Employment Practices Liability Insurance (EPLI) is important if you employ anyone through your business. Without this protection, you are at an increased risk financially, as your company might end up having to spend thousands of dollars to resolve an employee dispute in the form of a lawsuit. This is true whether your business is at fault or not as many times the mere act of defending a position in court can be expensive. Therefore, even with good employment practices, having this coverage can still make sense.
What is Employment Practices Liability Insurance?
EPLI provides coverage to employers against claims made by employees alleging:
- Discrimination: This can include discrimination regarding the religious or personal beliefs of an employee.
- Wrongful Termination: This is when an employee has been fired for what they feel is an unjust reason.
- Harassment: This includes all types of harassment including sexual harrassment.
- Other employment-related issues, such as failure to promote.
EPLI policies cover your legal costs when an employee claims their civil rights were violated or they were unable to complete their work in a fair environment. In today’s culturally sensitive environment, it’s more important than ever before to maintain a fair and inclusive workplace.
However, even when a business has the best of intentions, employees can still feel slighted or wronged on occasion. Therefore, having protection against a potential lawsuit or claim is of paramount importance as the costs of such an incident can be quite substantial.
What is an Example of an EPLI Claim?
Many situations might lead to an employee filing an EPLI claim. One example could be an executive of a manufacturing company filing a suit against their former employer for wrongful termination and the infliction of emotional distress. Perhaps the situation was caused when said employee was fired after issuing a complaint against the company for overtime pay or another similar issue. The employer might say that this executive was fired not for their complaints but instead was due to their poor performance. The employee obviously believes that they were wronged and could file a suit. The defense costs and settlement that is the end result of this would exceed $500,000. This scenario is just one example of the many types of situations that could lead to an EPLI claim.
What Affects The Cost of Your EPLI Policy?
The cost of your EPLI policy can be affected by several factors. The following are the most commonly noted:
- The number of people you employ at your business. The more people you employ, the greater the risk that one of them will feel slighted or discriminated against.
- The percentage of employee turnover rate. A business with a higher turnover rate indicates that there could be some problems within the inner workings of the company.
- Whether you’ve had previous suits lodged against your company. Obviously, if you have experienced complaints before, you are seen as a greater risk for another issue.
An EPLI Policy is a Worthwhile Investment
Having a healthy working environment where employees’ contributions are noted and there is no discrimination at all is ideal. Of course, even among companies that try their best to create this type of environment, there can still be incidents where employees feel unappreciated or feel they have been discriminated against. Therefore, no business is immune to the need for EPLI insurance because such claims are a risk for every business.
Contact our team at Arnold Insurance to find the best solution for your business and ensure you are covered should an employee file a lawsuit against your business.
