Why You Need Employment Practices Liability Insurance (EPLI)

Whether you’re dealing with existing employees or prospective employees during the interview process, every time your business interacts with people it faces the risk of an employment claim. For these situations, you need Employment Practices Liability Insurance (EPLI).

Some of the typical claims brought against employers allege:

• Discrimination (based on sex, race, age or
  disability, for example)
• Wrongful termination
• Harassment
• Other employment-related issues, such as failure
  to promote

Numerous federal laws specify the types of claims that your business may potentially face:

• Title VII of the Civil Rights Act of 1964, which
  prohibits discrimination based on race, color, religion, national origin and
  sex. It also prohibits sex discrimination based on pregnancy and sexual
  harassment.
• The Equal Pay Act of 1963, which prohibits employers
  from paying different wages to men and women who perform essentially the same
  work under similar working conditions
• The Civil Rights Act of 1966, which prohibits
  discrimination based on race or ethnic origin
• The Immigration Reform and Control Act of 1986,
  which prohibits discrimination based on national origin or citizenship of
  persons who are authorized to work in the United States
• The Americans with Disabilities Act of 1990,
  which prohibits discrimination against persons with disabilities
• The Bankruptcy Code, which prohibits
  discrimination against anyone who has declared bankruptcy
• Equal Employment Opportunity Act of 1972, which
  prohibits discrimination against minorities based on poor credit ratings
• The Age Discrimination in Employment Act, which
  prohibits discrimination against individuals who are age 40 or older

Unlike large corporations which have high employment practices insurance coverage limits, large human resource departments and legal staff, small and new businesses are the most vulnerable to employment claims.

In addition to carrying employment practices liability insurance, taking these steps can also reduce your risk:

1. Develop an employee handbook detailing your
   company’s workplace policies and procedures, including attendance, discipline
   and complaints. The employee handbook should also contain an employment at-will
   statement and an equal employment opportunity statement.
2. Create a job description for each position that
   clearly defines expectations of skills and performance.
3. Conduct periodic performance reviews of
   employees and carefully note the results in the employee’s file.
4. Develop a screening and hiring program to weed
   out unsuitable candidates on paper before calling them to interview in person.
5. Use an employment application that contains an
   equal employment opportunity statement along with a statement, that if hired,
   employment will be “at-will.” This means their employment can be terminated at
   any time, for any reason or for no reason at all, with or without notice. Also
   ensure that your employment application does not contain any age indicators,
   such as date graduated high school, as this could increase your risk for age
   discrimination claims.
6. Conduct background checks on all possible
   candidates.
7. Institute a zero-tolerance policy regarding
   discrimination, substance abuse and any form of harassment. Make sure you have
   an “open door” policy in which employees can report infractions without fear of
   retribution.
8. Create an effective record-keeping system to
   document employee issues as they arise, and what the company did to resolve
   those issues.
9. Review potential loss exposures with your
   insurance agent and purchase adequate employment practices liability insurance.
   

For more information on EPLI, please contact us.

[Adapted from Nationwide Insurance]