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Do you need EPLI?

Do you need EPLI?

Being a business owner and an employer comes with a lot of responsibility. From payroll taxes to health insurance, hiring costs and more, finding and keeping good employees can be difficult.

Sometimes mistakes are made: you hire the wrong person, the economy takes a dip and you have to lay off employees, a job applicant feels you made the wrong decision. Even if you keep meticulous records and follow all of the rules, a disgruntled current, former or would-be employee can still sue you.

That’s where Employment Practices Liability Insurance (EPLI) comes in. EPLI coverage protects your business from claims made by workers, buffering your business from the costs associated with litigating these matters.

Fired/Laid Off Workers

No matter the circumstances, firing or layoffs can result in lawsuits brought by former employees. A Hayes Brokers client who did not purchase EPLI coverage found themselves in litigation with an employee who was fired for drinking on the job.

The fired employee filed suit against the employer alleging racial discrimination, demanding $50,000 in damages. Legal fees are thus far in excess of $20,000 and will likely exceed the $50,000 plaintiff demand before it is all said and done.

It Only Takes One Employee

Even small businesses can feel the pain of employment practices liability claims. Even if there is only one employee in your company, that one employee can file suit and possibly bankrupt your business.

A photographer with one long-time employee, an administrative assistant, decided to retire after nearly 30 years in business. He gave the employee plenty of time  to find other employment, but just after announcing his retirement she found out she was pregnant. During her job search she lost the baby and filed suit against the photographer alleging that the stress of finding new employment caused her miscarriage.

Luckily, the photographer had EPLI insurance that covered his legal fees and the eventual settlement in the case.

Should You Purchase EPLI?

Legal fees without litigation can run into the tens of thousands of dollars. Cases that end up in court can easily reach six figures in legal fees alone. Case settlements and judgements against employers can be hundreds of thousands, even millions of dollars.

The US Equal Employment Opportunity Commission (EEOC) website lists recently settled and ongoing cases of racial, sexual and disability discrimination for everything from mom and pop businesses to billion dollar corporations. Claims can happen to any business sector and to businesses of any size.

EPLI protects against:

  • Wrongful termination including firing and layoffs of any size.
  • Failure to promote.
  • Whistleblower retaliation.
  • Age, disability, gender, sexual, religious discrimination or harassment.
  • Breach of employment contract.
  • Violation of federal, state or local civil rights laws.

The question isn’t really whether you need EPLI insurance. The question is: can your business survive without it? Talk to your broker about adding this valuable coverage to your insurance portfolio.

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