Understanding Employee Practices Liability
What is employment practices liability insurance?
Known in the insurance industry as EPLI, employee practices liability insurance provides coverage to employers against claims made by employees alleging discrimination (based on sex, race, age or disability, for example), wrongful termination, harassment and other employment-related issues.
A risk that impacts everyone!
Business leaders make decisions each day on a range of issues including things like hiring, firing, compensation, promotions and the work environment. Every one of these decisions impacts your employees and, depending on the outcome, could result in a claim related to wrongful employment practices.
These claims can disrupt business, hurt morale, damage your reputation and lead to serious financial damages. Thankfully, employment practices liability insurance (EPLI) can provide organizations with protection from the above risks.
Unfortunately it is common that small businesses often underestimate this risk and do not carry coverage. This can be because they lack an employee handbook detailing the policies and procedures that guide hiring, disciplining or terminating employees.
Business owners are at risk from the time they interview a prospective employee to the time that they fire an employee.
Areas to review to help reduce the risk of having an EPLI claim:
- Assess your potential loss exposures with a experienced Risk Advisor.
- Develop a comprehensive employee handbook with workplace policies and procedures.
- Create job descriptions for each position.
- Conduct background checks on all possible candidates.
- Conduct performance reviews.
- Zero Tolerance policy regarding discrimination, substance abuse and harassment.
- Effective record keeping system to document employee issues as they arise.