Summary: EPLI is particularly vital for small businesses due to their vulnerability to employment claims and lack of extensive HR resources.
- Workplace Lawsuits Trend: Persistent harassment issues underline the need for businesses to safeguard against legal risks.
- EPLI Coverage Essentials: EPLI protects against claims related to employment violations like discrimination, harassment, and wrongful termination.
- Costs and Benefits: EPLI is crucial for handling legal fees and settlements, providing financial protection and incentivizing fair employment practices.
- Proactive Measures: Investing in EPLI from the start is recommended to cover all phases of employment, including hiring and termination processes.
The "#MeToo" movement has not only catalyzed significant cultural shifts but has also reframed the conversation around workplace conduct, particularly concerning sexual harassment. This movement addresses the implications of suits brought on to companies in the wake of increased awareness of sexual harassment claims.
As awareness and support for victims of harassment have increased, so has the willingness of individuals to come forward and take legal action. This has resulted in a rising number of lawsuits against employers, highlighting the critical need for robust protective measures for both employees and businesses.
The Growing Trend of Workplace Lawsuits
CBS News recently reported that even years after the 2017 “#MeToo” movement shed light on workplace harassment, 40% of working women have still experienced such treatment during their careers. They also found that only about half of women today express confidence that their employers would effectively deal with harassment if they reported it. All in all, little has changed since over the years.
It is essential for businesses to not only have measures in place to create a safe environment for every employee, but to also protect themselves from potential lawsuits.
While most suits are filed against large corporations, no company is immune to such lawsuits. Recognizing that smaller companies now need this kind of protection, some insurers provide this coverage as an endorsement to their Business Owners Policy (BOP). An endorsement changes the terms and conditions of the policy.
Another option is Employment Practices Liability Insurance (EPLI), which is a stand-alone coverage.
What is EPLI Coverage?
EPLI insurance coverage protects businesses from the financial ramifications associated with claims of employment-related violations. EPLI coverage is designed to safeguard employers from the costs incurred due to lawsuits filed by employees alleging breaches of their legal rights.
What Does Employment Practices Liability Cover?
EPLI can cover many kinds of employee lawsuits, including but not limited to:
- Discrimination (based on age, sex, race, religion, color, and national origin)
- Sexual Harassment
- Wrongful termination or discipline
- Emotional distress or mental anguish
- Invasion of privacy
- Libel or slander
- Breach of contract
EPLI policies typically cover legal fees, settlements, and judgments that arise from covered claims. The coverage can be crucial for businesses, especially considering the high costs associated with legal defense and potential payouts.
EPLI coverage usually operates on a claims-made basis, meaning it only covers claims made during the policy period.
Is EPLI Insurance Worth it?
So, if you’re wondering if EPLI insurance is worth it, the answer is a resounding yes.
Businesses operate in an increasingly litigious society. This, coupled with the growing awareness of employees' rights and social movements influencing workplace behaviors, means EPLI is more important than ever.
Just imagine if you or your company were ever sued for something like racial discrimination, sexual harassment, or wrongful termination. If the case ended up in court, you could incur hundreds of thousands of dollars in legal costs and attorney fees. The expense could be enough to cripple most businesses, putting everything you’ve worked so hard to achieve in jeopardy.
Since EPLI insurance covers a variety of lawsuits, it offers robust financial protection. At the same time, it also encourages businesses to adopt fair employment practices and to actively manage potential risks in the workplace.
Is EPLI Insurance Worth it for Small Businesses?
For many small businesses, EPLI provides peace of mind and financial protection against these potential lawsuits. It offers invaluable protection against the unpredictable and often substantial costs of employment-related legal issues.
Here are just a few reasons why EPLI insurance is worth it no matter how small (or how large) your business is:
- Risk of Lawsuits: Small businesses are not immune to the risk of employment practices claims. Some could say they may be more vulnerable because they often lack a dedicated human resources department.
- Financial Protection: Legal defense costs and potential settlements or judgments in employment-related claims can be substantial. EPLI helps protect a business’s financial stability by covering these costs, which might otherwise be crippling for a small business.
- Support and Resources: Beyond financial coverage, EPLI insurance provides a good framework for employment law and best practices.
Invest in EPLI Coverage from the Start
It is important to note that this type of policy protects a company from the pre-hire process to the exit interview, including seasonal or temporary employees. For instance, if a prospective employee comes in for an interview and is not hired, but sues claiming he or she was the victim of discrimination, you and your company would be protected.
It is important that you review your current policies, and strongly consider obtaining a quote for this coverage from our office. Give us a call today at 732-380-0900 to learn more.