What Is Employment Practices Liability Insurance?
Numerous state and federal regulations protect job applicants and employees against discrimination and other unethical acts. There has been a rise in workplace lawsuits in the past years. Small businesses are particularly at risk since they lack the resources to hire employment lawyers or implement extensive employment rules and training programs.
Getting employment practices liability coverage is an additional way to safeguard your company’s finances in the event of a lawsuit brought against you by one of your employees. Generally, general liability insurance does not include employment practices liability, although it can be obtained as a separate policy or even as an addition to a company owner’s Coverage.
As package insurance, EPLI coverage may include additional limits and exclusions. Employment Practice Liability insurance shields employers against claims brought by disgruntled or disgruntled employees. It covers a wide range of scenarios not covered by general liability insurance. Even if your company wins a lawsuit, the cost of legal defense can be overwhelming.
EPLI protection is critical for the financial well-being of your company. Protecting your firm from various lawsuits, including harassment and discrimination, can be done through insurance. As time goes on, more and more people are making these kinds of claims. If you’re looking for the right EPLI insurance for your business, an insurance agency can help.
Why Is Employment Practices Liability Insurance Important?
In many cases, small-business owners don’t know much about EPLI insurance or think it’s unnecessary or too pricey, and hence they don’t take it. Small business owners with staff must consider acquiring Employment Practice Liability insurance. However, this is extremely crucial in businesses with high staff turnover rates. Those working in these industries are more prone to file claims of discrimination, sexual harassment, or unfair dismissal—all covered by EPLI policies.
Social media has also given the harassed a platform and made it simpler for them to come out and speak out about their experiences. Even if you win an employee lawsuit, the legal fees can still be expensive. That’s why you need EPL insurance to safeguard your business at all costs.
Employment Practices Liability Insurance Scenarios
Suppose you’re looking for a sales position and interview a few candidates. Only one candidate with relevant expertise in your industry is suitable for the post. This position needs them to make sales calls, and you fear that their Asian accent will impede their ability to close successfully.
The candidate emailed you asking if they got selected for the job, and you pointed out that they need to improve their English accent. The interviewer has filed discrimination claims against your company which sees this as unfair treatment. They have written proof that they were turned down due to their accent. In such a situation, the Employment Practice Liability insurance may be useful.
How Much Does Employment Practices Liability Insurance Cost?
Since Employment Practice Liability insurance is not typically sold as a stand-alone product, the insurance cost is not set. Your insurance company may offer EPLI as an additional endorsement to your current Business Owners Policy (BOP) coverage. As with any other type of company insurance, the cost of EPL insurance can be affected by a variety of factors, including:
The size of an organization may be the most reasonable criterion in determining EPL risk. In other words, the larger the staff a business has, the more probable a discrimination case will be filed by one of those employees.
Human Resource Policies
The size of a corporation isn’t all that matters to insurance companies. HR practices and regulations will also be taken into consideration to decrease risk and prevent claims. You may think that your investment in HR people, policies, and procedures is not important to an insurance company. Companies that fail to demonstrate a certain level of dedication are billed more than their counterparts, or worse, refused coverage entirely.
History of Employment Practices Liability Insurance Claims
Your claims history will, of course, have an impact on your premium. Your premium will be reduced if you have not filed any claims in the last couple of years.
Terms and Conditions Of The Employment Practices Liability Insurance Policy
As a general rule, the policy conditions of most insurance plans will be the same regardless of which company is issuing the policy. EPLI policies, on the other hand, can vary greatly depending on the nature and unpredictability of the risks they cover. It is important that you thoroughly review your insurance and consult an experienced broker to verify that you are sufficiently covered.
What Does Employment Practices Liability Insurance Cover?
A wide range of charges might lead to employment-related claims. Some claims will be more common than others, based on a company’s industry. Employment Practice Liability insurance coverage typically covers legal defense costs, settlements, and rulings. Whatever happens, legal fees will be compensated regardless of how well or how poorly a case is argued.
An Employment Practice Liability insurance policy should have the ability to cover a variety of EPLI claims, so let’s take a deeper look:
It is common for a retaliation claim to be filed by an employee who claims that they have been mistreated or discriminated against because they have spoken out about workplace problems. Employees commonly seek retaliation when they uncover or expose a workplace issue that the owner does not want the public to know about.
However, it is said most employees make these allegations as a result of their salary being decreased or getting demoted
2. Failure To Promote
Even while a failure to promote might be linked to numerous reasons, recent trends demonstrate that a significant number of these claims are related to disability discrimination. Employees often assume they are overlooked for promotion because of their disability or health condition.
3. Workplace Harassment
The most common form of workplace harassment claims that employees might pursue against your organization is sexual harassment. Violent and nonverbal forms of sexual harassment are all too common in today’s work environments. This also includes unwelcome sexual advances or favors from managers or colleagues in exchange for bonuses and promotions.
A claim of defamation alleges that the employer has made false comments that have caused harm to the employee’s reputation at the workplace in some way.
5. Employee Benefit Issues
Employees can also sue if benefits like retirement and healthcare programs are mismanaged.
6. Invasion Of Privacy
Software applications that track staff behavior and security cameras across the office are examples of surveillance tools that employees say are violating their privacy rights in a breach of privacy allegation at work. In addition, these kinds of allegations are increasing and getting more and more frequent.
7. Mental Trauma
When an employer deliberately causes emotional discomfort to their employees by engaging in conduct that is not appropriate for the job, this is known as causing emotional trauma. As previously stated, claims of sexual harassment, racial discrimination, and other forms of misconduct at work can be directly linked to these types of allegations.
8. Wrongful Termination
Those fired in wrongful termination cases think they were laid off wrongly, which means their dismissal wasn’t related to their performance. When firing employees, companies must ensure that the employee has violated in some way before doing so. Wrongful termination cases never seem to favor the employees, but the process can be lengthy and expensive, even if they do.
9. Third-Party Claims
Retailers, restaurants, and commercial property owners all engage with the general public daily, making third-party Employment Practice Liability insurance an absolute necessity for their businesses’ long-term survival. Discrimination allegations by clients who feel they have been discriminated against or have not received the same professional care as other clients are only some examples of these violations of the Americans with Disabilities Act (ADA).
What does Employment Practices Liability Insurance Not Cover?
If you are ordered by the court to pay penalties, you can’t file a claim to do so. When an employee is fired, and the verdict comes in their favor, you are legally obligated to pay the employee’s wages. However, this amount of compensation isn’t allocated from the coverage. Also, it does not cover any bodily injury or damage to your property, nor does it cover anything that occurred outside of the United States. EPLI often does not cover the following claims:
1. Sick Or Injured Employees
Purchasing workers’ compensation insurance is necessary if you have employees injured or ill while on the job.
2. Theft By Employee
You’ll need commercial crime insurance to protect yourself against employee theft.
3. General Errors
Employment Practice Liability insurance does not cover a professional error that results in an employee lawsuit, even if it is made by a member of your staff. Additional malpractice insurance or professional liability policy will be required in that case.
4. Company Decisions
If a board of directors or management refuses to fulfill company regulations or misuses business funds, Employment Practice Liability insurance does not protect those decisions. A director’s or office insurance policy can protect in these situations.
5. Unemployment Insurance
In most jurisdictions, unemployment benefit claims are handled by a separate agency that is not covered by Employment Practice Liability insurance.
How To Prevent Employee Lawsuits?
As a business owner, you can take steps to reduce the likelihood of an employee bringing a lawsuit against your company, but there is no guarantee that you will never be sued. If you don’t already have a detailed handbook outlining acceptable workplace behavior, you should do it immediately. Make sure your personnel is properly educated and given enough training.
To ensure zero tolerance for misconduct and discrimination in the workplace, make sure to include this in your rules. Make it as simple as possible for users to report issues. Investigating a complaint is also critical. Respond immediately and thoroughly to any allegations of prejudice in the workplace.
It’s also important to consider the type of coverage you have. Claims-made and occurrence-based Employment Practice Liability insurance are offered. A claim can only be compensated if the incident occurred and the employee’s lawsuit was filed when the insurance was in existence. This type of policy is more prevalent than the other types. The negative here is that you have to constantly renew your coverage regularly to ensure no missing period in between.
It is possible to have an occurrence-based insurance policy compensate allegations within the coverage period, irrespective of whether they were reported after the policy finished.
Does A Church Need Employee Practices Liability Insurance?
In the event of unfair dismissal, sexual misconduct, discrimination, contract breach, and emotional distress claims, the employer is covered by Employment Practices Liability Insurance (EPLI). Claims involving church volunteers, who make up most of the church’s workers, can be covered under EPLI policies. Certain churches may not hire someone because of their religious convictions or extracurricular activities that do not align with the church’s teachings.
Third-party discrimination and harassment should also be included in church policy. Extending the insurance to encompass anyone other than paid workers and volunteers is known as third-party coverage. Some examples of these parties include service providers and other tenants in the same building.
Even if a church is a place of worship, it still needs church insurance. You can’t put your sacred location at risk without church insurance. Regardless of the size of your ministry or the number of properties it owns, church coverage is required to protect your place of worship.
You need insurance to cover a range of things like your church being damaged, your employees being injured, or the church bus getting into an accident. Companies like Integrity Now Insurance Brokers provide the church insurance you’re looking for.
We are one of the leading companies providing church insurance in California and many other parts of America. Our wide range of services includes workers’ compensation insurance, church property insurance, house of worship insurance, Ministry Insurance, commercial auto insurance, and church liability insurance.
Contact us now and get your employees insured.