How to Protect Your Company Against Employment Lawsuits

avoid-frivolous-employment-lawsuits

As a business owner, your goal is to hire the most qualified employees. Unfortunately not every hiring decision goes as planned. Even if an employee is terminated for legitimate reasons— such as poor attendance or unsatisfactory work habits—every termination opens the door for a potential lawsuit. Read one business owner’s experience and then learn how employment practice liability insurance (EPLI) can help protect you and your company from costly, frivolous lawsuits.

When Mary, a Colorado business owner, received a complaint that her sales manager made crude, disparaging remarks to a female employee during a trade show, Mary took the claim seriously and conducted an investigation. During the course of her investigation, Mary spoke with another employee who witnessed the incident firsthand. According to this employee, the sales manager’s actions were offensive and harassing. Ultimately, after much deliberation, Mary fired the sales manager for his behavior.

Weeks later, the employee who witnessed the incident sued Mary for $500,000, claiming that after the incident, Mary had passed her up for promotion and assigned her poor sales territories, all because she came forward with the details of what happened at the trade show.

Although the lawsuit was groundless, Mary racked up hefty legal bills defending herself against the allegation.

employment-practices-liability-insuranceLawsuits like the one Mary faced can come out of left field and are much more common than you’d think. In fact, three out of five employers will be sued by a prospective, current or former employee while they are in business. EPLI can help mitigate these risks by providing the necessary resources to defend your company against a lawsuit or pay a claim.

As costs for litigation and damage awards climb, experts predict that employment liability will only become more complex. Read on to learn how Employment Practices Liability Insurance works and why, if you have employees, you need this coverage.

From the moment that you start the pre-hiring process until the exit interview, you are vulnerable to an employment-related lawsuit. As a result, your business should take a hard look at whether it can afford to defend itself against alleged wrongful employment practices accusations. If not Employment Practices Liability Insurance (EPLI) protects your company against wrongful termination, discrimination or sexual harassment suits from your current, prospective or former employees. This coverage applies to directors, officers and employees, and can sometimes extend to third-party liabilities.

Why Choose Employment Practices Liability Insurance?

According to researchers, three out of five employers will be sued by a prospective, current or former employee while they are in business. While many suits are groundless, defending against them is costly and time-consuming.

Employment practices liability policies provide protection from the following wrongful employment practices:

  • Harassment
  • Discrimination
  • Actual or alleged wrongful dismissal, discharge or termination
  • Employment-related misrepresentation
  • Employment-related libel, slander, humiliation, defamation or invasion of privacy
  • Wrongful failure to employ or promote
  • Wrongful deprivation of a career opportunity, wrongful demotion or negligent evaluation
  • Wrongful discipline
  • Vicarious liability for intentional acts
  • Punitive damages
  • Coercion or humiliation in relation to race, marital status, gender, age, physical and/or mental impairments, pregnancy, sexual orientation, and any other protected class established by federal, state and local statutes

EPLIMany policies offer the following inclusions and add-ons:

  • Consultation, HR assistance and other risk management consultative services.
  • Coverage for defense costs outside the policy limits
  • Third-party liability coverage
  • Wage and hour coverage for claims alleging wage and hour violations
  • Volunteer workers can be added as additional insureds
  • Extended reporting periods may be added.

To learn more about employment practices liability coverage and how Roper Insurance & Financial Services can help you protect your business, call one of our business insurance specialists today at 303-721-1145 or email us at [email protected].