Understanding Why Your Business Needs EPLI

Understanding Why Your Business Needs EPLI

There’s no foreseeable end to the rising frequency of claims against employers, including sexual harassment, wrongful termination, and retaliation. Even small businesses face the risk of such accusations day-to-day.

EPLI or employment practices liability insurance is a business insurance policy that covers employers for various employment-related claims by former, current, and prospective employees. Third parties can also file these claims against companies.

What is Covered Under EPLI?

EPLI covers multiple employment-related issues, including:

  • Wrongful discharge
  • Discrimination (basis includes gender, sexual inclination, race, etc.)
  • Sexual harassment
  • Retaliation

Some EPLI policies cover other employment-related issues like defamation and breach of employment contracts. However, coverage doesn’t usually include claims such as:

  • Bodily injury/property damage
  • Workers’ compensation claims

Does My Business Need EPLI?

You should be concerned about the risk of employment practices liability if you’re a small business. In 2020, employees successfully filed 70,804 discrimination claims against businesses and government agencies, resulting in over $439 million in compensation for the victims.

If any of your employees faces an employment-related accusation, it could cost them around $125,000 to defend themselves in court. The cost can be too high, even when the claim is baseless. To cushion your small business against such financial loss, consider investing in EPLI. The policy can pay to defend your company in court and cover settlement for the complainant.

How to Increase Protection for Your Business

You can minimize the probability of facing an employment practices liability claim by:

  • Creating proper company policies

    Create a clear company policy on equal opportunity employment, discrimination, retaliation, and harassment. Also, let all employees know that they can report any employment-related malpractice right away, whether the perpetrator is a co-worker, supervisor, or senior manager.

  • Include policies in your employee handbook

    It’s important that you effectively communicate your anti-discrimination policies throughout your organization. You can publish the rules in the employee manual and distribute them to all employees, including new hires. Make certain that your company doesn’t tolerate specific behavior that could trigger a liability lawsuit.

  • Train management and other employees

    Training senior employees enables them to understand your policies and how to uphold and reinforce them in your company. In some states, regular sexual harassment prevention training may be required by law. Make sure your ongoing employee training programs on this subject satisfy relevant state or local standards.

    You can create engaging programs, such as lunch and learn, to address a specific anti-discrimination/harassment issue, one at a time. Alternatively, invest in immersive top-leadership seminars or retreats to educate company management on this subject.

    Once you’ve provided training to managers, you should create opportunities for them to share their knowledge with the other employees. Training on company policy should be mandatory for new hires as well. You can then document and track progress by requiring successful participants to acknowledge receiving training in writing.

How Spotlight Insurance Agency Can Help

Even after doing your best to guarantee fair treatment for all workers in your organization, you may still face discrimination or other wrongful employment practices lawsuits. The experts at Spotlight Insurance Agency can help you protect your company with the right business insurance policy. A typical EPLI policy can provide as much as $1 million per claim with an aggregate limit of $5 million per year. Contact us today to discuss your EPLI coverage needs!