From the moment that you start the pre-hiring process until the exit interview, you are vulnerable to an employment-related lawsuit. As a result, your business should take a hard look at whether it can afford to defend itself against alleged wrongful employment practices accusations. If not, there is an insurance solution called employment practices liability that protects against wrongful termination, discrimination or sexual harassment suits from your current, prospective or former employees. This coverage applies to directors, officers and employees, and can sometimes extend to third party liabilities.
Why Choose Employment Practices Liability?
According to researchers, three out of five employers will be sued by a prospective, current or former employee while they are in business. While many suits are groundless, defending against them is costly and time-consuming.
Employment practices liability (EPL) insurance is a policy used to cover your risks due to some of the most common employment-related lawsuits, including the following:
- Wrongful termination: The discharge of an employee for invalid reasons.
- Discrimination: The denial of equal treatment to employees who are members of a protected class.
- Sexual harassment: Subjecting an employee to unwelcome sexual advances, obscene or offensive remarks, or the failure to stop such behavior.
EPL works to provide the necessary resources to defend your company against a lawsuit or to pay for a claim. As costs for litigation and damage awards climb, experts predict that employment liability will only become more complex. As a result, it is critical for business owners to understand their exposures and options for managing risks.
Employment Practices Liability: Crucial for Small Businesses
Understandably, it can be much more difficult for small businesses to defend themselves against employment-related claims because they tend to have fewer resources and a different work environment. Small businesses are particularly at risk for employment-related claims for the following reasons:
- Many have a minimal staff and lack of in-house counsel and/or full human resources department to rely on
- Overall lack of extensive recordkeeping on employee performance
- More intimate working environments may cause personal riffs during layoffs
An Affordable Solution
Fortunately, with employment-based lawsuits on the rise and the economy’s sluggish upward climb, EPL coverage is becoming more affordable. More insurers are beginning to offer EPL insurance policies with comprehensive coverage to smaller businesses to protect them in tough times. In fact, EPL insurance is becoming so important to the success of small businesses that it is being offered at more affordable prices and being tailored specifically for those smaller companies. With the average cost of an employment lawsuit exceeding $270,000, the potential return dwarfs the initial cost of EPL coverage.
Contact us at 608-238-2686 today to learn more about employment practices liability coverage and how we can help protect your business.