If your business hires employees, one of your main legal risks is that an employee can file a claim against your company. That's why most businesses with a staff benefit from carrying Employee Practices Liability Insurance (EPLI), which pays for legal costs when your company faces an employee complaint in court. Here's a look at EPLI claims and how this coverage protects your business.
Among the most common EPLI claims is the failure to offer work to protected classes, as described by the Americans with Disabilities Act (ADA). Protected classes of people include those who suffer from disabilities such as blindness, deafness, and epilepsy. The ADA calls for employers to make an effort to consider hiring qualified individuals with disabilities. At some point, someone might complain your company never employs handicapped individuals, but your EPLI coverage will pay for legal costs.
Another reason an employee can sue an employer is if they feel they've experienced discrimination in the workplace. This unfair treatment can be based on numerous factors, including ethnicity, gender, and sometimes age. An example of discrimination is when two employees have the same position and do the same work, but one gets paid less because of their race or gender. EPLI coverage pays for legal costs and settlements involved with discrimination.
This century has been a wake-up call for managers who tolerate harassment in the workplace. Sometimes even executives themselves can face accusations of sexual misconduct. While the best way to avoid these situations is to clearly emphasize zero tolerance for sexual harassment, if the case goes to court, your EPLI coverage will pay for it.
Wrongful Termination of Employment Employers must follow federal, state, and local laws that apply to them or face fines and other consequences. Wrongful termination occurs when an employer violates these laws or breaches a contract. If an employee has a contract with an expiration date and is terminated before the date, they may seek to recover damages. Another reason employees may file this claim is that they were terminated without any type of warning. EPLI generally covers each of these scenarios.
Retaliation, wrongful discipline, and misclassification are other types of claims that EPLI covers. Retaliation occurs when an employer punishes an employee for blowing the whistle on someone within the organization, which causes a shakeup. Misclassification happens when an employer tries to treat an independent contractor as an employee. Wrongful discipline can encompass any type of punishment considered inappropriate in business.
Understanding your risks as an employer is essential to business success. No matter whom you hire, there's always a chance an employee will become unhappy with the company at some point and try to collect what they consider mistreatment. Be aware of these common EPLI claims, and make sure you have sufficient coverage to reduce your risks. Contact us at Graystone Insurance Group for more information on securing EPLI coverage for your enterprise.
