Employment Practices Liability Insurance
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We live in a litigious society. These days, it is difficult to terminate employment or run a business without the risk of a lawsuit. More and more people in this country are suing employers for wrongs, whether real or perceived, and companies, particularly small businesses, are paying the price. Your business policy’s liability insurance may not protect you from this sort of lawsuit. Instead, you will need employment practices liability insurance.
What Is Employment Practices Liability Insurance?
Employment practices liability insurance, commonly referred to as EPLI insurance, is specifically designed to protect employers from lawsuits brought on by employees. It provides coverage for many situations that general liability insurance does not.Even lawsuits that are thrown out of court or are won by your company are expensive, due to the high cost of securing legal defense. Therefore, this insurance coverage is very important as financial protection for your business enterprise.
What Does EPLI Insurance Cover?
EPLI insurance will provide compensation for losses caused by employee lawsuits, including all incurred court costs and legal fees.
While frivolous lawsuits commonly happen, many petitioners do have legitimate claims. Even if your company does not intentionally violate employment laws, you still can be held liable. For this reason, it is particularly important to have a well-written employee handbook and policies and procedures manual available, and to ensure that employees adhere to the established guidelines.
Some examples of reasons that a lawsuit may be filed against your company include the following:
• Wrongful termination: This is the most common claim brought against employers in lawsuits. The EEOC states that is it illegal to fire an employee on the basis of their age, race, national origin, sex, or because of a disability. It is also illegal to terminate employment because an employee did any of the following:
• Took a leave of absence under the Family Medical and Leave Act (FMLA).
• Reported wrongdoings to authorities, as dictated by the Whistleblower Protection Act.
• Even if an employee’s termination had nothing to do with any of these situations, if a judge is convinced otherwise, your company may be held liable for lost wages and punitive costs.
• Harassment: These lawsuits most frequently involve sexual harassment, but can also include cases of workplace violence or bullying. The harassment may come from senior administrators, supervisors or co-workers. If the employee can prove that the company was aware of the problem and did nothing or made inadequate attempts to remedy it, the company may face fines and penalties if the case is brought to trial.
• Discrimination: These cases involve situations where an employee is turned down for promotions or advancement opportunities on the basis of age, sex, race, national origin or disability. Employees typically win these cases when they are able to show a trend toward discrimination within the company.
• Breach of contract: If your company has a contract with an employee and you violate the terms of that contract, the employee may file a claim against you. An employee who can prove that damages resulted from this breach is likely to win.
• Emotional distress: Employees who feel that your company fosters a hostile work environment or who feel subjected to overly stressful situations in the workplace may file a lawsuit against your company. These cases are more difficult to prove in a court of law, but the resulting legal fees may still prove burdensome.
• Other violations: Some other potential employee lawsuits that EPLI insurance can protect you from include wrongful denials of workman’s compensation, statute violations, wage and hour violations, loss of consortium, drug-testing false-positives, libel and slander.
Another employee lawsuit that is showing up in courts involves invasion of privacy. This usually occurs if employees feel they have been wronged as a result of cyber-snooping or video monitoring. This type of claim is not covered under most EPLI policies, but you may be able to get coverage through a newly created cyber liability and network security policy. Speak to an Insurance Station agent for more information about this sort of coverage.