What is EPLI (Employment Practices Liability Insurance)?
Employment practices liability insurance protects businesses if their employees make a claim against them alleging inappropriate or unfair acts.
These employee claims can have a significant financial impact on your business. Even if the claim is baseless, the cost of defending can be substantial.
EPLI claims can include:
As a small business owner, you may think your organization is not big enough to need EPLI. Here are the facts about EPLI:
According to the national insurance organization Trusted Choice, over the last 20 years, employee lawsuits have risen roughly 400%, with wrongful termination suits jumping up more than 260%.
- Sexual harassment
- Age and sex discrimination
- Libel, slander, defamation of character
- Emotional duress
- Employee discipline actions
- Failure to hire or promote employees or prospective employees
EPLI Insurance Is Affordable.
- About 41.5% of employee lawsuits have been brought against private companies with less than 100 employees.
- The average cost to settle out of court is $75,000.
- If you get to court and lose, the average jury award is about $217,000.
The cost of EPLI can pay for itself if you have a claim against your business. EPLI can cover defending a lawsuit as well as judgments and settlements – whether you win or lose your case.
What is a hostile work environment?
A hostile work environment is when employees feel they are being harassed due to their national origin, sex, race, religion, age, or disability. According to the US Department of Labor the "unwelcome conduct renders the workplace atmosphere intimidating, hostile, or offensive."
What is sexual harassment?
The Equal Employment Opportunity Commission (EEOC) defines sexual harassment as "unwelcome sexual advances, requests for sexual favors and other verbal or physical conduct of a sexual nature that are sufficiently severe or pervasive to affect an individual’s terms or conditions of employment." According to the EEOC, sexual harassment claims represented roughly one-third of all claims filed – including LGBT-based sexual harassment charges.
What is retaliation?
Retaliation occurs when a manager fires, demotes, or harasses an employee who files a discrimination complaint. According to the EEOC, more than half of EEOC claims filed in 2020 involved claims of retaliation.
What other trends impact EPLI claims against small business employers?
The "gig economy" has led to more wage and hour lawsuits. It is important to be sure your outsourced workers are classified properly and their employment terms are clear. The FLSA Handy Reference Guide is a good resource for your business.
According to the U.S. Bureau of Labor Statistics, women working full-time earn 80.7% of what men earned in 2020. Equal pay, parental leave, and professional development are policies your business can implement that can prevent EPLI claims.
How can you prevent EPLI claims?
- Review your company employment situation with your insurance agent to determine the EPLI coverage that is best for your business.
- Avoid discriminatory hiring practices.
- Use an employee handbook to clarify job descriptions and company policies.
- Have a clearly stated policy regarding harassment and discrimination.
- Encourage employees to report problems without negative consequences.
- Managers who have an open door policy with employees, train staff how to respond to complaints, and treat staff with respect are being proactive before complaints may occur.
- Communicating with your employees creates trust. If employees feel comfortable communicating about problems they may have, you may be able to resolve it before it escalates.
Document all employee complaints, and record your company’s effort to resolve them. If a complaint is filed, you will have a record of your actions. If an incident occurs or you have a meeting with an employee with a complaint, keep a written record of it.
If you are not sure if your business needs EPLI, please talk to us.
Every business is different. And, almost all companies are at risk for EPLI claims from their employees – or even job applicants. Many business owners make the mistake of thinking their general liability insurance policy covers them. It does not.
An employee lawsuit can be expensive to your business beyond paying a fine or a claim. It can damage your company’s reputation if you are viewed as an unfair employer. It can affect employee morale and productivity – or your ability to attract people to hire. Even if you win a lawsuit, it can still cost you thousands to defend your business.
At KJE Insurance, we take the time to listen to you, learn about your business, and recommend the coverage you need to protect your business. Contact us today for an EPLI quote.