Large corporations often have significant legal departments as well as detailed employee handbooks, contracts and rules in addition to HR departments to ensure the risk of employee lawsuits is minimized. Small and medium businesses may not have these additional ways to minimize risk. In addition, all companies can be subject to employee claims of discrimination or to lawsuits based on allegations of failure to promote, wrongful termination, harassment or other issues.
Does My Business Need Employment Practices Liability Insurance?
Employment practices liability insurance, also known as EPLI or EPL, is important for any organization with employees and any company seeking to hire workers. While you strive to provide a fair workplace, employees who have not gotten the career outcome they feel they deserve may react with legal action. All companies eventually choose to not hire a candidate or decide to terminate a worker. In these cases, especially, allegations of wrongdoing can occur.
Without this type of liability insurance (EPLI) you may face the financial consequences of a claim yourself. For a smaller or medium-sized business, such a legal case may be enough to put the company in danger of closing.
Employment practices liability coverage protects you in case of a lawsuit launched if you:
- Interview a candidate and do not hire them
- Discipline an employee for lateness or other performance issues
- Fail to promote an employee
- Terminate an employee for any reason
In addition, you may face a lawsuit for reasons that do not reflect your hiring or employee practices at all. A worker may claim to feel unsafe in the workplace due to the actions of peers or other employees. Employment practices liability insurance protects you in these instances as well.
Unfortunately, while your enterprises may make hiring, termination and other employment decisions in an objective and impartial way, employees who feel slighted may misinterpret company actions. An employee who is paid differently than a peer may allege unequal pay, even if their pay is different because it reflects a different role in the company or a lower level of experience.
Your coverage and costs will depend on the company’s legal history, worker turnover, the number of workers in your employ and other factors. You can purchase EPL as a stand-alone policy or as part of your Business Owner’s Policy or Directors and Officers Insurance.
In addition, you may wish to consider tail coverage with your policy. Many EPL policies are claims-made, meaning you are only covered while your policy is in place. Unfortunately, many claims are made months or even years after an alleged incident, or even years after an employee has left an organization.
The Upside of Insurance
Gunn-Mowery believes there should be an Upside to Insurance. Insurance should make you feel protected and offer peace of mind. This is why the team at Gunn-Mowery answers your insurance questions, helps you find the right coverage fit and brings you quotes from multiple insurance companies. Attentiveness, support, custom solutions and more: that’s the Upside of Insurance with Gunn-Mowery. Contact us today to find the right insurance options for you.