A kind of liability insurance covers employers against claims of poor employment practices. Insurers call this employment practices liability insurance. It's often referred to as EPLI. U.S. companies already spend $2 billion a year on this kind of insurance.
It's hard to avoid stories about sexual harassment scandals in the news these days. Industry watchers expect the demand for EPLI to increase as a result.
What Does EPLI Cover?
Policies may vary. EPLI usually protects companies against claims of harassment, discrimination and other improper employee practices. For instance, employees may claim a company passed over them for a promotion because of their gender or ethnic group. In other cases, workers may say that a manager bullied or propositioned them.
Companies can open themselves up to these kinds of claims as early as the first interview. Some candidates may say that the manager did not hire them because of a disability that would not impact job performance. Companies can rely upon EPLI insurers to help fund a defense, a settlement, or a judgment. Some insurers also offer programs that help their clients reduce the risk of claims.
Which Companies Need EPLI?
It's common to see news about harassment claims against famous people. Yet, Hollywood isn't the only places where people make harassment claims. These stories may get reported upon more because famous names engage an audience.
Last year, the U.S. Equal Employment Opportunity Commission (EEOC), resolved almost 100,000 cases. The most common reason for these cases include incidents of retaliation and discrimination because of race, gender, and disabilities. These cases resulted in payments of over $480 million. They involved private and government employers. Claims can happen anywhere.
Stephanie Gironda works as an employment attorney. She said that employee claims have grown so common that they are almost regarded as a normal part of doing business. Neither employers nor employees think this is good news. Companies have begun to buy insurance to protect themselves against this risk just as they do for many other risks.
How to Reduce the Risk of Employee Claims
Small businesses may not think they need strict policies about the way people should treat each other. In some cases, managers and business owners may not even understand the problem. Proactive companies will take steps to educate managers and employees about proper behavior. Even small companies can suffer from claims. Large companies usually do more to formalize policies and educate their employees.
A consultant, employment lawyer or insurance company may offer resources to help companies develop fair policies. At the same time, no employer can control everybody's behavior at every moment. EPLI protection remains an important part of your business priorities.