Employment Practices Liability is absolutely critical for any company with employees, as it provides protection from litigation that could arise from past, present, and even prospective employer/employee relationships.
Most businesses are sincerely working to grow and strengthen their business when they look to hire employees, and they want to take care of those employees so that they become valuable members of the team for the long term. Sometimes, though, something happens that causes that relationship between employee and employer to sour, and that can quickly lead to an Equal Employment Opportunity Commission complaint, or a lawsuit.
There are a wide variety of causes for issues like these, ranging from a simple mistake made by a business owner or a supervisor with no ill intent…..to an employee at any level who is behaving in such a way that they are violating the law…….to an employee who is working the system for their own gain or acting vindictively. Regardless of the cause, protection against these claims and suits is absolutely critical both from a financial standpoint, as well as from a time standpoint. EPLI claims typically take about a year to resolve, and without EPLI coverage, your business could be facing that investment of time and resources without the support of the claims team at a major insurer.
The typical EEOC complaint or employment practices lawsuit tend to center around things like wrongful termination, sexual harassment, negligent promotion or retention, wrongful refusal to hire, slander, defamation, libel, invasion of privacy, or discrimination based on age, gender, sexual orientation or identity. A good EPLI coverage plan should also include coverage for issues that come up with lesser frequency like punitive damages coverage, third party discrimination brought by customer, vendors, or suppliers, miscellaneous disciplinary related claims. Some companies offer these as option coverages you can purchase, and a quick conversation with your agent should give you an idea if your business is at a higher risk for these types of claims.
Here in Minnesota, coverage starts at $100,000 but typically you can, and should, purchase additional coverage, which is usually available up to around $1million. EPLI also typically carries a separate deductible from the rest of your policy, which can vary depending on your insurance carrier, but is $2500 with Farmers. Rating is based on the type of business you operate as well as the number of full and part time employees you have. That being said, it’s a pretty inexpensive coverage if you have no prior claims of this type, usually coming in around 12% of your total Business Owners Policy.
Prevention is, of course, the best way to avoid having to use EPLI coverage, and for that there are many resources. Farmers maintains a resource site for our insured’s that includes sample documents like employee handbooks, training on how to prevent workplace sexual harassment, discrimination, and wrongful termination, as well as how to promote ethical behavior. We also have a help line or online conference options to help our insured’s address specific incidents.
We all hope for the very best when we hire employees, but like all things, let us hope for the best but prepare for the worst. Employment Practices Liability Insurance can help you do just that.
This post was written by Aaron Nicklay, Agent with Farmer’s Insurance. For more information on Employment Liability Insurance and how Aaron can help your business prepare for the worst, email him at anicklay@farmersagent.com or call (952) 229-5155.
