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  • With the uncertainty of today’s economy, where employees are becoming more independent and knowledgeable, there has been a drastic increase in employment-related lawsuits, making employment practices liability insurance (EPLI) a must-have. EPLI covers businesses against claims made by workers that their legal rights as employees of the company have been violated. It protects a variety of different employee lawsuits, including claims of:

    • Sexual harassment
    • Discrimination
    • Wrongful termination
    • Breach of employment contract
    • Negligent evaluation
    • Failure to employ or promote
    • Wrongful discipline
    • Deprivation of career opportunity 
    • Wrongful infliction of emotional distress
    • Mismanagement of employee benefit plans

    Depending on the type of business you operate, and how many employees you have, along with various risk factors, the cost of EPLI coverage varies. This coverage will essentially reimburse your business against the costs of defending a lawsuit in court. The policy will still cover the legal costs if your company loses the lawsuit.

    Why This Is Important For Small Business Owners

    For small business owners, EPLI coverage is critical to have. Within the last five years, six out of 10 employers have had to deal with employment lawsuits. If an employee sues you for wrongful termination, you don’t have the money to protect yourself and your business like a larger corporation can. A lawsuit could incur hundreds of thousands of dollars in legal costs and attorney fees. Small to medium-sized businesses pay an average of $160,000 to resolve this kind of lawsuit.

    For a small business, that’s enough to take down your business, putting everything you’ve worked endless hours to achieve in jeopardy. If that’s not enough to get you to get this coverage, consider these five additional reasons:

    1. Employee lawsuits are growing
    2. Settlements are getting more expensive
    3. Big or small – all businesses face risks
    4. You can be fault-free; however, it will cost you
    5. Your current policy most likely doesn’t provide coverage 

    Luckily, there are ways in which you can prevent employee lawsuits from happening. It’s essential that you educate your managers and employees so that you minimize problems from the very beginning by doing the following:

    • Create effective hiring and screening programs; thus, you’re avoiding any discrimination throughout the hiring process
    • Hang corporate policies throughout the workplace
    • Ensure policies are written out in your employee handbook, making them very clear to all employees
    • Showcase what steps employees can take if they are discriminated against or sexually harassed by a supervisor 
    • Document everything while also showing the steps your business is taking to prevent and solve employee disputes

    While having this type of coverage is the first step in protecting yourself from these lawsuits, you must also focus on your company culture. Your culture should exhibit a safe environment where discrimination and harassment of any kind are not tolerated.

    Not Sure Where To Begin?

    We get it. You didn’t start your business to become a lawyer and protect yourself from employee lawsuits. That’s what professional employer organizations (PEOs) are here to help with. When you partner with a PEO like GMS, you gain access to HR experts that are trained to help business owners during these challenging times. While GMS offers EPLI as a line of coverage, we do so much more than that. To prevent these lawsuits, we take proactive measures. We help create handbooks stating all corporate policies and steps in which you and your employees should take in any situation. In addition, our HR experts work hand in hand with you and your business to mitigate employment risks and address any discrepancies. GMS takes on all the administrative burdens you don’t have the time or expertise to manage effectively. Contact us today to learn more.

  • Employment Practices Liability Insurance is an often overlooked form of insurance coverage for small business owners, and many do not realize its significance until it’s too late. EPLI protects employers from employee liability damages and defense costs from claims brought by any employee alleging claims such as sexual harassment, discrimination, wrongful termination, and retaliation.

    Image of a costly lawsuit that could have been prevented with Employment Practices Liability Insurance.

    Who Needs Employment Practices Liability Insurance?

    We live in an increasingly litigious society and employers must do everything they can to protect what they have worked so hard to build. The most vulnerable companies to an EPLI lawsuit are new or small businesses, typically due to the lack of handbooks and a legal department.

    The EPLI policy provided by GMS to its clients covers four major areas of concern: Discrimination, Sexual Harassment, Wrongful Employment Actions, and Retaliation. There are many subcategories to these titles that are ever increasing as employment law develops in the courts. Examples are wrongful termination, defamation, invasion of privacy, malicious prosecution, wrongful demotion, or failure to employ, promote, train or enforce workplace policies and procedures. 

    The Claims Journal provides a list of the top trending EPLI claims as of 2014:

    • Genetic Discrimination: The Genetic Information Nondiscrimination Information Act prevents companies from using genetic information to influence hiring decisions. 
    • Pregnancy Discrimination: The Pregnancy Discrimination Act prevents employers from any negative action taken as a result of an employee’s pregnancy.
    • Illegal Background Checks: Employers must notify candidates of the request in writing and notify them that the results will factor into their employment decision.
    • Unpaid Interns: The Department of Labor set standards for whether it is acceptable to have unpaid interns. If they are simply performing the tasks of a paid employee without any educational element, the DOL has deemed that they require monetary compensation. 

    The Cost of a Lawsuit

    Many fail to understand that their existing general liability insurance policies will not cover them in these events. The effects of these lawsuits can be financially catastrophic for a small business owner.

    Recent studies show the average cost to simply defend your company against a suit is $45,000. They go on to state that even though 75 percent of these are found to be “groundless.” the rest have an average jury award of $342,000.

    How GMS Can Help

    The GMS EPLI policy has a $50,000 deductible, with the first $25,000 responsibility on the client. There are specific notice requirements that must be met in order to trigger the coverage. A GMS client must advise its assigned account manager of facts or circumstances which may reasonably be expected to give rise to a claim. It has been our experience that swift fact finding and analysis by our HR professionals and legal counsel can effectively diffuse a claim before it becomes a matter that needs referral to defense counsel.  GMS will counsel the client to either fight the claim or negotiate a proper resolution where warranted. GMS has often shielded its clients from spending needless sums in legal fees and expenses through risk management services.

    As you can see, it’s of the utmost importance to make sure you are covered against such allegations. Contact GMS today to see how we can make your business simpler, safer, and stronger.

  • If you think bullying only affects children, guess again. According to a 2019 Monster.com survey, a whopping 94 percent of people said they were bullied in a workplace at some point. This trend has grown to the point where now states like Tennessee are implementing new statutes to combat the issue. Find out how Tennessee plans to tackle workplace bullying and what what you can do to protect your business.

    An employee being bullied at work.

    How Tennessee’s Anti-Bullying Statute Now Impacts Employers

    Tennessee’s efforts to have workplaces implement anti-bullying policies started back in 2014 with the adoption of the Healthy Workplace Act. This act incentivized employers to add these anti-bullying policies in exchange for some legal protection against potential litigation from bullied employees.

    The 2014 version of the statute only applied to state and local government agencies, but that changed on April 23, 2019 when Tennessee Gov. Bill Lee signed a bill that extended those protections to private employers in addition to government agencies. However, the statute doesn’t require employers to create an anti-bullying policy. Instead, it incentivizes them to do so for some legal protection.

    How does the statute protect Tennessee employers who add an anti-bullying policy? According the The National Law Review, “Employers that adopt a policy that complies with the act will be ‘immune from suit for any employee’s abusive conduct that results in negligent or intentional infliction of mental anguish.’”

    However, there are some stipulations for the adopted policy in order to gain the aforementioned legal protection, as the policy must meet one of two requirements. First, the employer can adopt the model policy published by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR). Second, the employer can create its own policy as long as it:

    • Assists employees in recognizing and responding to abusive conduct
    • Prevents retaliation against employees who report abusive conduct

    What Small Businesses Can Do to Protect Themselves and Their Employees from Bullying Cases

    While Tennessee’s changes to the Healthy Workplace Act give employers some optional protections against litigation, it isn’t the only state to do so. According to The Healthy Workplace Campaign, 30 states have adopted some form of healthy workplace bill. Regardless of whether your state has some optional protections or not, it’s important to take steps to address the situation for your company.

    Not only can bullying cause stress and anxiety for your employees, it can also open you up to potential litigation from victimized workers. Even if you personally didn’t bully the employee, that worker could argue that you ignored the issue or enabled it by creating an environment that fostered bullying. When the potential costs of a lawsuit could reach hundreds of thousands of dollars, it’s important that you protect your business from these potential dangers. Here are some steps you can to prepare for the future.

    Create your own anti-bullying policy

    A good anti-bullying policy can help your workplace even if your state doesn’t offer immunities from potential lawsuits like Tennessee. Having a policy in an updated employee handbook will not only help show that you made an effort to make your stance on bullying clear, it can also helps protect against both people claiming you’re partially responsible for bullying and any employees you need to discipline – or even terminate – for bullying.

    The specifics of your policy can depend on the laws in your specific state, but the Society for Human Resource Management provides a good template for an anti-bullying policy as a basis. It’s also important to involve your lawyer and an HR compliance expert to make sure you use the proper verbiage in your policy.

    Educate employees

    In addition to having a policy in your handbook, it’s also good to take a more active approach toward teaching your employees about anti-bullying practices. One such option would be a training and development program where an HR expert could come in and educate your employees about the steps you’ve put in place to talk about and prevent bullying. Not only will this increase awareness of your efforts to everyone in the company, it can also give them the means of reporting an issue in case one ever occurs.

    Get liability insurance

    While the steps above can help you limit the chances of bullying and show your company’s efforts to create an open, healthy workplace, there is still a chance that an employee may still file a liability lawsuit. Employment Practices Liability Insurance (EPLI) can help protect you against the financial ramifications of these lawsuits whether or not they’re warranted.

    Protect Your Business from Bullying and Other Threats

    Whether you’re dealing with bullying, a workplace injury, or some other issue, it’s important to make sure that your business is prepared for any trouble. However, that’s not so easy when you have to spend so much time and effort running your business. That’s where GMS can help.

    As a Professional Employer Organization, GMS provides comprehensive HR services for businesses of every size. Whether you need help handling payroll, risk management, or some other key function, our experts can help you prepare for the present and the future while you focus your efforts on growing your business. Contact our Tennessee office or one of our other locations today to talk to one of our experts about how GMS can help your business today.