EPLI – Employment Practices Liability Insurance for Small Businesses
What is EPLI?
EPLI stands for Employee Practices Liability Insurance. It is a form of commercial insurance that helps protect your business from incidents regarding the employment process.
What does it cover?
Though coverage varies from policy to policy, these are some common employee lawsuits that EPLI may cover:
- Sexual Harassment
- Mismanagement of benefit plans
- Wrongful infliction of emotional distress
- Wrongful discipline
- Breach of the employment contract
- Negligent evaluation
- Deprivation of a career opportunity
- Wrongful termination
An Employee practice liability insurance policy may help pay for the costs associated with defending a lawsuit and any resulting settlements. EPLI can help cover legal costs as well. However, it does NOT usually cover punitive damage. It also does not cover civil or criminal fines. In addition, EPLI does not cover the liabilities that your other policies would cover. This includes workers comp or professional liability.
What can I do to lower my risk of employment liability?
Like all other forms of insurance, the best bet to avoid employment liability is to take steps to prevent it. These are some simple measures you can take to help prevent any employment issues within your company.
- Talk to your insurance agent about getting appropriate EPLI coverage. Disclose any potential danger areas within your business and work with your agent to figure out the coverage that will best suit your company.
- Create an employee “guide book” or employment guidelines and behaviors. Outline the business procedures, expectations, and policies. By having a document with signed consent and clearly outlined details of appropriate employee behavior, the people in your company will have a clear idea of what behavior is not tolerated.
- Identify any unsuitable candidates during the interview process. Before calling them in for an interview, thoroughly review their application. By figuring out what candidates are not well suited for the job, you can help lower the risk of hiring a poor employee. You should also perform background checks before hiring anyone.
- Create a clear job description. Each job description should include the necessary skills, expectations, and responsibilities.
- When hiring new employees include an equal opportunity statement and an “at-will” statement. An at-will statement means that you are able to terminate an employee at any time for any reason. Make sure that on your employment application there are no age indicators.
- Conduct regular performance reviews. Document employee performance and track their performance over time. It’s an easy way to hold you and your employees accountable.
- Record any employee issues that arise and the steps your company took to resolve the situation.
- Show your employees the steps and actions to take if they feel as though they have experienced sexual harassment or discrimination. Make it clear that these behaviors are not permissible.
What is the cost of EPLI coverage?
The cost of getting EPLI can vary depending on your business. This could include the number of employees your business has, previous lawsuits against your company, employee turnover rate, etc. EPLI can also take various forms – it can be an endorsement to a Business Owners Policy (BOP), part of a general liability policy, or it can be on its own. Like other types of commercial insurance, EPLI is written by a claims-made basis. All this means is that the incident must have occurred during the coverage period.
Talk to your insurance agent to discuss an EPLI policy and coverage. It’s always best to be prepared in case something happens. Lawsuits can be huge financial burdens. An EPLI policy can help to protect your business financially.