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What is Employment Practices (EPL) Insurance?
Employment Practices Liability Insurance is a relatively new form of liability insurance. It provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. It covers your company, including its Directors and Officers. In construction, most people assume this is only for sexual harassment, and since most jobs sites are male, what could happen. The answer is A LOT!
In our experience, most of these claims in construction take the form of an employee alleging he was terminated due to his race or ethnicity. EPL insurance can help defend your company against the allegations provided they were not intentionally done. Be sure to read your policy to determine your exact limits of coverage and any important exclusions.
When do I need Employment Practices Liability Insurance?
Employment Practices Liability Insurance is needed as soon as you start to hire employees. In construction, this may be unlikely, but your exposure does exist. If you are with a large construction company most investors and directors will require that you carry this coverage as part of your Directors and Officers Liability Insurance since they can also be held liable in suits relating to employment practices.
Why do I need Employment Practices Liability Insurance?
Cases against employers are on the rise. It is estimated that three out of five companies will be sued by an employee. Companies are finding that they are vulnerable from the pre-hiring process through the exit interview, even if the employee was never hired, or only at the company a matter of days.
It can happen to ANY company. We have all experienced it. It could be a joke told in the break room, an employee you had to fire, a “friendly” vendor rep, or that person you chose not to hire. Every employer faces the reality that it will be the target of legal action from past, present and prospective employees. Even if the claim is groundless or fraudulent, the defense of a suit can be expensive in time, resources and financially.
New technology firms are especially vulnerable. Newer and fast growing companies are often prey to these types of claims because their management team has not yet designed or implemented procedures for hiring, firing, and disciplining employees.
We definitely recommend Employment Practices Liability Insurance to any company that has employees.