Why EPLI is More Important Than Ever in 2018

In the age of radical “social justice” movements, savvy business owners understand they should be evaluating their potential exposure through Employment Practice Liability Insurance (EPLI). Allegations of sexual harassment aren’t just restricted to the entertainment, political or media world any longer; business owners (and risk managers) of both large and small organizations must prepare for the internal and external damage that such claims can bring to an organization in terms of sales, reputation, and finances. It seems that all it takes is a perception of hidden wealth to attract lawsuits.

Small or new businesses, although not often a target, are the most vulnerable to these type of employment claims simply because they don’t have the resources, time or budget to secure the proper type of coverage, and they typically lack a legal department (or even an employee handbook) that would detail policies and procedures that guide hiring, disciplining, or terminating employees.

EPLI provides coverage for employers against lawsuits concerning a variety of issues ranging from sex, race, age, or disability to wrongful termination, retaliation, and sexual harassment. EPLI also covers other employment-related issues such as invasion of privacy, failure to promote, deprivation of career opportunities, and negligent evaluations. If you’re not sure if your company is adequately covered with this type of insurance, it may time to seek some assistance from an HR professional.
When are you at risk? The answer is simple: From the moment you interview a prospective employee. The cost of insuring your business for EPLI coverage depends on a variety of factors, such as:

• The type of risk your business presents
• The number of people you employ
• If you’ve had prior suits lodged against the company
• The percentage of employee turnover
• If you have established rules and practices in place

Depending on the size of your company, EPLI can be offered as an endorsement to a Business Owner’s Policy or a General Liability Policy. Although EPLI is available as stand-alone insurance coverage, it is also frequently sold as part of a management liability package policy that provides directors and officers fiduciary liability insurance.

Most HR experts agree that the best way to reduce risk is to have no employees. This can be facilitated by outsourcing your employees to a PEO. Even though in almost all states, the “co-employment” option still involves some employer risk, it helps to have a professional partner to help defend lawsuits.

To lower your employment practices liability risk, consult with EmployerNomics or another HR outsourcing professional. If you want to do it yourself, you should make sure you are fully compliant in these areas:

• Written employee handbooks detailing workplace policies regarding attendance, discipline and complaints
• Written Safety Program with regular meetings
• Job descriptions that clearly define expectations of skills and performance
• Periodic employment performance reviews
• Employment applications that contain proper wording regarding EEOC statements, at-will employment and age indicator information such as high school graduation dates
• Employee screening and hiring procedures to prevent unsuitable candidates from being interviewed and hired
• Zero tolerance policies regarding discrimination, substance abuse and harassment
• Certified Employee Assistance Program
• Open door and whistle blower policies in which employees can report infractions without fear of retaliation

And, of course, it should go without saying that these details regarding potential loss exposures need to be discussed with your insurance agent so that the proper amount of coverage is purchased. You might also consider that a PEO or other outsourcing solution can help you by removing the risk, or at least sharing it with a group that does HR professionally.

Employment discrimination laws have been around since 1964 when the Civil Rights Act of 1964 was signed into law. Keep in mind though, that something like 18,000 new lawyers graduate from law school every day. They are looking for something to do. Don’t let it be your business.