Employees may file lawsuits against their employers for a variety of reasons — and that can prove expensive, even when employers are found innocent of any wrongdoing. Employment practices liability insurance helps employers cover the costs associated with such lawsuits should they face one. Carrying EPLI can give business owners and executives peace of mind.
What is EPLI?
EPLI is a type of insurance that can cover certain costs a business might face in the course of dealing with employment-related claims, such as an unlawful termination. It’s a high-exposure area, and businesses can face huge costs in some cases. A business in the U.S. with 10 or more employees has more than a 1 in 10 chance of having an employment practices charge filed against it, according to international specialist insurer Hiscox. And U.S. Equal Employment Opportunity Commission data show the federal agency collected $296.1 million in monetary penalties from employment practices charges in 2014 — a figure that doesn’t include money awarded through litigation.
These cases typically arise when employees feel they’ve been terminated unfairly or retaliated against. The cost of fighting a large enough case in court could put you out of business — even if you win the case in the end.
As with other types of insurance, EPLI typically has a deductible and the cost will vary based on the deductible you choose. It covers certain legal costs and awards in lawsuits that involve accusations a company has:
- Violated any federal, state, local or common law that prohibits any kind of employment-related discrimination.
- Harassed an employee. This includes any type of sexual or gender harassment, employment-related harassment by non-employees, as well as harassment based on race, religion, sexual orientation, pregnancy, disability, age or national origin.
- Allowed an abusive or hostile work environment.
- Wrongfully fired or terminated an employee.
- Defamed, libeled, slandered, falsely imprisoned, malicious prosecution or invasion of privacy.
- Administered wrongful, excessive or unfair discipline.
- Wrongfully inflicted emotional stress, mental anguish or humiliation.
- Retaliated against an employee for reporting wrongful activity, or a violation of that employee’s protected rights.
Prevention is Important, EPLI is Protection
Developing strong personnel policies and putting together an effective employee training program is vital to reducing the risk of these types of employment practices lawsuits in the first place. EPLI is a lot like a homeowner’s insurance policy — you’re careful to take care of your home and ensure it doesn’t burn down or suffer other major damage, but underwriting the risk is worth it. We’ve seen many cases in the past year where employers lost on certain provisions of the cases and would have ended up paying out thousands of dollars out-of-pocket if they didn’t have this coverage.
Want to learn more? Contact us to talk about whether your company needs EPLI and to learn how we can help you train your employees on good employment practices.
HR Solutions is a human resources outsourcing firm based in Baton Rouge, Louisiana. We eliminate human resources headaches for businesses with 10 to 1,000 employees by handling their payroll, employee benefits, regulatory compliance and other staffing needs. Contact us to learn how we can streamline your company’s human resources function to save money and reduce risk.