Small business owners are not immune to employment related litigation. Employees that feel discriminated by an employer – whether factual or not – are free to file a complaint with the EEOC and seek other legal remedies including litigation. The cost to deal with complaints and litigation is staggering: defense and settlement costs of $75,000 per claim, on average. Employment practices liability or EPL insurance protects your small business from the cost of defending and settling these claims.
Types of EPL Claims
Federal law makes it illegal to discriminate against someone on the basis of age, race, disability, gender, national origin, genetic information, and religion. In addition, employees are protected from sexual harassment, pregnancy, unequal pay, and retaliation. Employers may find themselves accused of many types of wrongful behavior related to violations of these protected classes. Examples of EPL claims include:
- Wrongful termination
- Discrimination in hiring, promotions, and compensation
- Sexual harassment
- Invasion of privacy and emotional distress
- ADA Violation or disability discrimination
- Gender and/or sexual orientation discrimination
- Third party harassment and discrimination complaints
- Whistleblowing and retaliation claims
- Wrongful or discriminatory discipline
- Breach of written, oral, or implied employment contract
- Wage violations
Additional Resource: Hiscox Guide to Employee Lawsuits
Preventing EPL Claims
Following best practices is key in avoiding EPL claims. Not every claim or allegation can be prevented, but here some important steps to minimize the frequency of claims:
- Develop a detailed employee handbook that clearly articulates company policies. Have the handbook reviewed by qualified legal counsel to ensure compliance with federal and state laws.
- Follow company procedures exactly and uniformly with all employees, especially as it relates to hiring, promotions, pay scale, and discipline.
- Put employment offers in writing including detailed job duties, benefits package, and compensation.
- Document everything related to specific employee evaluation, promotion, pay, hiring, and firing.
- Train and education employees about sexual harassment and diversity.
- Use written employment contracts, whenever possible, that include “employment-at-will” verbiage. Have all contracts reviewed by legal counsel.
- Implement an effective new hire training program especially applicable safety training.
Additional Resource: Chubb Insurance Claim Examples
Consider EPL Insurance Coverage
Lastly, consider purchasing a comprehensive and affordable EPL insurance policy. At Safeguard Insurance we work with several highly-rated national providers of employment practices liability insurance including Great American, USLI, Chubb, and Philadelphia. EPL insurance premiums start at around $100 per year when included as part of your business insurance policy. Stand-alone EPL insurance starts at around $500 per year for a $250,000 policy.
Contact us today for a no-obligation EPL insurance quote.