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    Insurance | 3 min read

    Protect Your Business With Employment Practices Liability Insurance (EPLI)

    As a business leader, it is important to protect your company. It is your livelihood. One important thing to safeguard your business from are employment lawsuits. In the past 20 years, employment lawsuits have risen nearly 400%. Most are filed against large corporations, but no company is immune. Whether large or small, employment practices liability insurance policy (EPLI) is one way to protect your business from the potential monetary damages that a lawsuit can bring.

    EPLI covers a business against claims by employees that feel their legal rights have been violated. The most common claims include, sexual harassment, discrimination, wrongful termination, breach of contract, and failure to employ/promote. The cost of an EPLI policy varies on the type of business you have, the number of employees you have, and various other risk factors. A policy will reimburse the costs of defending a lawsuit in court and for judgements and settlements rendered against your business. Keep in mind, this type of policy will not pay for punitive damages or civil or criminal fines, nor workers' compensation.

    Preventing Potential Legal Disputes

    Your first line of defense against potential lawsuits is prevention. By implementing a few best practices for your company, managers, and employees, you can minimize risk and avoid situations that can lead to claims of misconduct. Some examples of best practices include:

    • An effective hiring and screening program to avoid claims of discrimination during the hiring process

    • Visible and easily accessible corporate policies

    • Staff education on all policies, as well as the steps they can take if they experience harassment

    • A policy that gives clear direction on how to document incidents, record your action plan, and how the incident will help prevent and resolve future disputes

    As the leader of your organization, it's important that you live by your policies and procedures so employees understand where the company stands on these issues, and feels comfortable coming forward if they feel they have been violated. 

    A High Price to Pay

    According to the law firm of Murphy Austin Adams Schoenfield LLP, in Sacramento, California, here are some average costs of court and legal fees you can expect to pay if your business faces a lawsuit. A case dismissal will cost you up to $15,000 in court and legal fees. If you go to trial and the judge rules against you, you could be forced to pay nearly $200,000 in court and legal fees to the other party.

    In addition to monetary damages, you may experience a possible decrease in workplace morale, a distracted management team, and decrease productivity from your employees. Resolution to these cases can take anywhere between 18 and 24 months and bring on stress and a long-lasting impact for your company. In the long run, paying for EPLI is a fraction of the cost you would pay if you lose a court case filed against your business.

    A study conducted by Advisen revealed only 23% of companies with fewer than 100 employees, 34% with 500–700 employees, and 40% with more than 1,000 employees invest in EPLI. With the increase of job growth and competition for workers, millennials are demanding greater work-life balance and less than half of them expect to be in their current position three years down the road. The road to higher expectations and less loyalty have intersected and employees are inclined to take action if they feel they are not being treated well. In 2013, the Equal Employment Opportunity Commission (EEOC) handled more than 100,000 complaints and filed over 130 lawsuits, resulting in nearly $400 million in awarded damages—a record high.

    These days, employees are more aware of their rights, and the internet provides a slew of information regarding wrongful termination and workplace harassment cases. Google returns 316,000 hits and 424,000 on those two search terms, respectively. An EPLI policy can protect your business from potentially astronomical damages that could impact your bottom line, as well as your reputation. Begin conversations internally and seek an insurance provider that can give you peace of mind.

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    Joy Larson

    Joy Larson is the Vice President of Operations for SWBC Insurance Services, and she has more than 30 years of comprehensive insurance industry experience. Joy is responsible for managing her division's daily operations and creating efficiency with automation and workflows. Joy holds her Property & Casualty license as well as a surplus lines license, and she has been a Certified Insurance Counselor since 2004

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