Employment Practice Liability Insurance




Employee lawsuits – why do they happen, how often do they happen, and what do they cost employers? This article will focus on these issues and how EPLI or employment practice liability insurance can prevent your business from the devastating financial damages these lawsuits bring.

Hi, I’m Gordon Coyle. Welcome to my website, where I talk about the risk and insurance issues on business owners’ minds. My goal here is to help inform and educate decision-makers so you can make better decisions around risk. Please reach out if I can help you directly; I’d love to hear from you.

employment practice insurance

So, let’s start with why employees sue their employers.

There will always be specific acts that trigger lawsuits – like outright discrimination, harassment, and wrongful termination. But today, there’s also an undercurrent of “feelings” that some employees in every company will have – they may feel mistreated, think the work environment is hostile, or feel like the boss is a hothead and maybe sometimes inappropriate. These feelings often lead to problems and lawsuits.

Employees today are also much more aware of their employment rights, and social movements like the #MeToo movement have sharpened that awareness.

Then, you’ve got an ever-growing body of federal, state, and local laws that make compliance with employment practices difficult. On top of that, you add in return-to-work policies that many companies are struggling with right now. You have the potential for a huge dumpster fire of potential lawsuits for an unprepared employer.

I could cite all the statistics around the rising cost of lawsuits and the increasing frequency of employment-related claims, but rather than spend time on that, I would know it’s risky being an employer today.

Whether you have 5 or 500 employees, you should regularly take proactive steps to prevent lawsuits or inquiries, starting with sound policies and procedures, up-to-date documents, cultural awareness, anti-harassment training, and more. If you need help in this area, I have a deep bench of experts who can assist you.

Employment Practice Liability Insurance is a “failsafe” or backstop should you find yourself on the receiving end of a lawsuit or inquiry from a regulatory body.

Now, there is some confusion here. Some business owners think that their business insurance policies already cover them for employment-related lawsuits. Unfortunately, this is mostly untrue. Some business owners’ policies may include a small sub-limit of employment practice coverage, but the scope and limit of protection here are minimal and can’t be relied upon.

To fully protect your business from potentially devastating six or seven-figure type lawsuits, you need a stand-alone EPLI policy or have EPLI built into your D&O – Management Liability package.

You also need to have that policy crafted to fit your needs. Don’t buy a policy online right off the shelf; it needs to be customized with the right endorsements to thoroughly protect you so that you have the peace of mind to know that if a lawsuit, complaint, or EEOC inquiry lands on your desk, you’ve got a policy that will pay the legal costs to answer those complaints and to defend you in court. It will also pay settlement amounts if that comes up.

Without EPLI, you’re paying these costs out of pocket in real-time, which could empty your bank accounts and then some!

Now I know it is human nature to procrastinate and think to yourself:

Do I REALLY need this type of insurance?

Can I afford it?

Do I really need it right now?

Let me offer a bit of advice.

I’ve often spoken with business owners who have an uncomfortable feeling, like they may be sued in an employment action. They’re worried about something that’s been said or something that has been done, and they ask me if they can get a policy.

The answer is yes, you can apply….. But, and there’s always a but – on most EPLI applications, there’s a question that asks something like – is any person proposed for this insurance aware of any circumstance that could reasonably give rise to a claim under this policy?

Suppose you have that terrible feeling that something might happen. In that case, this is where it needs to be disclosed, and unfortunately, coverage for that circumstance will be excluded, or some underwriters will just decline to offer a policy.

At that point, a decision-maker says – I wish I bought this policy years ago when it was first recommended to me.

The moral of the story is – don’t wait; you never know what may happen tomorrow. The sooner you decide that this is important and you complete an application, the better.

That’s my two cents. If I can help you with Employment Practice Liability or any other business insurance, I hope you’ll reach out and contact me. You can get started by clicking the GET INSURED NOW box above.

Thanks!

You cannot copy content of this page