We live in a litigious society. As business owners and business managers you are now, more than ever, at risk for legal suits. Employee lawsuits can be so much more than just an annoyance. They can take away from productivity, team morale, can distract your management team from functioning optimally and can cost you a lot of money. Did you know that over the past 20 years, employee discrimination law suits have risen by approximately 400%? Moreover, close to 50% of these suits are not against large businesses, but are rather targeted at small businesses with 100 or fewer employees. Did you know that the average timeline to resolve an employee discrimination claim is a year and a half to two years? Overall, the average cost of one Employment Liability claim to your business for court and legal fees at trail ranges from $150,000 to $200,000.
From perceived discrimination to legitimate concerns, the risk of your business facing a law suit is an ever-growing threat. Most business owners would admit that carrying insurance on their business is a necessity. However, very few business owners take active steps to mitigate the risk to their business by discussing options with their insurance agent.
Employment Practices Liability Insurance (EPLI) protects businesses and owners from this intangible threat. EPLI claims can span from claims of emotional distress from your employees to a wrongful failure to employ/promote, to assault and battery at the workplace. EPLI coverage helps protect your from claims of discrimination based on: wage and hour claims, gender pay differences, discrimination due to race, color, religion, sexual orientation, disability or age.
There are some re-occurring trends among business owners when it comes to EPLI coverage. These are the top two excuses that we hear from our clients regarding this exposure in their business:
1-) My Employees Would Never Sue Me: Most small business owners mistakenly think that with a small staff they will have little to no exposure. I can’t tell you how many business owners have told me that, “my employees are like family. They would never sue me”. Unfortunately, several of these business owners have since faced law suits from their employees and it cost them a lot of money.
2-) This Is Covered On My General Liability Policy: Sorry, it’s not. Employment Practices Liability Insurance is not covered by any other policy. Unless you have an EPLI policy in place, you and your business are at risk for this exposure.
So what are some of the most common claims and how might these play a role in your business? These are the top three Employment claims that are filed against business owners:
1-) Wrongful Termination: Yet another reason that your business needs to have an employee handbook that is signed by the employee and outlines documented, progressive discipline. If there is no structure to your employee practices that are standardized across the board, it becomes your word against the employee’s.
2-) Discrimination: Another reason why all practices should be outlined in your employee manual and all practices should be standardized for all employees. Discrimination can be associated with age, religion, sex, disability or any other number of things. While discrimination is often perceived relative to the individual, one way that business owners can protect themselves from this accusation is to have established standards and practices and maintain them equally for all employees.
3-) Harassment: Whether this takes the form of sexual harassment, verbal harassment or physical harassment, again, having established guidelines that are standardized across all employees helps mitigate the exposure for business owners.
So how can you protect yourself and your business? Ask your insurance professional about EPLI coverage today. I advise my clients to get a full business review every year to ensure that they are not paying for overlapping coverages with multiple companies or missing out on an important coverage that leaves them exposed to a law suit or loss. You work too hard to grow your business to not protect it correctly.
Kelley Carter, CPIA
The Choice Insurance Agency, Inc.
The Choice Insurance Agency’s mission is to help you get from where you are to where you want to be financially by planning, achieving your plan and protecting your plan from unexpected events. In the process, our goal is to deliver insurance services in a manner that exceeds your expectations. See what The Choice Insurance Agency can do for you today. Give us a call at 757-416-5100 to speak with one of the licensed, professional members of our team or request a contact here. The Choice Insurance Agency. We’re on YOUR side. 757-416-5100.