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Who Needs EPLI Insurance Coverage

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Lawsuits over employment practices are on the rise. Wrongful termination, sexual harassment, discrimination, and retaliation cases are making their way through the courts, all the way up to the Supreme Court.

Last year the Equal Employment Opportunity Commission (EEOC) helped U.S. workers receive more than $480 million in compensation for discrimination cases alone. The EEOC currently has a solid record of winning 90.6% of cases against employers.

Does your company need coverage for employment practices issues? Let’s take a closer look.

SEE ALSO: What is EPLI Insurance?

EPLI Basics

Employment Practices Liability Insurance (EPLI) can reimburse your company when someone sues you. It covers defense costs, settlements, and judgments associating with fighting the case, whether you feel that you’re in the wrong or not.

The main types of claims involved are:

  • Discrimination: Treating people differently based on race, religion, sex, gender identity, disability, age, origin, health status, and so forth.
  • Sexual harassment: Unwelcome sexual advances, threats, favors, or other conduct initiated as part of employment.
  • Wrongful termination: Ending employment in an unlawful way.
  • Negligent evaluation or supervision: Evaluating or supervising an employee in an unlawful way.
  • Retaliation: Taking negative actions toward someone based on protected acts like whistleblowing, lawsuits, and following the law.

Who Needs EPLI?

All businesses - big and small - should have EPLI insurance to protect themselves against risks. If you have just one employee, you are at risk for employment lawsuits.

The Insurance Journal found that just 25% of companies who should buy EPLI actually buy it. The most common reason was the mistaken belief that they would never be sued.

Untrue. Statistically speaking, any business that exists for more than 5 years will face a lawsuit at some point.

In fact, not only are lawsuits on the rise, but defense and settlement costs are rising too. The average EPLI claim costs a small business $30,000 to $75,000 to settle out of court and $217,000 in court judgments. That’s a bitter pill to swallow for a small or struggling company.

SEE ALSO: 5 Facts You Need to Know about EPLI Insurance

Signs You Need EPLI Now

If your company has any of these characteristics, it’s time for an immediate evaluation for EPLI insurance. You’re in the highest category for risk of employment practices lawsuits:

  • Never sued. If you’ve never been sued, you’re lucky. You may soon lose the numbers game.
  • High turnover. Disgruntled former employees are a high risk group for EPLI lawsuits.
  • Large workforce. For big employers, sheer numbers mean more exposure to risk.
  • Small workforce. For small businesses, just one EPLI lawsuit can bring financial ruin.
  • Health care plan. If you have a health care plan, you’re handling sensitive information that can foster lawsuits over privacy and discrimination.
  • Diverse workforce. Workplace diversity is a wonderful thing, but it can lead to interpersonal friction that sparks lawsuits.
  • Settled issue. If any employee has previously threatened or settled a case against you, you are at higher risk of future suits over issues like retaliation, the EEOC’s largest lawsuit category.

EPLI insurance provides a huge amount of protection for a reasonable investment. Click here to start a fast, free online quote that may help to protect your company.

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