Employment Practices Liability Insurance
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quick highlights
EPLI covers the company and employees from lawsuits for misconduct
Harassment, discrimination, and wrongful termination claims are at an all time high.
Small businesses can be bankrupt from the legal defense costs of a lawsuit even if they win
Employment practices liability insurance, also called EPL insurance or EPLI, helps to protect companies against allegations of wrong-doing made by their employees.
EPLI can help offer protection in case of claims of harassment, wrongful termination or discipline, failure to employ or promote, mismanagement of employee benefits, breach of contract, and discrimination.
What Is Employment Practices Liability Insurance and What Does It Cover?
An employment practices liability insurance policy protects the business from lawsuits based on misconduct alleged against an employee.
This policy will cover the company from a wide range of lawsuits, such as, sexual harassment, wrongful termination, or even breach of contract.
Although it's unpleasant to think about, it does occur that employees take legal action against the companies that employ them.
The losses related to such lawsuits can be enormous.
For example, the average out-of-court settlement for a discrimination claim is an estimated $40,000.
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While this may not be much for a large corporation, it can bankrupt a small business.
Employment practices liability insurance can help cover the cost of damages like settlement payouts and associated legal costs.
Most EPL policies will cover the company in general and management personnel, employees, directors, and officers.
The overall aim is to reduce any financial repercussions that may occur as a result of employee allegations.
Many EPLI providers will further offer tools and training designed to minimize the risk of a potential employee claim.
For example, risk mitigation measures might include writing detailed employee handbooks and providing staff training on topics like inclusivity.
What Types of Businesses Need Employment Practices Liability Insurance?
Any business with employees could benefit from employment practices liability insurance.
Even if you run a "mom and pop shop", like a retail shop, with just one or two workers, all it takes is one lawsuit to endanger your company financially.
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The more employees a company has, the greater the likelihood of a lawsuit and the higher the risk.
EPL providers can advise on the extent of coverage recommended depending on the number of employees.
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