We like to believe that we hire good people and don’t need to worry about law suits by our employees. However, the number of lawsuits filed by employees against their employers continues to rise. Statistically, you are more likely to be sued by an employee than suffer a property loss. We would not consider leaving our property uninsured, but businesses sometimes underestimate the necessity of Employment Practices Liability Insurance
Employment Practices Liability Insurance (EPLI) covers businesses against claims by workers inferring that their legal rights as employees of the company have been violated. Some of the more common employment related lawsuits include, but are not limited to:
- Sexual Harassment
- Wrongful termination
- Failure to make partner
While many of these areas sound more applicable to large corporations, no company is immune to such lawsuits. In fact, over 60% of the employee related liability claims filed annually are against small employers, and it is estimated that one employee related suit could bankrupt 50% of small businesses without Employment Practices Liability Insurance. Consider how much your business could afford to pay (attorney fees, damages, etc) without impacting your business.
There are two current factors driving potential employee related claims. The first involves the evolution of technology and social media. Technology impacts how employees interact and communicate and it has the tendency to blur the lines between personal and professional interaction. In addition to considering Employment Practices Related Liability insurance, we recommend that you review your employee handbook, and establish social media, internet, and cell phone policies if you do not currently have them in place.
The other area involves the rising cost of health care benefits and economic slowdown. Any reductions to employee benefits, including the reduction of health coverage, 401k matching benefits, and other may increase your exposure to an EPLI claim. It is a smart move to consider EPLI prior to having to consider any lay-offs, cut-backs, or changes to staffing.
We certainly hope that your firm will never be impacted by an employee related claim, but we do recommend a prudent approach of evaluating the cost and coverage of an insurance policy to address this exposure.