Why Employee Practices Liability Insurance is Crucial for Business
Liability, commercial automotive, property, and worker’s compensation are standard business insurance policies, but what about Employee Practices Liability Insurance (EPLI)? The Insurance Information Institute defines EPLI as covering “businesses against claims by workers that their legal rights as employees of the company have been violated.”(1) Having Employee Practices Liability Insurance for your small business is almost as essential as employing the resources which support your business. Protecting your business is essential as you will see after exploring the history of employee rights, common employee exposures and best practices to minimize risk.
There have been major political movements in the domain of employees’ legal rights since 1963. Political reforms such as The Equal Pay Act of 1963 to more current reforms like The Age Discrimination in Employment Act (ADEA) have transformed the landscape for business owners. Of the eight major employment acts in the last 50 years, each have been there to combat everything from discrimination of race to disabilities. With over 128,000 EPLI claims in 2010 (a 6% increase over 2009)(2), political policies are adapting as fast as ever to a changing workforce. For more information about current employment law, visit the U.S. Equal Employment Opportunity Commission.
From the first impression during the interview to the holiday party, your company is at risk for any employment claims. Employee Practices Liability Insurance can protect you from a variety of employee lawsuits, including:
- Wrongful infliction of emotional distress
- Deprivation of career opportunities
- Sexual harassment
- Wrongful termination
- Negligent evaluation
- Wrongful discipline
- Mismanagement of employee benefits
- Breach of employment contract
There are many paths to significantly decrease your Employee Practices Liability Insurance risks. Below are a few suggestions to help your business think smart and lower your risks of a claim.
- Develop an employment manual – This manual should detail employment policies and procedures. Be sure to cover every situation from repercussions to paid time off.
- Create a job description – Each position should describe the expectations and skills required to complete the job.
- Conduct timely performance reviews – Develop performance profiles for employees and record results on an ongoing basis.
- Create a background screening and hiring program – By developing minimum requirements, (i.e. education, experience, etc.) you can eliminate unsuitable candidates from your hiring pool before even calling them to interview in person. (For more information, visit: HireRight.com)(3)
- Zero tolerance policy – This type of policy is crucial to reducing claims regarding discrimination, substance abuse and any other form of harassment. By having an “open door” policy, employees can report concerns without fear of repercussion.
- Have an effective record keeping system –By establishing this system, you have a place to document employee issues as they arise. This will also allow for a record as to what the company did when resolving those issues.
Employee practices liability insurance is a crucial product to include in your business owners policy (BOP). There was an increase in discrimination claims in 2009 to 2010 from disability (+17.3%), religion (+11.9%), race (+6.9%), sex (+3.6%) and age (+2.1%). In today’s world, an off-color joke or even a lingering glance can be interpreted as an unlawful advance; therefore businesses need to minimize any employee practices liability claims by following the tips above.
Call our Orlando Florida insurance office at 877.874-4673 or fill out the rate quote request form on this page. One of our specialized agents will call to discuss an affordable Florida Employment Practices Liability Insurance program with you. We are ready to go to work for you, so contact us today.