5 Reasons Why You Should Have Employment Practices Liability Insurance

Most Business Owners have a growing concern over the increase of lawsuits related to employee complaints alleging  wrongful termination, discrimination, and harassment and that is why they are obtaining Employment Practices Liability Insurance. They understand that these types of lawsuits can be very costly for business owners, from thousands to even millions of dollars. Even an employment related claim without merit can cost an employer $10,000 to $20,000 to defend. The Equal Employment Opportunity Commission (EEOC) now handles more than 80,000 employment practices grievances a year.  The average tally for a discrimination case exceeded $235,000, according to the EEOC.

No Employer is safe from by being sued

5 Reasons Why You Should Be Concerned and Think Seriously About Getting Employment Practices Liability Insurance:

  • 1) An employer is more likely to have an Employment Practices Liability or EPL claim than a general liability or property loss.
  • 2) General liability policies do not cover EPL or can be endorsed with watered-down coverage at low limits.
  • 3) Over 40% of EPL claims are brought against private employers with under 100 employees (Source: SHRM)
  • 4) Most litigious states: CA, NJ, IL, TX, FL, NY
  • 5) Almost 75% of all litigation against corporations today involves employment disputes.

This is why the need for employment practices liability insurance (EPL) has increased dramatically over the last several years. Employment practices liability insurance is a type of policy that business owners can buy to protect their organizations against employee suits for rights protected under such laws and protections brought under Title VII of the Civil Rights Act of 1964, the ADA (Americans with Disabilities Act) of 1990, the Civil Rights Act of 1991, ADEA (Age Discrimination in Employment Act) of 1967, and Family and Medical Leave Act (FMLA). All business owners should understand these laws, conduct cost-benefit analyses and discuss their insurance options with a trusted agent.

Employment Practices Liability (ELP) is an area of United States law that deals with wrongful termination, invasion of privacy, sexual harassment, emotional distress, discrimination, false imprisonment, breach of contract, and wage and hour law violations.  The Equal Employment Opportunity Commission (EEOC) interprets and enforces these laws. The EEOC recognizes eleven types of employment practices discrimination: age, disability, national origin, pregnancy, equal pay/compensation, genetic information, race/color, religion, retaliation, sex, and sexual harassment.

More recently, with the expansion of privacy laws, an increase in employee privacy concerns have developed as private employee data is stored electronically on company computers and off-site servers. This is not always covered under an EPL policy, but the insurance industry has responded by offering cyber liability and network security policies. It is important for business owners to be aware that there are both federal and state statutes that govern an employer’s liability to its employees.

Two Ways To Protect Your Business From Employment Practices Lawsuits


What You Should Do Now To Reduce Exposure:

  • * Train staff and managers about the potential exposures they face.
  • * Review the employee handbook to make sure it’s up to date and has been reviewed by legal counsel.
  • * Establish formal policies and procedures, in addition to the employee handbook, that cover issues such as anti-retaliation procedures.
  • * Obtain Employment Practices Liability Insurance.

Business Owners should work with legal counsel when implementing employment policies. Also, if you currently are not protected by having Employment Practices Liability (ELP) Insurance, please contact an Erb and Young Insurance Agent today at 321-234-1690.

Related Posts