Why You Need Employment Practices Liability Insurance (EPLI)

BPJ Employment Practices Liability Insurance

With increased government regulation related to employment issues it’s easy to see why carrying Employment Practices Liability Insurance would be a good idea for most employers.

In employment practices liability insurance, 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.

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:

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.

Reducing the Risk

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 Employment Practices Liability Insurance or any commercial liability insurance, please contact us.