Claims for wrongful practices can be costly, so your business needs to be protected.
From hiring new workers to assigning duties, each of your decisions affects employees in a unique way.
Although these actions are critical to running your business, they also create exposures that could lead to costly claims by employees or government regulators. Even if they are not warranted, claims for wrongful employment practices can disrupt operations, damage your business’ reputation, hurt employee morale, and negatively impact your bottom line.
Thankfully, businesses can rely on employment practices liability (EPL) insurance to protect against a wide range of wrongful employment practices claims including wrongful termination, discrimination, sexual harassment, and retaliation.
For examples of what can happen, look at the following scenarios.
Claims Scenario No. 1:
An industry supplier that relies heavily on the performance of its salespeople.
The firm employs several salespeople who, when performing at a high level, contribute greatly to the company’s bottom line. One such salesperson, who had put up great numbers in the past, saw a marked decline over the last few years. In addition, this salesperson had become increasingly hostile toward some of his customers.
After frequent warnings and poor performance reviews, the salesperson was let go. However, this salesperson quickly fired back with a wrongful dismissal lawsuit, claiming he had been fired based on his age. Cases like these can often fetch well over $100,000.
EPL insurance in action:
One of the key benefits of EPL insurance is how it responds to actual and alleged acts. In this example, EPL insurance can provide ample defense cost coverage, which in turn, protects a company and its directors and officers.
What’s more, the type of claims EPL policies respond to are vast. In fact, EPL insurance can help businesses fight claims related to breaches of contract, wrongful terminations, and non-compliance with employment laws.
Claims Scenario No. 2:
Take All Complaints to Heart or Get Taken to Court
A small business with only a few employees.
A small company employs just 10 workers, most of who are male. While the staff members seem to get along from the employer’s perspective, one of the company’s few female workers expressed private concerns to her manager.
Specifically, the female employee felt uncomfortable with the way her male peers spoke to each other when they were around her. In addition, she felt that she was unfairly overlooked for a recent promotion due to her sex.
Because the employer felt this employee wasn’t being treated any differently, they didn’t take any corrective action or address any of her behavioral concerns. As a result, a sexual harassment lawsuit was quickly filed against the company.
EPL insurance in action:
Sexual harassment cases are becoming increasingly common and can affect businesses of all sizes. While organizations need to take reports of harassment seriously, EPL insurance can help organizations respond effectively to such claims.
Furthermore, many policies provide additional resources that companies can use to boost their risk management practices. Notably, EPL insurance can connect businesses to human resources consultation, which can be invaluable when avoiding legal action.
Learn More About EPL Insurance
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.
Claims for wrongful employment practices are on the rise and often lead to business interruptions and costly claims. To truly protect your organization, it’s critical to seek EPL insurance. To learn more, contact your insurance broker today.
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