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Commercial Insurance: EPLI – Video Included [2020 UPDATE]

Employment Practices Liability Insurance (EPLI)

As a small business or startup owner, you are in a highly vulnerable position when it comes to claims of wrongful termination, discrimination, harassment and other employment-related issues.

It is vital that you understand all the problems that can arise in such matters, get the appropriate coverage with employment practices liability insurance, and ensure that you have the practices, policies and processes in place that protect your business from allegations and lawsuits.

In this guide, we’re going to explain everything you need to know – let’s take a closer look.

Screening new employees

Allegations can arise without even hiring a new employee – the whole process begins at the interview stage.

If you decide not to hire a candidate, it is possible for them to claim some kind of discrimination – unless you have protections in place.

It’s also vital to develop a proper hiring program, from where you can screen unsuitable candidates from their applications, so you don’t have to interview them in person.

If an interview does take place, and the interviewer recognizes potential issues or red flags during and following the meeting, it’s important they know they can speak with their human resources department and bring it to their attention.

Conduct thorough background checks on all potential employees, and make sure that you include an equal opportunity statement with your employment applications (and stand by it), and remove any sign of questions regarding age, sex and race to avoid discrimination claims.

To avoid many issues from an interview, avoid asking about any of the following subjects and characteristics:

  • Religion
  • Ethnicity, race or color
  • Age
  • Marital status
  • Smoking/drinking
  • Pregnant/kids

Hiring and firing new employees

It’s the same principle for when you hire a person, but are then forced to dismiss them at a later stage – they can claim for wrongful dismissal if you haven’t covered your back.

There are a few things you need to do to protect your business from these claims.

First, make sure you have EPLI commercial insurance, NJ to limit the losses you may be liable for.

Create an employee handbook, too, detailing your policies on everything from attendance and disciplinary matters to equal opportunity statements and complaints procedures.

Employees must have access to this handbook or a digital copy, and sign a contract stating they have read and understood all terms.

Post copies of corporate policies around the office in spaces such as bathrooms, break rooms, workspaces, kitchens, etc.

Make sure your job descriptions are accurate so that workers know where they stand, and form an environment where regular performance reviews are noted – and acted upon.

It’s also a good idea to create a zero-tolerance policy about harassment, substance abuse or discrimination so that if those situations arise, you will be covered should you need to fire someone.

Teach employees the steps to follow if they experience sexual harassment or discrimination from a supervisor.

Supervisors should be fully aware these actions are unacceptable and are fireable offenses.

Finally, good record-keeping is essential in case you need evidence at a later date.

This means conducting timely performance reviews and tracking results and feedback.

You should provide that feedback to the employee so they are not blindsided, and if the behavior continues, you have it on record that it was addressed.

This is particularly important for failure to promote claims.

Understanding EPLI and employment law

Your EPLI coverage cost will depend on a variety of different factors.

How many people do you employ?

Have you ever faced suits from employees/candidates in the past?

What is your employee turnover rate?

And do you have the relevant practices and rules – as outlined above – in place?

All these issues – and many more – will be taken into account.

Finally, it’s also critical to the health of your business that you have an understanding of employment law.

There are many different laws in place that protect the rights of workers and candidates, which cover all kinds of issues.

The list includes discrimination based on color, race, sex, religion and national origin along with discrimination against people with disabilities, declared bankruptcies, or poor credit ratings.

An understanding of employment law will help you form the right policies with the proper intricacies and give your business the protection it needs to survive – and thrive.

Other common claims and considerations

Claims

  • Mismanagement of employee benefit plans – this includes claims where employees state they were not given enough benefit options, or the options were not offered in their best interest. This also includes using outside consultants and fiduciaries
  • Invasion of privacy – Intruding into someone’s personal life without their consent. This can include filming or following off-hours and having misleading information exposed
  • Breach of contact – Broken on-paper agreements about terms and promises involving items such as bonuses, promotions, perks and more
  • Wage theft/hour law violations – Denying wages owed to employees for time worked, or overworking employees and refusing to pay overtime

Exclusions

There are a number of common exclusions in employment practices liability insurance.

Many of these occurrences will require separate policies or add-ons. They include:

  • Bodily injury – includes physical harm, sickness, disease and even death caused by another party
  • Intentional or dishonest acts – deception and spread of misinformation
  • Property damage – the destruction of public or private property

Businesses that need EPLI

Most professional businesses will benefit from EPLI coverage. They protect directors and officers, management teams, and employees.

Some businesses and industries that should have coverage include, but are not limited to:

  • Retail stores
  • Restaurants
  • Bars
  • Lawyers
  • Accountants
  • Insurance companies
  • Manufacturers
  • Fitness centers
  • Salons
  • Healthcare facilities
  • Auto repair shops
  • Food distributors
  • Transportation services
  • General contractors
  • Marketing agencies

If you have additional questions EPLI and if it’s the right fit for your business, contact us.