An employee lawsuit could have a substantial financial impact on your business. Many small business owners are left vulnerable, mistakenly believing that their business liability insurance policies include employment practices liability insurance (EPLI). First, this is not the case. Insurers have strengthened their exclusions regarding EPLI coverage over the years. Even businesses with as few as one employee can be held liable under employment laws.
How do I protect my business from an employee lawsuit?
First, EPLI is a financial safeguard protecting businesses against employee lawsuits alleging inappropriate or unfair acts that violate their rights. Regardless of merit, claims regarding sexual harassment, discrimination, and wrongful termination are included in this category.
Next, according to data collected by the Equal Employment Opportunity Commission (EEOC), roughly 42% of all EPLI claims were filed against small private businesses. Meanwhile, the average claim award hit $217,000. Also, skimming on coverage can be a costly, devastating mistake. Here’s what you need to know.
Meanwhile, several states are passing new legislation, and Internet hashtags such as #metoo and #timesup are bringing the public’s attention to ethics in the workplace. EPLI claims continued to soar in 2020. Also, the most significant rise occurred in lawsuits alleging retaliation, sexual harassment, labor laws violations with gig workers, and the gender pay gap.
Next, the key for claims to not impact your business is to frequently review, revise and set new internal and personnel policies in place. Also, updating handbooks and developing programs that help prevent discriminatory hiring practices will help. Also, creating detailed job descriptions and expectations for each role are just some ways to keep you covered.
Meanwhile, other effective prevention strategies involve developing and protecting a company culture of safety. Also, create respect and equity by ensuring a well-implemented, structured, and confidential internal complaint reporting process. Lastly, develop strict anti-retaliation policies and host regular training.
How expensive is Employment Practices Liability Insurance?
Premiums. The overall cost of your EPLI policy will vary depending on a few risk factors, such as the number of employees, the thoroughness of your anti-discrimination and anti-harassment policies and procedures, and whether your company has ever had any EEOC complaints or lawsuits in the past.
Limitations. A standard policy does not cover criminal conduct, civil fines, penalties, and punitive damages. Some of your board members and leadership team may be covered, but the rest of your staff and middle managers may be excluded from this policy. Could you be sure to clearly understand which managers are covered under your EPLI policy and where you are left exposed?
How does my business stack up?
What do you think you should look out for? Do you know your “risk profile”? Does your policy keep you thoroughly protected under both state and local laws? When researching EPLI coverage, take extra care to understand what types of claims are covered carefully. While less inclusive policies may save you some money in the long run, they can fail to protect you when you need it most.
Even the best employers get sued. Please call us today to review potential loss exposures and ensure you are set up with suitable EPLI coverage. We can customize your coverage to safeguard your business against the ever-increasing world of employment-related risks.