Many small business owners are left vulnerable, mistakenly believing that their business liability insurance policies are inclusive of employment practices liability insurance (EPLI). This is simply not the case. In fact, insurers have strengthened their exclusions regarding EPLI coverage over the years. Even businesses with as few as one employee can be held liable under employment laws.
EPLI is a financial safeguard protecting businesses against employee lawsuits alleging inappropriate or unfair acts that violated their rights. Regardless of merit, claims regarding sexual harassment, discrimination and wrongful termination are included in this category.
According to data collected by the Equal Employment Opportunity Commission (EEOC), roughly 42% of all EPLI claims were filed against small private businesses, with the average claim award hitting $217,000. Skimming on coverage can be a costly, devastating mistake. Here’s what you need to know.
Current trends. With several states passing new legislation and Internet hashtags such as #metoo and #timesup bringing the public’s attention to ethics in the workplace, EPLI claims continued to soar in 2020. The biggest rise occurred in claims alleging retaliation, sexual harassment, labor laws violations with gig workers and the gender pay gap.
Policy of prevention. The key to preventing one of these rising trends from impacting your business is to frequently review, revise and set in place new internal and personnel policies. Updating handbooks, developing programs that help prevent discriminatory hiring practices and creating detailed job descriptions and expectations for each role are just some of the ways to keep you covered.
Other effective prevention strategies involve developing and protecting a company culture of safety, respect and equity by ensuring that you have a well-implemented, structured and confidential internal complaint reporting process, developing strict anti-retaliation policies and hosting regular trainings.
Premiums. The overall cost of your EPLI policy will vary depending on a few risk factors, such as number of employees, the thoroughness of your anti-discrimination and anti-harassment policies and procedures, and whether your company has ever had any EEOC complaints or lawsuits in the past.
Limitations. Criminal conduct, civil fines, penalties and punitive damages are just some things not covered in a standard policy. Some of your board members and leadership team may be covered, but the rest of your staff and middle managers may not be included in this policy. Be sure to have a clear understanding of which managers are covered under your EPLI policy and where you are left exposed.
What to look out for. Do you know your “risk profile”? Does your policy keep you thoroughly protected under both state and local laws? When researching EPLI coverage, take extra care to carefully understand what types of claims are covered. While less inclusive policies may save you some money in the long run, they can fail to protect you when you need it most.
Even the best employers get sued. Call us today to review potential loss exposures and ensure that you are set up with suitable EPLI coverage. We can customize your coverage to safeguard your business against the ever-increasing world of employment-related risks.