As a business owner you make decisions every day that effect and impact your employees. However, many of those decisions you make, from hiring to firing, could lead to a potential employment practices claim if not handled correctly.
Employment practices liability insurance (EPLI) protects businesses against claims by their employees or former employees who claim that their legal rights as employees are violated. The coverage helps pays for defense and any judgments that could potentially be awarded.
An Employment Practices Liability policy typically covers the following incidents:
The cost of coverage is based on a number of factors including gross sales, number of employees, past claims, and industry type. The premiums are minimal for the amount of coverage provided. Coverage also may be available through your Business Owners Policy (BOP) so make sure to ask your agent.
There are a number of proactive steps you as a business owner can take to prevent or reduce the impact of employment practices claims. We recommend the following to all businesses:
Almost every employment practices liability policy is written on a claims-made basis. This means that the claim must have occurred during the coverage period. Therefore, it is important that you maintain coverage or purchase a tail policy if coverage is dropped as many employment practices claims are brought about months after an employee has left the company.
Questions to Ask Your Agent