Labor Practices Liability Insurance (EPLI) is insurance that protects you against claims from your employees that result from the general conduct of your business.
Are you, the business owner, more likely to be sued by a stranger or an employee?
The answer in most cases by a significant and increasing margin … is an employee.
According to the Equal Employment Opportunity Commission, the average number of Labor Practices Liability (EPLI) cases filed per year is a staggering 80,000 cases. According to a recent study, the average payment for an employee-related claim has risen more than 30% to approximately $ 180,000.
This new wave of litigation is not limited to large corporations. Small and medium-sized businesses are being devastated by EPL’s lawsuits. A recent case illustrates the problem.
A jury in Philadelphia decided in favor of a plaintiff who worked for a water treatment company with 15 employees. The plaintiff was subjected to national origin defamations and was sued. After only deliberating for half an hour, the jury awarded the plaintiff $ 200,000 in back pay, $ 100,000 for emotional distress, and $ 265,000 for the plaintiff’s attorneys, for a total of $ 565,000.
Other crazy awards:
– A jury awarded $ 80.7 million to a UPS supervisor who alleged a supervisor touched her chest during an argument.
– A New York jury found that the NBA sexually discriminated when it failed to make a woman a regular season umpire, awarding $ 100,000 in lost wages and $ 8 million in punitive damages.
– Large general insurance company settled $ 157 million sex discrimination class action lawsuit
– Mitsubishi resolved two sexual harassment cases stemming from the same incidents for $ 45 million
– Publix Supermarket announced an $ 81 million settlement from a sexual harassment lawsuit
Here are just a few of the ways employees can file lawsuits against employers:
1. Improper termination of employment
2. Age discrimination
3. Do not hire or promote
4. Breach of an implicit employment contract
5. Negligent hiring or evaluation
6. Sexual or other harassment in the workplace
7. Retaliation treatment
8. Provocation of emotional distress
9. Misrepresentation related to employment
10. Violation of employment-related laws
11. Adverse change in terms of employment
12. Improper referral (deprivation of professional opportunities)
13. Failure to grant tenure
14. Invasion of privacy
15. Slander, libel or defamation
Businesses are being destroyed by employee lawsuits. The cost to employers includes defense costs and payment of damages. A business has to defend itself in a lawsuit regardless of whether a lawsuit is ever entered or not. It can cost thousands of dollars to simply answer an EEOC charge without any lawsuits.
How You Can Protect Your Business
The best way to protect your business is by creating an Employee Handbook.
Take the time to create employment policies and procedures for your company. Simply researching and writing your procedures will allow you to assess how you run your business. Once you have written procedures in place and are careful to enforce those procedures, you will be better able to defend your company against allegations and lawsuits from employees.
Define hiring processes and create checklists for the entire hiring process to ensure all laws and procedures are followed.
Define disciplinary and / or dismissal procedures for the employee.
Once you have written the employee handbook, ask your attorney to review it before it is published.
Once it’s published, meet with each employee, either individually or as a group, and go over the manual in detail. Have each employee sign, indicating that they have received a copy and that the Employee Handbook has been explained to them.
Next, be careful to strictly enforce the employment procedures in the law and in your Employee Handbook. That also means you need to train your management team to follow the procedures in the Employee Handbook.
Insist on an exit interview for every fired or laid-off employee. In that interview, review all the issues and ask the employee to sign, saying that the issues have been explained, regardless of whether the employee agrees or disagrees.
Finally, companies must purchase liability insurance for labor practices. EPLI policies generally cover claims for wrongful termination, workplace harassment, and discrimination. Key elements of EPLI policy coverage include defense costs to the business, as well as coverage of claims and jury awards.