As an employer, risks that require Employment Practice Liability are inevitable. A business owner may be in good standing with respect to the law and can still be sued. This makes it essential to purchase the proper Employment Practice Liability Insurance to cover the costs of employment-related claims and protect your business’ assets. Below we discuss what Employment Practice Liability Insurance entails, the types of lawsuits it covers and what you can do to potentially lower the risk of liability.
Employment Practice Liability Insurance
Employment Practice Liability Insurance, also known as EPLI, is coverage employers can purchase to protect their businesses when facing lawsuits filed by employees or former employees. With the many different types of employment lawsuits, it is important to know what potential scenarios you may face as a business owner. Below we have outlined the most common employment lawsuits and how employment practice liability insurance can help protect you.
Wrongful termination cases arise when an employer illegally fires an employee. In order for an employee to file a case, the termination must involve a wrongful act such as firing based on discrimination, firing in violation of company policy or firing in violation of state laws.
Discrimination lawsuits stem from terminating an employee based on their skin color, race, religion, nationality, sexual orientation, gender, age or sex. The Equal Employment Opportunity Commission protects employees from employment discrimination. As an employee, you are protected from biased or unjust treatment, harassment, denial of a reasonable workplace accommodation, inappropriate questions about or disclosure of medical information and retaliation.
Harassment is defined as unacceptable behavior inflicted on an employee by a co-worker or employer that leads to a hostile work environment. There are multiple types of harassment including discriminatory, personal, verbal, physical and sexual harassment. While teasing and jokes are not generally classified as workplace harassment, there are instances in which these actions do contribute to a hostile environment. In order for an employee to file a harassment lawsuit, it must be not only pervasive, but consistent over time. Additionally, if the actions are so severe that they disrupt the employee’s ability to work effectively or interfere with their career progress, it can also constitute a lawsuit.
Retaliation occurs when an employer punishes an employee for participating in a “protected activity”, such as filing a complaint. For example, if an employee files a complaint with the manager, who then fires them for the complaint, the employee can sue for retaliation. Overall, there are three key elements involved in a workplace retaliation lawsuit.
- The employee engaged in a protected activity
- The employer took an adverse action against that employee
- There was a connection between the protected activity and the action from the employer
Lowering the Risk of Employment Practice Liability
The first and most proactive step to lowering the risk of employment practice liability is to purchase Employment Practice Liability Insurance. EPLI will ensure that your financial and business assets are protected in the event of being sued by an employee or former employee.
When going through the hiring process, it is important to make your expectations clear as an employer. An extensive resume analysis, screening process and background check prior to interviewing are great ways to avoid lawsuits from potential candidates.
Another great strategy is to write an employee handbook that states all of the company rules, policies, expectations, as well as a zero-tolerance policy for discrimination and harassment. In addition, implementing an open-door policy helps employees feel as though they can reach out to management about issues in the workplace without apprehension.
Lastly, it is essential that you keep detailed records such as written documentation of any complaints or other employee issues and the resolutions made to resolve them. Having everything in writing can ensure that as an employer you did everything in your power to resolve the problems.
Consult with an Employment Practice Liability Insurance Agent at Unity Insurance Today
If you are an employer, it is important to make sure that you have the right coverage for your business. Consult with an experienced and qualified insurance agent at Unity Insurance. Our team can provide you with the expertise and guidance in choosing the right Employment Practice Liability coverage for your business. To consult with a member of our team, contact us today.