Employment Practices Liability Insurance (EPLI) insures businesses against claims by workers who feel their legal rights as employees of the company have been violated. This includes claims of sexual harassment, discrimination, and wrongful termination.
What will EPLI insurance cost?
Business owners should not feel immune to this type of legality from their employees (regardless of how well they feel they know them), as claims continue to be on the rise. Legal fees, settlements and awards are costly. According to the U.S. Equal Opportunity Employment Commission, the average cost a company incurs to defend themselves is $125,000. The average jury award is $200,000, with employees winning two of every three cases that make it to trial. Small and large businesses alike need to be protected from these suits.
In comparison, EPLI is affordable. The cost of coverage depends largely on the type of business, number of employees and other risk factors (such as the number of times the company has been sued by past employees).
What should I look for in a policy?
Choose an established carrier; inquire about their experience and financial strength. An inexpensive premium is a mute point if the carrier folds. Ensure the policy covers discrimination, sexual harassment, retaliation and other intentional acts. It’s also wise to include written demands and EEOC charges.
Companies that co-employ with a professional employer organization (PEO) should expect this type of coverage to be one of the standard ancillary offerings that the PEO will consult and provide for you.
How can I be proactive in preventing the litigation?
Successful human resource professionals can substantially contribute to the bottom line by taking action to prevent employment litigation.
- Construct effective hiring and screening programs to avoid discrimination in hiring.
- Create employee handbooks and personnel policies and abide by them.
- Enforce non-compete and non-solicitation covenants under state law.
- Observe workplace safety laws and regulations.
- Conduct management training, including training on harassment prevention, hostile workplace issues, handling EEO cases, dealing with problem employees and conducting performance reviews.
EPLI is an important insurance policy every business should have in place. Management training and other HR best practices will assist in minimizing litigation. If your business needs help in this area, talk to Tandem HR today for a free consultation. Tandem HR is a Professional Employer Organization (PEO) in the Chicago area that assists hundreds of small and mid-sized businesses with creating exceptional workplaces. We also help clients save time and money while growing their business by taking on the administrative tasks associated with human resources, benefits, payroll, tax administration, regulatory compliance and risk management.
For more information on Tandem HR or PEOs, visit TandemHR.com or call 630.928.0510.