Employing people comes with its rewards, but certainly can also have its challenges. Business owners can be subject to employment liability risks on any given day. Employment related claims can have a significant financial impact on a business. In fact, according to a 2017 Hiscox study, the average cost to defend and potentially settle an employment related lawsuit is roughly $160,000. That number is certainly higher today.
Employment Practices Liability insurance (EPLI) is insurance designed to protect a business from employment lawsuits brought on by former, current, or potential employees. The coverage provides protection against alleged discrimination, harassment, wrongful termination, retaliation and other employment related issues.
In addition to carrying an EPLI policy, other steps can be taken to help minimize the risk of an employment related lawsuit. Its important to have clearly written company policies, typically in the form of an employee handbook. Within the written company policy, items such as anti- discrimination, anti-harassment, anti- retaliation, equal employment, and others should be addressed.
Also, its important to ensure proper training of management and employees. California now requires that employers with more than five employees put each employee through a one-hour mandatory training. Managers are required to complete a two-hour training.
However, even with the proper precaution’s employers are still susceptible to employment related claims. Please ask your insurance agent for advice on if an EPLI policy would be right for you.