Posted November 5th, 2018 by Jason Metz
Employment practices liability insurance, also known as EPLI, covers a business when employees say their legal rights were violated. The U.S. Equal Employment Opportunity Commission (EEOC) received 84,254 workplace discrimination complaints and secured $398 million in settlements for the victims in 2017.
What does employment practices liability insurance cover?
EPLI covers legal costs for judgments, out-of-court settlements and your legal defense, whether your business wins or loses the lawsuit. Examples of lawsuits brought against businesses include:
- Discrimination based on age, disability, race, religion, sex or any other factor.
- Failure to employ or promote.
- Mismanagement of employee benefit plans.
- Violation of the Family Medical Leave Act.
- Other employment-related issues such as wrongful discipline or wrongful termination such as a firing someone after a false positive of a drug test.
Employment practices liability insurance cost
The cost of EPLI depends on several risk factors, including:
- Type of business.
- The number of people the business employs.
- Any history of employee lawsuits.
- The percentage of employee turnover.
- Whether or not the business has established rules and procedures in place.
Tips to prevent employment practices liability lawsuits
There are several steps a business can take to reduce the possibility of an EPLI lawsuit. These can include:
- Having personnel policies. Make sure all policies are in writing. Policies might include job descriptions for each position and employee expectations. It's a good idea to have these policies in an employee handbook and visibly posted in the workplace. Make it clear what behaviors are not permissible and educate the staff. You may want to include an employment-at-will and an equal opportunity statement in the employee handbook.
- Having a zero-tolerance policy. Make it clear the company will not tolerate harassment or discrimination.
- Having procedures in place. Have clear written direction for employees to report disputes and state that they will not be punished for doing so.
- Documenting disputes. If there's an employee dispute, it's a good idea to document the issue and the steps taken to address it.
The U.S. Equal Employment Opportunity Commission has tips on creating employee policies.
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