Employment Practices Liability Insurance
Laws are in place to protect employees, job candidates and employers from discrimination and unfair workplace situations, but the number of employee lawsuits has increased in recent years. For business owners, that can be risky.
Any size business is vulnerable to this type of risk. Small businesses tend to be especially vulnerable because they are less likely to retain employment attorneys or have detailed employment policies and training programs.
If you are a small business owner, what can you do to protect your business? In addition to taking steps to reduce your risk of employee lawsuits, you can financially protect your business by purchasing employment practices liability insurance (EPLI). Employment practices liability is generally not covered by general liability insurance, but can be purchased as a stand-alone policy or added as an endorsement to a Business Owners Policy or Commercial Package Policy.
What Does EPLI Cover?
EPLI provides coverage for legal costs, settlements and judgments that arise from claims of:
- Discrimination, based on age, race, gender and other factors.
- Sexual harassment.
- Wrongful termination.
- Breach of employment contract.
- Infliction of emotional distress or mental anguish.
- Failure to employ or promote.
- Wrongful discipline or demotion.
- Mismanagement of employee benefits.
- Defamation.
- Privacy violations.
- Violation of the Family Medical Leave Act or other such laws.
EPLI covers companies against claims or lawsuits filed by employees, former employees and employment candidates regarding their employment relationship with an employer. This type of coverage protects the company, its directors, and officers, as well as current and former employees. EPLI policies may also cover seasonal employees, leased employees and independent contractors.
What’s Not Covered?
While EPLI covers many areas of employment risk, most policies have certain exclusions, such as violations of the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, Occupational Safety and Health Act (OSHA), and the Employee Retirement Income Security Act (ERISA), as well as claims arising under workers compensation laws. EPLI also will not cover punitive damages or claims resulting from criminal acts. Privacy violations caused by a computer breach also may not be covered by EPLI.
Steps to Limit Employment Liability Risk
Purchasing EPLI is an important way to manage employment risk, but ideally, your business will not have to deal with an employment practices lawsuit. Taking the following steps can minimize the risk of such a lawsuit arising in the first place:
- Establish Clear Workplace Policies
- Educate Management and Employees
- Hire Carefully
- Provide Job Descriptions
- Perform Regular Employee Reviews
- Keep Documentation
Contact LG Insurance Agency for more information about protecting your business with Employment Practices Liability Insurance and for all of your small business insurance needs.
Information borrowed from Insurance Information Institute.
All content provided in this blog is for informational purposes only. Topics discussed on this blog relate to insurance products and issues in a general application, and are not an offer of insurance, a guarantee of coverage, or applicable to specific and individual circumstances. Contact LG Insurance Agency for questions and information specific to your insurance needs.
