Protecting your company from potential legal risks is crucial for a successful and compliant workplace. In recent years, the number of lawsuits filed by employees against their employers has increased. While larger corporations often face the majority of these lawsuits, no business is entirely immune to such claims and the associated legal costs.
While there are numerous concerns regarding the workplace, clients, employees, and legalities, all of them can be costly to your bottom line and business reputation, making it crucial to implement proper safeguards. This is where Employment Practices Liability Insurance (EPLI) comes into play.
What Is EPLI?
EPLI is a type of insurance that provides coverage to employers against claims made by employees alleging discrimination, wrongful termination, harassment, and other employment-related issues. Potential claims can include sexual harassment, bias based on gender, race, age, or disability, wrongful termination, negligence, and more. Even if you win the case, plenty of legal costs are associated with these claims, which can chip away at your bottom line. EPLI can protect your business from these kinds of claims by helping to cover the legal costs and damages related to them.
What Can EPLI Help With?
Since EPLI coverage protects against employee lawsuits, it is often used to cover claims related to the Americans with Disabilities Act (ADA), the Equal Pay Act (EPA), the Age Discrimination in Employment Act, and other similar laws. It is important to note that having EPLI coverage does not exempt employers from legal obligations; instead, it serves to provide additional protection if a claim is made against them despite their compliance efforts.
This insurance typically covers legal and court administration fees, witness fees, and expenses related to court-ordered settlements or judgments.
Importance of EPLI Coverage
Cost reduction
Employing EPLI coverage is important for the employer and their business. When a company has a large number of employee-related claims against it, the costs for legal counsel, potential damages, and other lawsuit fees can quickly add up. EPLI coverage acts as a protective layer between your business and the accompanying lawsuit costs, ensuring that a single lawsuit doesn't jeopardize the company's bottom line.
Business protection
Small businesses don't always have the money or resources to protect themselves against lawsuits. EPLI coverage provides protection for a variety of claims, including negligence, discrimination, unfair termination, and other related issues. This comprehensive coverage ensures that businesses are protected against multiple potential legal threats.
Peace of mind
EPLI coverage allows you to operate a business while focusing on the safety and well-being of your employees. While having EPLI coverage doesn't guarantee a win in a case or lawsuit, it can provide peace of mind when a claim is filed. Knowing that your business can cover legal counsel and other potential legal or court fees allows you to focus on ensuring compliance, creating a safe and respectful work environment, and growing your business.
Tips For Reducing Employee Claims and Lawsuits
While it's impossible to prevent all claims, you can take steps to minimize the risk of EPLI lawsuits and discourage inappropriate workplace behaviors.
Continuously update your employee handbook.
Consistently updating your policies is a great way to ensure appropriate employee behavior. Implementing strong anti-harassment and anti-discrimination policies is also incredibly important to provide a respectful workplace. Consistent communication with employees can also help identify any necessary updates.
Provide training
By educating employees on proper procedures and best practices, you're arming them with the knowledge they need to interact with colleagues and within the workplace.
Run background checks
Conducting background checks on potential employees not only verifies their qualifications but also helps ensure the safety of your current team.
GMS & EPLI Coverage
While understanding and implementing EPLI coverage is a great idea, it can be a complex process. Luckily, working with a professional employer organization (PEO), like Group Management Services (GMS), can make the process easier.
Alongside our EPLI coverage, we provide additional services that can benefit your business. At GMS, our team will help you create a compliant employee handbook, develop policies for filing and responding to employee lawsuits, and assist in mitigating employment risks. We also offer training on anti-harassment, anti-discrimination, and other essential HR topics for both employees and business owners.
To learn more about EPLI coverage and how to implement it in your business, download our guide.