Employment Practices Liability Insurance: Affordable Protection

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Employment Practices Liability Insurance

Employment practices liability insurance is designed to protect business owners from allegations and litigation related to the hiring, firing and wrongful acts with active employees.   The list of potential employee disputes is very broad and could include wrongful termination, discrimination in hiring or promotion, breach of employment contract, sexual harassment and retaliation.

Many Nevada employers believe they are protected by “at-will” employment statutes.  It is true an employee may be terminated at any time in Nevada, as long as the reason for termination is not discriminatory.  It is also true that an employee may feel the termination was unjust for reasons involving gender, religion, ethnicity or disability.  The employee may also feel the termination was a retaliatory act.   Termination is just the tip of the iceberg.  Employees may also feel discriminated against if they fail to receive a promotion or pay increase.   They may interpret a co-worker’s lewd comments as sexual harassment or allege a hostile work environment. An allegation can quickly escalate into a lawsuit, which can become very expensive for a small employer to defend.   In fact, the average cost to defend a meritless claim is over $10,000.   A legitimate claim can easily exceed $150,000 for defense and settlement.

The solution to the problem of employment related lawsuits is several fold.  First, have a well written and constantly updated employee policies manual.   Make your employees aware of any changes in policies.  Have new employees review the employee policies manual and sign an acknowledgment of “at-will” status and understanding of company policies.

Second, document disciplinary activity and performance reviews in writing.   Anything that could potentially be cause for termination or failure to promote needs to be documented in the employee’s file and discussed with the employee.   Also, there should never be closed door meetings between employees and supervisors/business owners with just two people.  Always have a 3rd party in the room as witness to what said and done in the meeting.

Lastly, if your business cannot afford $10,000 to $150,000 (or more) to settle an employment related dispute, consider purchasing employment practices liability insurance, also called EPL insurance.    EPL coverage is extremely affordable and covers a broad variety of employment disputes.  You may be able to add EPL coverage to your existing business insurance or purchase a stand-alone policy with very high limits.   Many employment practices liability insurance policies also provide free consultation with a labor law attorney, include a review of your company policies manual.

For a no-obligation quote on EPL insurance, contact the experts at Safeguard Insurance today.   The call and quote are free, but the advice and coverage might just save you a lot of money in the future.