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Harassment, discrimination and retaliation claims are nothing new in today’s workplace. But with the rise of movements such as #MeToo and TIME’s Up, these claims—particularly those related to sexual harassment—are becoming more frequent. 

In 2017, the United States Equal Employment Opportunity Commission received 84,254 discriminatory employment practices complaints. A staggering 60 percent of all businesses will be sued by an employee at some point in time. However, most companies don’t have the proper coverage in place help to protect themselves. 

That’s what makes Employment Practices Liability Insurance so critical.

What is EPLI? 

EPLI protects businesses against employee lawsuits including discrimination, wrongful termination, sexual harassment, invasion of privacy, wage and hour disputes, illegal background checks, pregnancy and more. It also provides protection against claims from third parties including discrimination, sexual harassment and invasion of privacy. While most businesses have general liability insurance and workers’ compensation policies, these do not include the type of claims covered by EPLI. Some policies may include a sublimit for EPLI, but this coverage is very limited. The best option is always to purchase a separate policy.

The Risks

In today’s litigious society, people are looking to sue first and ask questions later. In fact, businesses are more likely to be sued by an employee these days than to have a fire at their office. As a business owner or executive, the risks start from the moment a potential employee walks into the office for an interview. Employees and potential employees can sue a company for any number of reasons. 

Particularly in the field of construction, employees are often working very closely together. What people say and do to each other might be considered acceptable by one person but considered inappropriate by another. For example, something said in a joking manner between a group of employees on a jobsite can be misunderstood or deemed offensive by someone, resulting in a complaint to HR or the executive team. 

In the past, employees may not have shared their concerns for fear of retaliation but today, they are gaining the courage to report perceived instances of harassment or discrimination. Even if these claims turn out to be meritless or unwarranted, businesses are still responsible for defending themselves—which often comes with a hefty price tag and lost time. Any type of claim can open companies up to irreparable reputational damage and could negatively affect future projects, hiring and relationships.  The good news is that having an EPLI policy pays for defense costs. 

Protecting the Business

The best offense is always a good defense. With harassment claims expected to continue rising, having solid HR procedures in place is key and providing guidance and education to managers and employees can help minimize risk from the start.  For example, if a business holds regular safety or staff meetings on the jobsite or in the office, the company should take some time to review its HR policies and procedures to ensure they’re a top priority for all employees. Here are some other best practices businesses should follow:

  • use consistent hiring practices for each potential employee;
  • conduct background checks on all possible candidates;
  • establish employment policies and procedures for reprimanding and/or terminating an employee;
  • have an open-door policy to help employees feel more comfortable reporting harassment or other infractions without fear of retaliation or retribution;
  • implement a zero-tolerance policy towards discrimination, harassment and/or substance abuse;
  • institute a social media, email and communication policy to clearly outline what type of content is permitted to be sent and what employees can say/share online;
  • create a screening program to eliminate unsuitable candidates prior to calling and engaging them for an interview;
  • conduct regular performance reviews and document them in an employee’s file;
  • document all violations and incidents and keep this information in each related employees' files; and
  • require employees to sign a formal statement acknowledging they have reviewed the company’s policies and understand them.
What’s Covered? 

Even with top-notch procedures and policies, businesses are still open to liability. And rapidly changing technology and expanding communication channels have made it even more difficult for employers to protect themselves. Social media, email, texting and even drones are blurring professional lines and making claims more complicated than ever. Employees are free to use social media outside of the workplace, but the use of these platforms can lead to EPLI claims. Cyber bullying, sexual harassment, defamation of character and reputational damages are just some of the potential claims and lawsuits that can arise from employee’s activity on social media.  

As every business owner knows, insurance is a necessary evil. Having an EPLI policy in place is the only way to truly protect a company from the financial consequences of a claim—and acquiring a policy is critical for companies of all sizes. From employees horsing around on the job to age discrimination claims to sexual harassment, EPLI helps to keep the business safe. So, what’s covered? According to the Insurance Information Institute, EPLI protects against a variety of employee lawsuits, including claims of: 

  • sexual harassment; 
  • wrongful termination; 
  • discrimination based on sex, age, race, pregnancy or disability; 
  • breach of employment contract;
  • failure to employ or promote;
  • wrongful discipline;
  • negligent evaluation; 
  • deprivation of career opportunity; 
  • wrongful infliction of emotional distress; and 
  • mismanagement of employee benefits.
The Cost

The cost of EPLI coverage depends on a variety of factors including number of employees, amount of coverage needed, existing HR policies and if the company has ever had an EEOC complaint and/or lawsuit in the past. However, EPLI premiums far outweigh the potentially devastating cost of a lawsuit. The average cost of defending an EPLI case in court lands somewhere between $200,000 and $300,000 but if a company on the losing end of a lawsuit, the average amount of punitive damages awarded in employment cases is an astounding $2.7 million.

With changes in minimum wage and a growing job market, claims are bound to continue increasing making it critical to acquire EPLI insurance now. To ensure a business is properly protected, business owners should contact their insurance agent today to discuss their options. 


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