews.
- Learn the best practices when it comes to selecting candidates for employment.
- Update your employment application to remove any indicators that could be used in a discrimination lawsuit, like more in-depth questions regarding age, race, and sex.
Contact Marine Agency to talk about your risk factors and learn more about employment practices liability insurance.