If an employee sues you, you may or may not be protected. Employment practices liability insurance, also called EPLI insurance is specifically designed to protect employers from lawsuits brought on by employees. It provides coverage for many situations that general liability insurance does not.
Unfortunately, as an employer, there is a good chance that eventually one of your employees will sue your business. Employee lawsuits can be much more than just an inconvenience. They are expensive, distracting for your management team, and can quickly erode productivity and employee morale.
These types of suits are becoming more common. Over the last 20 years, employee lawsuits have risen roughly 400%, with wrongful termination suits jumping up more than 260%. Oddly enough, you are more likely to be sued by an employee these days than to have a fire at your facility.
Even small companies are being impacted. Roughly 41.5% of employee lawsuits are brought against private companies with less than 100 employees. The financial damage of employee lawsuits can be dramatic; some sources state that the cost of settling out of court averages $75,000, and the average jury award hits $217,000 if you go to court and lose. Despite all of these scary numbers, roughly 7 out of 10 businesses don’t carry EPLI insurance.
This can be an expensive mistake. Even lawsuits that are thrown out of court or are won by your company are expensive, due to the high cost of securing legal defense. Therefore, this insurance coverage is very important as financial protection for your business.
Common EPLI claims: The types of possible EPLI situations are extensive. Here are some examples:
- Wrongful termination: Statistics show that this is the most common claim brought against employers. According to the EEOC, it is illegal to terminate an employee on the basis of age, race, national origin, gender, or disability. A business can also be sued if they fire an employee for:
- Taking a leave of absence under the Family Medical and Leave Act (FMLA).
- Reporting wrongdoing to the authorities under the Whistleblower Protection Act.
- Harassment: In most harassment cases, the issue is sexual harassment, but cases of violence, bullying, and issues based on race, color, age, and religion all fall into this category. The harassers can be senior managers, supervisors, co-workers, agents of the employer, or even non-employees. If the employee can prove the company was aware of the issue and ignored it or did not take adequate steps to solve the problem, the business may face additional fines and penalties if the case makes it to trial. Prevention is the best way to eliminate harassment at your business. It should be clearly communicated to all employees that harassment will not be tolerated.
- Discrimination: Discrimination cases involve employees who are turned down for employment or denied promotions or raises based on age, gender, race, national origin, or disability. If an employee can show a trend of discrimination in your business, they may have a winning case on their hands. This can also include pregnancy discrimination.
- Breach of contract: Violating the terms of an employee’s contract can result in a lawsuit against your company. Proof of damages to the employee due to the breach will often result in a victory for your former employee.
- Emotional distress: If employees feel that your business is fostering a hostile environment, or if they are subjected to overly stressful situations in the workplace, they may sue. While these cases can be very difficult to prove, the legal fees for defending the case can be substantial.
- Other violations: EPLI insurance also offers protection for suits regarding statute violations, wage and hour violations, wrongful denial of workers’ compensation, loss of consortium, false positives from drug tests, unpaid interns, illegal background checks, libel, and slander.
Want to know more or get a quote for coverage? We’d love to help.
About Keslar Insurance
Keslar Insurance Agency is a full service provider of residential and commercial insurance products in New Hampshire and Maine. Recent recipients of the Business of the Year from the Exeter Area Chamber of Commerce as well as the Business of the Year from the Newmarket Business Association, Keslar insurance is committed to the community.
Keslar Insurance makes sure clients have the right insurance products to protect the most important things in life-family, possessions and business. Keslar Insurance employees focus on providing the kind of service and value we’d expect for ourselves and our families. Our products which include Homeowners insurance, Auto, Life, Umbrella, Renters, Landlord, Boat, Snowmobile, ATV, Flood, Commercial Auto, Business Owner’s Policies, General Liability, Worker’s compensation, motor home, camper and more. For more information visit: www.keslarinsurance.com.
