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Man leaving with boxFor many years employers of all sizes have faced a growing number of job-related lawsuits and allegations. The Independent Insurance Agents Trusted Choice website states that you are more likely to be sued by an employee than to have a fire at your facility. Additionally, new overtime rules and legislation such as the Family Medical Leave Act and the Americans With Disabilities Act have created a crucial need for business owners to consider purchasing employment practices liability insurance (EPLI).

Employment practice liability insurance provides coverage for damages and defense costs resulting from allegations of :
  • Wrongful termination
  • Wrongful failure to employ or promote
  • Sexual or other workplace harassment
  • Employment discrimination including age, gender, race, color and national origin
  • Retaliation
  • Violation of the Equal Pay Act or Family Medical Leave Act

Claims covered by EPLI are NOT covered under a business owner’s general liability insurance. In fact, claims of the type covered by EPLI are specifically excluded from general liability insurance.

Here’s an example of a typical claim provided to us by one of our leading insurance companies:

An employee alleged that the employer discriminated against him on the basis of his age and disability. The employee further alleged that he was terminated in retaliation for filing a workers compensation claim and for complaining about discrimination. The employer contended that the plaintiff was not able to perform the essential functions of the job and that he was discharged for legitimate, non-discriminatory and non-retaliatory reasons. Defense costs totaled more than $175,000 and settlement costs were an additional $142,000.

Employment related claims may not only be brought by individual employees but by employees as a group and by government agencies such as the U. S. Equal Employment Opportunity Commission (EEOC). Information provided by one of our leading insurance carriers states that the EEOC recovered a record $365,400,000 against private sector and state and local governmental employers during the 2012 fiscal year. All the more reason to protect your business from the potentially staggering costs associated with employment related liability claims.

Even well-run companies with good policies and procedures can face allegations of wrongful employment action. In fact, business owners can be completely innocent of all allegations and still face crippling costs. Just having to defending employment related practice allegations can cost thousands of dollars. According to an Advisen white paper released recently and quoted in Insurance Journal magazine, defense costs can top out at $300,000 and the timeline for resolution can be anywhere from 18 to 24 months.

The cost of EPLI coverage will vary based on the type and size of your business and the limit and deductible you choose. Here are just two examples provided by one of our leading insurance companies:

  • An employee handbook that is distributed to all employees and that clearly defines what is expected of all employees with regard to job duties, compensation, benefits, performance standards, behavioral standards, safety, etc and procedures for the filing and handling of complaints and grievances is sometimes required. Online resources are available for putting together an employee handbook. 
  • It is also advisable to seek the advice of an employment attorney.

To find out more about how to better protect your business’ assets with employment practices liability insurance (EPLI). Contact one of the agents and CSP Insurance Services. We will be glad to help you.

Lawson Walker
Contact Lawson Walker, CIC
Call: (843) 468-9718

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