There was a time when insurance was purchased by clients to protect themselves from disasters, misfortune, and catastrophe from nature, accidents and irresponsibility.  But insurance has evolved and expanded over the years due to the fact that, society has become extremely litigious.

People will sue for the craziest things, and often businesses and employers are targeted from their own employees. Whether the circumstances are due to a rise in unemployment, companies down-sizing, a struggling economy or the belief that “I am not hurting the business, because the insurance company pays,” employee suits against business owners have risen dramatically over the last 10 years with an increase of over 13%.

And although all the lawyers that I deal with personally and professionally are responsible and conscientious, there are those that know all about liability and how to work the insurance system for financial gain.

In the last few years, I have heard numerous stories of “my employees are like my family;” “I didn’t know it was considered “offensive;” and “But this is the way our office always behaved,” that turned into filings with he Equal Employment Opportunity Commission. Many times there was no ill-will or offense meant. All intentions were good and honorable, but you never know how staff may interpret your interactions.

Any prospective, current or ex-employee can file a “Charge of Discrimination” with the Equal Employment Opportunity Commission. The most common types of filings include the following categories:

  • Sexual harassment
  • Race or Gender Discrimination
  • Pregnancy
  • Wrongful termination
  • Breach of employment contract.
  • Negligent evaluation
  • Failure to employ or promote
  • Mismanagement of employee benefit plans
  • Wrongful discipline and retaliation
  • Deprivation of career opportunity
  • Wrongful infliction of emotional distress

One a complaint is filed with the E.E.O.C. the commission will begin an investigation into the charges filed. Companies must hire lawyers, build a defense, rebuttal the charges, supply the E.E.O.C. with extensive documentation and evidence. The link below provides business with an overview of how the entire process unfolds

But as a small business owner, you do have protection, before any actions against you or your company occur: Employee Practices Liability Insurance. EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated.

The cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past. The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements. The policy covers legal costs, whether your company wins or loses the suit.”* (Insurance Information Institute) 

I strongly suggest to every small business owner that he look into E.P.L.I. It is a policy hopefully you will never need to use, but often not having it can do incredible damage to your finances, your reputation and your state of mind.

To learn more about Employee Practices Liability Insurance please visit our website: HERE

For more information on “employee rights” please follow links below:

 http://www.eeoc.gov

 http://www.iii.org/article/what-employment-practices-liability-insurance-epli