First, what is EPLI?
Employment Practices Liability Insurance is a coverage that many companies do not have or do not understand.
Let Bickle Insurance breakdown the obvious. This is commercial liability insurance for claims of wrongful employment practices. These claims may vary but are typically related to wrongful termination, discrimination, sexual harassment, and retaliation.
Do you currently have an EPLI endorsement or stand-alone policy? Here are the five reasons why you would not need this coverage.
You have no human beings in your organization
Most of the claims related to EPLI claims are from the result of employees. If you do not have any employees or not considering interviewing any employees, then the risk is eliminated.
Or is it?
EPLI claims may come from a vendor or customer to the single “employee” of the company. These are third party claims and a sole proprietor may have exposure.
The most common third-party claim is with temporary employees hired from a staffing agency. Just because a company has EPLI does not mean 3rd party coverage is in place. Some insurers include it and others offer it as additional coverage.
My brother-in-law is an attorney
Sure your brother-in-law has nothing else better to do than defend you against employment practice lawsuits. Certainly, his firm and himself will take a reduced fee from you because you’re a great person.
……It’s the least he can do for allowing him to borrower your RV last year.
Or you may hand to the company’s attorney to handle the case. Having an attorney on retainer is helpful but are they equipped to react to an employee lawsuit. Many times, your company’s attorney is a generalist or is very specialized in your specific industry. It’s unlikely that their specialty is employment law.
It is a waste of money
It is safe to say that businesses and people struggle with buying intangible products. You do not get to buy a new insurance policy and drive it off the lot with the top down. It is also reasonable to assume that if you do not understand something or how it can help you, then it is not worth the cost.
Most successful businesses understand their expenses must stay in check to create a positive bottom line. Let us do a little math.
The price for EPLI can start below $500 a year for a small company with a few employees. This increases as the number of employees and liability coverages rise. A company under 100 employees may pay around $5,000 a year.
So, you already stated it was a waste of money. Okay, so what is the cost to have your attorney work on a lawsuit for your company? Remember earlier we mentioned they are not an expert in employment practices so it will take more billable hours, or they refer you to a specialist $$$.
It sounds like the cost of the insurance may be less than your attorney to look at the case. Add fees for defending the case and potential settlement and the insurance premium is a safer bet.
My relationship with my employees is great
Would a top tier employer reduce the chances of a potential lawsuit? Sure, many of the “Best Places to Work” companies have solid HR practices and policies. Employees and managers understand what professional workplace standards are from repeated education and training.
However, even with solid practices, it takes one small crack (or employee) to break the wall. As much as a company will attempt, they cannot control the actions of an employee. Additionally, some claims are the result of non-malice errors.
An illegal background check by a well–intentioned hiring manager could occur if they forgot to notify the applicant in writing that a credit report is required in hiring. Or they forgot to get permission from the applicant to pull credit.
Additionally, the Department of Labor rules on unpaid interns has impacted companies on several class–action lawsuits.
It will never happen to me
If you have the power to stop the world from spinning, then yes, maybe it will never happen to you. Unfortunately, the rest of us are not from Krypton and cannot prevent events from happening.
Your commercial insurance policies will transfer the cost of losses that may occur in your company. How much of a potential loss is transferred is a business decision? A decision based on your exposure and ability to recover operations from an event.
To determine this appetite is a discussion to have with a trusted insurance advisor. A qualified advisor can help a company determine appropriate coverages for their operation and outline areas of improvement in loss controls.
Still not convinced that a loss could impact your business.
A few statistics:
- Over the last two decades, employment practices lawsuits have risen by 400%
- Wrongful termination jumped more than 260%
- Approximately 42% of lawsuits are against business with less than 100 employees
- The average out of court settlement is $75,000
- The average jury award is $217,000
THERE ARE TWO MORE:
- 7 out of 10 businesses do not buy EPLI…….And many times it is better not to follow the herd.
- Your company is more likely to be sued by an employee than have a fire at your facility.
At Bickle Insurance we want you to understand the coverage you need and don’t need for both your business and personal insurance needs. If you have any questions just fill out this quick form or contact us at 740-593-7311 or at firstname.lastname@example.org.