EPL Insurance: Protecting Your Business from Risk
The Harvey Weinstein accusations (and those that have followed) have led to the most widespread debate we've ever seen regarding sexual harassment in the workplace. The tidal wave of discussion about this issue will undeniably create changes in the office environment, while leading to lawsuits both just and unjust - for years to come.
If you're a business owner and not familiar with Employment Practices Liability insurance (EPL or EPLI), today's the day to learn more to protect yourself and your business from potential liabilities.
EPL is an insurance for claims brought against an employer by both current and former employees. These claims can include age, gender and racial discrimination, failure to promote, wrongful termination and yes, sexual harassment to name a few.
Over the last 20 years, employee lawsuits have risen over 400% with almost half of these claims brought against private companies with under 100 employees. With average costs of settling at $75k and an average jury award at over $200k, the financial damages are extremely significant.
And these numbers don't factor in the distraction damage, a claim is sure to cause at the office. Gossip and “water cooler talk" can affect productivity and employee morale, causing an even greater cost.
It's also important to recognize that even if a lawsuit has no merit, the insurance company still has an obligation to defend the policy holder, and these costs can easily soar into the tens of thousands of dollars.
Is EPLI the same as Professional Liability Insurance?
When it comes to robust coverage against lawsuits, EPLI and Professional Liability Insurance may seem similar at a glance, but there are coverage gaps when looking closely at one or the other. When comparing the two, you can think of EPLI as covering claims from your employees while Professional Liability Insurance covers claims from your clients related to the quality of the goods or services from your company.
More specifically, EPLI will cover costs regarding claims in areas such as:
- Discrimination
- Sexual Harassment
- Wrongful Termination
- Defamation
- Breaches of Privacy
On the other hand, Professional Liability Insurance will cover costs regarding claims such as:
- Negligence
- Undelivered Services
- Shoddy or Substandard Work
- Oversights
Remember, EPLI is employee-focused while Professional Liability Insurance is client-focused. It would be good to look into where your coverage gaps are and to implement a complementary version of both so that you are prepared for any situation.
PEOs Can Lower Your Liability
Recognizing the lawsuit statistics in the first section and the importance of EPL, many Professional Employer Organizations (PEOs) and PEO companies now offer or include this insurance in their services.
PEOs can provide a wealth of assistance in shielding your company from these potential issues. A PEO company with Certified Human Resource Professionals (CHRP) can dramatically reduce the chances of a claim from ever being filed.
How? For starters, these professionals know your industry's statistics in relation to many of these claims. They will discuss your company's involuntary turnover history. For example, what are the reasons you've terminated employment with individuals the past few years - and what does the makeup of that group look like?
A review of your current employee handbook alone can be the difference in a claim being filed or not. Including company policies that address potential EPL issues can prevent consequences before they take place. The right PEO provider can even tailor a handbook for your business if you don't have one.
Find the Best PEO Fit For You
PEOs have had exponential growth for over 30 years because employers continue to be battered by increasing employment administrative burdens, face more employee lawsuits and have less time for sales, service and expansion.
But understand that just like you, each PEO company is uniquely different. They offer different services and benefits - and their costs vary dramatically. While some include EPLI in their proposal, others may offer it a la carte or not at all. You'll also find differences in deductibles and pricing for EPLI. Discussing your business needs and which PEO can impact those the most is how ELQ can help you maximize these services. Call or fill out our quote request form and start saving today.
