EPLI May Not Be Enough
Many insurance agents will tell you that an EPLI policy will protect you. This may or may not be the case. Consider that most of these have rather high deductibles and low limits. For example it’s very common to see a $25,000 deductible and a $500,000 maximum payout. EPLI may not be enough for some employers.
Hiring People Means Taking On Risk
Once you have found the right people to staff your business, you hire and train them and think you’re all set. Well you might be surprised at all the different ways that as an employer, you might be liable for the actions of those employees. Unfortunately there is even a good chance that eventually one of your employees will sue your business. All businesses that hire staff should have some sort of coverage or strategy against employee lawsuits. A professional employer organization (PEO) may reduce that risk by displacing the liability.
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Over the last 20 years employee lawsuits have risen roughly 400%. Wrongful termination suits have increased more than 260%. Employee lawsuits are more than just an inconvenience; they are an expensive distraction that can erode productivity and morale. Over 40% of employee lawsuits are brought against private companies with less than 100 employees. That said, did you realize that you can be held liable for the conduct of your employees? In the eyes of the law, employers are seen as directing the behavior of their employees. As such, they must share in the results of their behavior, good or bad. When someone is injured or harmed, who is most likely to pay – the employee or the employer?
When is the Employer At Fault?
The rule of thumb is that a negligent act or omission by an employee done in the course of employment, authorized by the employer, or so closely related to an authorized act that the employer is held responsible. There is a significant difference between an employee that causes a job-related accident and an employee who causes an accident (while on the job) that is unrelated to his or her employment.
Detour v. Frolic
Courts sometimes use the terms “detour” or “frolic” to signify the difference. A detour is a deviation from explicit instructions but so related to the original instructions that the employer will still be held liable. A frolic, on the other hand, is simply the employee acting in his or her own capacity rather than at the instruction of an employer.
Traps For The Employers
Other types of employer liability involve worker’s compensation when a work-related injury occurs and negligent hiring, such as an employer carelessly hiring a criminal for a job that the employer should have expected could expose others to harm. If you become aware of something that could be a problem after the fact, then you must address the matter immediately to avoid negligent retention liability.
What Can You Do?
There are so many different areas of potential liability for employers, consultation with the right HR Outsourcing Consultant is critically important. These professionals will ensure you have the proper written policies in place as well as make sure you have sufficient procedural protection. Don’t be one of the roughly 7 out of 10 businesses that don’t carry enough Employment Practices Liability protection.