Most small business owners know about core insurance policies such as general liability, property and workers’ comp. But how can you protect the business from increasingly common lawsuits brought by current and prospective employees? The US Equal Employment Opportunity Commission (EEOC) reported nearly 100,000 employee claim filings in 2012. Today, that number has risen to 500,000, an increase of 400%.
Employment practices liability insurance (EPLI) is liability insurance that covers legal costs and associated expenses your business might incur during litigation of a lawsuit claiming harassment, discrimination, wrongful termination, and more.
So what if …
… a newly hired manager makes unwelcome overtures to another employee while at the office? The newly hired manager could be sued, but so could your business as the legal entity governing the actions of its employees on the job. You could immediately fire the new manager and issue an immediate apology to the harassed employee, but your business is still vulnerable to being sued for a circumstance outside of your control.
… you need to defend your business against a baseless claim by a prospective employee? Let’s say you interview two highly qualified prospects for a job opening and your first choice accepts. After delivering the unfortunate news to your second choice, you receive a summons to appear in court and defend your business against a discrimination claim from a person you never even hired.
… your business loses a sizable contract and you’re forced to downsize? As it happens, the employee you’re forced to let go is diagnosed with a serious illness and sues, claiming the termination is more a matter of your business saving on health insurance than the contract loss.
What ifs like these affect small businesses every day. EPLI will protect your business from the legal costs, damages, and other related fees throughout the litigation process.
It’s very hard to predict whether your business will be targeted by a lawsuit. But it’s worth considering that employee and prospective employee lawsuits are becoming more prevalent. If your business is sued by a current, prospective, or former employee for circumstances beyond your control, the cost of not having EPLI can quickly outweigh the annual premium expense. Even cases that are dismissed have an average cost of $10,000 to $15,000 in legal fees.
The cost of EPLI insurance depends on several factors, such as business size and employee turnover. However, most small businesses can get coverage for between $800 and $3,000 annually, with $1,200 being the average.
Learn more about EPLI protection and the confidence it provides in shielding your business from unforeseen claims brought by your employees.
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