If you have employees, you could face an employment-related lawsuit. EPLI provides coverage.
Employees, former employees, and job applicants may sue your business if they believe you have violated their rights. Litigation may be expensive regardless of the outcome. Employment practices liability insurance (EPLI) will help you manage your EPLI risk.
EPLI Risks for Microcap Companies
It doesn’t matter if you have one employee or one thousand: once you take on an employer role, you also take on EPLI risks. In fact, you don’t even have to hire a worker to face lawsuits – people who merely apply for a position can sue you.
EPLI risks for microcaps may stem from:
- Job candidates. Job candidates may claim they did not receive an offer due to discrimination on the basis of gender, race, age, or another protected class.
- Current employees. Workers may claim they are being sexually harassed by supervisors or that their supervisors are allowing coworkers or even customers to harass them. Other claims could involve being passed up for promotions due to discrimination.
- Former workers. Former workers may claim they were fired due to discrimination or as retaliation for complaining about discrimination or harassment. Alternatively, former workers may claim they had to quit due to a hostile environment.
How Employment Practices Liability Coverage Helps Protect Your Business
Even if you try to follow employment laws, you may be accused of illegal discrimination. For example, if you hire one candidate who’s a better fit for your company culture, another candidate whom you turned down may claim your decision was due to illegal discrimination. If you face a covered EPLI lawsuit, your policy will cover your defense costs as well as settlements, judgements, or awards.
EPLI coverage can help you:
- Grow your company. As your company grows, you will need to hire more workers. This means taking on more EPLI risks. With insurance in place, though, you can do this with confidence.
- Build a great team. You need to be able to hire the best person for the job. You also need to be able to let employees go when it’s not working out. Hiring and firing is a minefield, but EPLI helps you navigate it.
- Safeguard your bottom line. An EPLI lawsuit may be expensive to defend – and settlements or judgements may be even more costly. EPLI provides financial protection.
Key EPLI Policy Features
EPLI policies typically provide coverage for lawsuits alleging:
- Discrimination
- Sexual harassment
- Wrongful termination or failure to promote
- Breach of employment contract
- Retaliation
- Mismanagement of employee benefits
Frequently Asked Questions
Does EPLI cover regulatory fines?
Companies accused of illegal harassment or discrimination may face EEOC penalties and other regulatory fines. EPLI often does not cover these regulatory fines and penalties. However, some policies may provide coverage.
Does EPLI cover wage and hour disputes?
A standard EPLI policy does not provide coverage for wage and hour disputes. However, it may be possible to add this coverage to your policy. To avoid uncovered lawsuits, review your coverage and determine whether you need additional coverage.
Does EPLI cover worker injuries?
No, EPLI does not cover worker injuries. Workers’ compensation covers claims involving worker injuries. Most employers are required to carry workers’ compensation insurance under state law.
What can my company do to avoid EPLI lawsuits?
Even with adequate EPLI coverage in place, it’s best to avoid lawsuits. You can do this by training your managers on all local, state, and federal employment laws, keeping up with changes in regulations and trends in litigation, and adhering to current best practices when hiring new employees. It’s also important to create a process to help employees report harassment or discrimination and to thoroughly investigate and address these reports. Documentation may also be key to your defense if you are ever sued. When in doubt, consult with a legal expert before making any decisions.
Does EPLI coverage work on a claims-made or occurrence basis?
EPLI typically works on a claims-made basis. This means your policy will only cover claims made while the policy is in force. Additionally, the event that triggered the lawsuit cannot predate the retroactive date. To ensure you have adequate protection, it’s important to maintain continuous coverage. You may need to secure tail coverage.
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