Employment practices liability insurance generally protects businesses from a variety of potential employment-related liability issues. If your business has employees, here’s a sampling of different situations where having an EPLI policy might be helpful. (Exact protections can vary depending on a particular policy’s terms and conditions.)
Federal and state laws limit what questions employers are allowed to ask when interviewing potential job candidates, rendering certain questions illegal. For instance, employers can’t ask about a candidate's country of origin, marital status or arrest record. In addition to these, there are several other questions that are legally off limits.
Should an interviewer ask any of these questions, your business may immediately be exposed to a potential employment practices lawsuit. It often doesn’t matter whether the interviewer intentionally broke the law or not.
Potentially even worse, simply hiring an employee that sues over an illegal job interview question may not get your business out of the lawsuit. The ultimate issue isn’t only one of potential discrimination, but it also involves an invasion of privacy. That invasion likely occurred the moment the question was asked and won’t go away if you hire the person.
Many employment practices liability insurance policies extend coverage not only to current employees but also to prospective employees. Although a policy might not personally defend the interviewer who asked an illegal question, a policy may help your business survive the fallout of an incident like this.
Women have generally been paid less than men for a long time, and this practice is causing issues for some businesses. Should your business engage in this practice (either intentionally or unintentionally), the business could face upset employees and several lawsuits if anyone discovers this is the norm.
Gender-based discrimination is illegal, so women who can prove they're underpaid solely because of their gender have a strong case against their employer. They may sue for the difference in the pay or, in some cases, even more. If this practice is company-wide, suits from multiple employees over a pay gap that existed for years can become extremely expensive to settle.
Many EPLI policies include coverage for pay-related and gender-discrimination claims, and having a policy that does offer this coverage might help your business settle lawsuits like this. If you’re purchasing a policy for this express protection, work with an experienced insurance agent who can help you choose a policy that has a suitably high limit. These (and other) employment-related suits can cost a lot to defend against and settle, so it’s normally a wise decision to get plenty of coverage.
Employees’ benefits packages sometimes account for a sizeable portion of their total compensation, and they may understandably be irate if someone mismanages their package. Additionally, they might also sue your business for what they lost due to mismanagement.
Such lawsuits can be devastating, for they frequently involve many employees who work for a business. While one claim might be manageable, one from every employee often is much harder to financially survive.
EPLI is primarily known for helping protect against discrimination lawsuits, but many policies also offer coverage for mismanaged benefits packages. If this is a protection your business needs, an informed agent can help you find a policy that offers the coverage.
These are just a few of the many situations where an employment practices liability insurance policy might offer protection. To learn more about how this type of insurance could help shield your business from potential lawsuits, contact World Insurance Associates. Our independent agents will be happy to answer any questions you have about EPLI policies, and they can help you find one that’s right for your business.