As a business owner, sometimes you have to make the critical decision to let an employee go. Justified or not, your employee may feel wronged and believe the firing was not warranted. Or, perhaps an existing employee files a lawsuit alleging wage and hour disputes or some sort of discrimination. Do you know if your insurance would cover you in these scenarios?
Employment practices liability (EPL) coverage is becoming an increasingly popular and necessary policy in this day and age. EPL coverage can help protect you against:
- Wrongful termination
- Discrimination
- Sexual harassment
- Hostile work environments
- Wage and hour disputes
- Allegations from third parties (typically clients) of discrimination or harassment by employees or the business related to non-compliance with ADA and other employment laws (NOTE: This coverage is highly recommended)
With an increasingly litigious society, EPL coverage has become essential for any small business owner. In 2014, the U.S. Equal Employment Opportunity Commission (EEOC) reported:
- 88,778 workplace discrimination charges filed
- 42.8% of charges were retaliation allegations
- 35% of all charges alleged race discrimination
A changing economic climate, demographic shifts in the labor force, and employees’ understanding of employment laws and regulations all have an impact on the number of charges filed with the EEOC. These statistics and trends were reported in 2014 and have been on the rise in the past few years with the global impact of social media and societal movements.
More importantly for small business owners, the defense costs and settlement value arising from these types of claims are escalating quickly. Punitive damages, such as pain and suffering, can be awarded above and beyond a simple compensation. Allegations of this nature can result in settlements in excess of $100,000—not to mention the other costs that can be associated with the lawsuit. With the uprising of public allegations in the news, employment practices liability claims can not only damage the reputation of your business, but potentially run you out of business entirely if you’re not adequately protected.
Even the most disciplined practices can face allegations of illegal employment operations. Anyone can file a complaint with the EEOC in a matter of minutes, and, even if a case is meritless, it is expensive to defend yourself. Without an EPL insurance policy, you are responsible for any legal defense fees and indemnity from wrongful employment practices claims.
Protect yourself. Protect your practice. Look into an employment practices liability insurance policy today.
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