Employee lawsuits are a burdensome yet relevant issue employers must be ready to handle. Whether your company is at fault or not, legal defense fees and wasted time can seriously hinder the productivity of your business. With the increasing number of lawsuits filed by employees against their employers each year, being protected as employees return to the workplace is of the utmost importance. Luckily, many insurance providers offer Employment Practices Liability Insurance (EPLI) to protect businesses. No company is immune to the effects of a lawsuit, so it’s important to understand the ins and outs of EPLI coverage and how they can help you secure a healthy and profitable organization.
What Is EPLI Coverage?
Employment Practices Liability Insurance offers coverage to businesses against employees and former employees claiming that their legal employee rights have been violated. EPLI covers directors, officers, management personnel, and employees as insured. The most common types of claims that are covered include:
- Wrongful termination
- Sexual harassment
- Failure to promote
- Invasion of privacy
The cost of EPLI coverage depends on the specific type of business you run, the number of employees, and various risk factors such as whether your company has been sued over employment practices in the past. The policy will reimburse your company for the costs of defending a lawsuit in court and for judgments/settlements. Legal costs are covered even if your company loses the lawsuit.
Importance Of Having EPLI Coverage
When it comes to the well-being of your business, being protected against employee lawsuits is essential. The costs associated with these claims can be overwhelming and affect your business regardless of its size. EPLI coverage is important to have as employees return to work because employee lawsuits have been rising. Within the last decade, employee filings with Equal Employment Opportunity Commission have increased by 20%. Not only is the number of employee lawsuits growing but the amount of money paid due to these settlements is as well. The average settlement for employment practice claims is estimated to be $70,000, showing the importance of EPLI coverage.
How To Protect Against EPLI Claims
Employment practice lawsuits can spring up at any time, whether it’s during the hiring process, throughout employment or during termination. It’s also important to keep in mind that EPLI claims can be filed by past or current employees. Any practice that doesn’t align with laws and policies can create trouble within your business. You can help protect your business against EPLI claims by:
- Ensuring your current policies comply with applicable federal, state and local laws.
- Evaluating all employees with a consistent and fair methodology that focuses on job performance.
- Treating all employees professionally and with equal respect.
- Writing job descriptions that only list job-relevant requirements.
Being consistent in your treatment of employees can help minimize the risk of potential lawsuits. However, this doesn’t dismiss the need for coverage in the case of a lawsuit being filed.
EPLI During Public Health Crises
EPLI coverage can also help protect businesses during public health crises. With the ongoing pandemic for instance, many legal questions regarding employment liability are being raised as employees return to work. Is an employer at fault for a virus contracted at work and is it considered a workplace injury? Can businesses terminate employees who refuse to return to in-office work? These types of questions will likely give rise to employment litigation in 2021 and in possible future health crises. In regards to COVID-19, EPLI policies could provide coverage for various potential scenarios such as:
- Claims of inadequate workplace policies and practices leading to the contraction of COVID-19.
- Claims of an employer’s failure to provide legally required protective equipment and/or retrofit the workplace.
- Claims of an employer taking retaliatory action against an employee for reporting failure to comply with COVID-19 protocols.
- Claims of an employer disclosing that an employee tested positive for COVID-19 in connection with the employer’s contact-tracing efforts.
- Claims of an employer misrepresenting the severity of COVID-19 health risks in the workplace or failure to take reasonable steps to improve conditions through cleaning and disinfecting.
Employment Practice Liability Insurance For 2021
Employees are critical to the success of a business but no matter the size of your organization, it is important to take the necessary steps to protect your business in the unfortunate event of an employee lawsuit. At Biscayne Risk & Insurance Group, we provide business insurance and risk management services to help you navigate the complexities of the workplace, pandemic or not. Contact us today for Employment Practice Liability Insurance or to help you improve your existing insurance policy’s language to better protect your business from employee liability risks.