Employment Practices Liability Insurance
Business today is risky indeed. Some of the biggest risks New Jersey businesses and beyond face come from their employees – at least when it comes to liability. Employment practices liability claims can be made by existing employees or past employees alike and they can be made for a wide variety of reasons. That is why any business that hires employees, no matter how big or small, needs to make sure it has the protection of employment practices liability insurance, or EPLI.
What Types of Protection does EPLI Insurance Provide?
Businesses are legally required to adhere to certain practices when it comes to hiring, treating, and protecting their employees. This includes preventing physical harm as well as emotional harm.
The types of claims specifically covered by employment practices liability insurance include:
- Wrongful termination
- Sexual harassment
- Negligent hiring, promoting, or compensation practices
- Invasion of privacy
- Emotional distress
- Breach of contract
- Wage and hour
- Hostile work environment
- Libel or slander
EPLI coverage protects your business by helping to cover the legal costs of defending the business against these claims as well as any judgments awarded against the business. Of course, this assistance is subject to deductibles and policy limits.
There are some exclusions to keep in mind when it comes to employment practices liability coverage. These exceptions include things like major workforce reductions, acquisitions, and mergers. Criminal conduct is also typically excluded from coverage.
Preventing Employment Practices Claims
These types of claims are often greatest during times when jobs are scarce. There’s little a single business can do about that. During times of growth and abundance, however, there are many steps businesses can take to protect themselves in the event of employment practices claims made against them as well as to reduce the likelihood that claims will be made.
1) Document everything. Every ounce of praise and censure you offer employees should be documented and in employee files. Further, employees should be aware of what is in their files at all times.
2) Create standards of behavior in the workplace and follow them.
3) Make sure every employee knows the proper chain of events that follows a claim for all parties – including the proper chain of command for making claims – especially if the immediate supervisor is the one the claim of misconduct or inappropriate acts is against.
4) Treat all employees fairly. Most of the time these claims come about as the result of an employee feeling as though he or she was not treated fairly.
5) Purchase employment practices liability insurance. No matter how many steps you take to prevent these claims, the odds are good that your business will be subject to at least one claim in its lifetime. Legal fees alone can take a big bite out of business profit, before any awards have been made. This insurance can help with legal expenses and award payments, saving your business a pretty penny.
Work with an independent insurance agency, like Otterstedt Insurance Agency, to determine the right amount of ELPI coverage to meet the needs of your business. While you don’t want to pay for more coverage than is necessary, you certainly do not want to be caught without enough coverage to meet those needs.
Working with a reputable insurance agency can also help you understand the somewhat unique way that employment practices liability coverage works. Since files can be claimed by past employees and present employees, most policies operate on a claims-made basis meaning that they cover claims that are made while the policy in effect or within a specified period of time identified within the policy. It’s important to know whether the policy you purchase offers retroactive coverage for prior acts.