Employment practices liability covers unseen exposures that occur within the workplace between employees an third parties. In recent years the need for coverage has become more apparant due to the lawsuits being brought against businesses and their officers, directors, employees or managers. An EPLI policy generally covers the below listed areas:
1. Sexual Harrasement
2. Wrongful Termination
3. Age and Gender Discrimination
4. Emotional Distress and Mental Anguish
5. Failure to Promote
6. Race Discrimination
7. Wage and Hour
8. Invasion of Privacy
9. Defamation of Character
Unfortunately statistics show that most business’s do not purchase this relatively inexpensive coverage until claim has occurred. The defense costs alone, even in a frivilous claim, can be in excess of $10,000 dollars that an insured would have to pay out of pocket if a policy wasn’t in place. I know some of you may be thinking “oh my employees would never bring an accusation against us”, but let me provide an example where if a policy was in place, an insurance company would have paid out on the claim.
An office worker filed a claim for sexual harrasement and hostile work enviroment that caused her mental anguish, why, because according to her she was being discrimated against by her boss. This was all because he supposedly flirted with other women in the office she worked at, but he never approached her! In this case, discrimination was found, and the employer had to pay out of pocket as he didn’t have a policy in place.
Wage and Hour suits as well as Wrongful Termination are two other claim scenarios where EPLI coverage is readily needed. In the State of Washington, the law provides employers with at will discretion related to firings. Problem is, too many employers are firing individuals for cause and putting it in writing. This opens the door for an ex employee to pull their personnel file and if the company handbook was not followed exactly, they would have a persuable case. As for Wage and Hour claims, they typically arise where an ex-employee claims that they worked more hours then they were compensated for. Now that they are no longer employed they want the company to not only compensate them for the time but overtime as well.
As you can see, suits can be brought for a broad number of reasons. Even when the company you own or operate has done nothing wrong. The unforseen cost is in the defense. Whether you believe the claim has merit or not, the cost to defend can be substantial and truly an unneccessary financial hit.