Is Your Business In Danger Without EPL Insurance?

EPLINo smart business owner would ever think of closing down for the day, turning off the lights and leaving with the front door wide open hoping that nobody would come in to steal their assets while they are gone. However, that is the exact situation a business is in when they do not have Employment Practices Liability (EPL) insurance. A business without this coverage has a huge hole or opening in their insurance protection portfolio!

What is EPL insurance?

EPL insurance protects businesses and individuals against losses arising from employment practice disputes involving current and former employees. Common claims include discrimination, sexual harassment, workplace harassment, wrongful termination, failure to promote, invasion of privacy, negligent evaluation, and wrongful discipline, to name just a few. Did you know that your business is at risk of an employment claim from the moment you interview a prospective employee? For example, if you decide, for whatever reason, not to hire the prospect, that individual could allege some sort of discrimination and bring up a statement or a question which arose during the interview process.

As expected, large corporations typically have substantial EPL insurance in place. However, small businesses usually don’t have this coverage and are often the most vulnerable to employment claims. That’s because they usually lack a company handbook, a legal department, or even an HR Department that would be responsible for hiring, disciplining, or terminating employees in strict compliance with all local, state, and Federal laws. An employee bringing an employment case has a 75% chance of winning with an average damage award of $388,128. However, even if your employee loses, it is not uncommon for legal fees associated with a lawsuit to exceed $250,000. When you spend that much on legal fees, it is hard to feel like you have won. So how can you, as a small business owner, reduce your risk of these claims especially given the economic climate we are in today?

1. Prepare an employee handbook detailing your business’ employment policies and procedures for all aspects of employment including procedures for disciplining or terminating an employee. Make sure that each employee is given a copy of the handbook, reads it, and signs a statement acknowledging their receipt of this handbook.

2. Conduct periodic performance evaluations of employees and note the results in the employee’s file.

3. Create an effective record-keeping system to document employee issues as they arise and including steps that were taken to resolve any issues.

4. Create a job description for each position that defines expectations of skills and performance.

5. Institute a zero tolerance policy regarding discrimination, substance abuse, and any form of harassment in the workplace. Also make sure you have an “open door” policy in which employees can report infractions without fear of retaliation.

6. Review your loss exposures with your insurance agent and purchase the right amount of EPL insurance for your business.

While these steps can’t completely eliminate the risk, they can certainly reduce the risk and help you to better defend your business if and when a lawsuit is filed by one of your employees. This is why it is so critical to speak with your insurance agent and fill in this gap in coverage by purchasing an Employment Practices Liability Insurance Policy.

- Ray Alvarez

No Comments Yet.

Leave a comment

I have been with Petschauer Insurance for a long time. My account executive Lori Halloran is like family to me: she is always there when I need her and is very knowledgeable and understanding. I wouldn’t go anywhere else for my insurance needs.
Vincent Falcone
I have worked with various individuals at Petschauer and have found each to be responsive, courteous, and thoughtful. Each year, the contact for my auto policy proactively seeks new bids and has consistently saved me money on my policy.
Ryan Huber
I have had the pleasure of working with various members of the Petschauer Team, both personally and professionally for 20+ years. And I couldn’t have done it without them. They go above and beyond. Heidi, Narima, Sherri and LuAnn don’t just bring to us the products they offer, they help me to understand the specifics and evaluate what makes the most sense for me, my family and my employees. I always feel I have a better understanding of an industry I have no understanding of so that I can evaluate the offerings in a smart way, cost effective way. They are proactive with renewals, allowing us the time to do our due diligence, evaluate our plans to be sure we’re properly covered and are always there to listen and help with special circumstances. Their kindness, caring and willingness to lend an ear when needed, really makes them stand apart from the rest. Heidi and her family have built a beautiful culture at Petschauer and I highly recommend them to anyone I meet.
Jamie Stedman-Novo
I have been with Petschauer Insurance for over twenty five years. The staff is knowledgeable and professional. Petschauer writes both my personal and commercial insurance and they provide excellent counseling. I truly trust the firm and their staff. Thank you.
Mike Matonti
Quality attentive service is hard to find, but at Petschauer Insurance that’s what you can expect from their always friendly staff . It’s what we’ve experienced for all these many years.
John from Forest Pork Store Inc.
My company has called on Petschauer Insurance for many years for its insurance needs: liability, liquor, auto, etc. Working with Erwin and his team has been a pleasure from beginning to present. They are quick to answer any question and provide sound advice. I have always felt that my and our needs are important to them, in theory and practice. They go the extra mile, and we continue to be well served.
Stephen Kennard from Canard Inc.
Spence-Chapin has had the pleasure of working with the wonderful John Petschauer, Inc. for 15+ years. They have always provided excellent service to us–with great knowledge, expertise, and patience — even in the most challenging situations. There has not been one time when they have not been immediately accessible to us, even at a moment’s notice. We thank them for their work and celebrate their 60th anniversary, while looking forward to working with them for another 60 years and beyond!
Excellence in customer service and it’s a one stop shop for all my insurance needs.
Tom Haines
From the first time I spoke with Lori Halloran at Petschauer Insurance, I knew she was a special person. She is a woman that conducts herself professionally, with compassion and full knowledge of all types of insurance Petschauer has to offer. While speaking with her, as she explained and answered all of my questions, I felt like I was speaking with family…which is another way to describe this company. She has a way of making very confusing decisions so simple and easy to understand. I even added another insurance policy to my two renewal policies because of her. My last renewals could have been processed via mail but I really wanted to take the time to drive and meet this wonderful woman face to face. She greeted me with this huge beautiful smile, which matched her personality perfectly. So, I just had to go back another time just to say “Hi” and bring her flowers in appreciation for all her help and also celebrate a new friendship. The Petschauer “Family” has been there for me since my first policy when I was 19 years old, and now I’m a “senior”. I’ve been with them forever and don’t plan on going anywhere else. Thank you Lori for your dedication and to the rest of the Petschauer staff.
Jane Deitlein
Petschauer is great. I never had a problem.  They always call me back. Fabulous employees who are always willing to help.
Marty Bruno