Why EPLI is Crucial to Your Business | JGS Insurance 

Why EPLI is Crucial to Your Business

By Meaghan Tyndale-Williams, Vice President – Commercial Lines

Is your company covered by Employment Practices Liability Insurance (EPLI)?

If not, you might want to consider it. Over the past twenty years, the number of employment-based lawsuits has increased as employee awareness of fair employment practices has become more widespread. Why you need EPLI insurance will become clear as you consider some of the claims that can be filed against your business.

Here are just a few examples that may provide the wake-up call you need to see how serious—and commonplace—these exposures can be:

  • An employee vandalizes your bathroom by writing offensive or crude comments on a stall wall and another employee is offended.
  • An employee in the lunchroom tells off-color jokes that offend other employees.
  • You prohibit an employee from returning to work after a medical leave unless the employee has full clearance to perform all job duties.
  • While the most common type of lawsuit results from claims of unfair employment termination, other types of lawsuits are on the rise:
  • Genetic discrimination – for requesting personal or family medical history.
  • Unpaid internships (currently a hot topic on Capitol Hill) – for recruiting workers to perform tasks normally considered part of entry-level employment positions.
  • Gender discrimination – for pay inequities between men and women in the same establishment who perform equivalent tasks under similar working conditions.

According to statistics on trustedchoice.com, the average court costs and legal fees for claims that are dismissed can top out at $15,000 or more. Cases that are settled out-of-court can set you back $75,000, while those that go to trial can carry a whopping $300,000 price tag or more. It’s enough to bankrupt a company.

Harassment cases are particularly challenging. Cases often devolve into “he said, she said” scenarios that are virtually impossible to prove. So even if no harassment has occurred, it’s often easier to settle the claim than to fight these lawsuits. In a recent case I have witnessed firsthand, a litigious plaintiff was awarded a sizable $75,000 in damages—even though it was her sixth such claim.

Your company can follow some simple, common-sense practices to help avoid these lawsuits. The practices shown below are fairly simple and inexpensive to implement:

  • Develop job descriptions for every position so employee expectations and responsibilities are clear.
  • Create an employee handbook that spells out company procedures and conduct policies including specific detail about what constitutes “harassment.”
  • Offer mandatory training sessions to review policies in person and provide an opportunity for Q&A.

Of course, the best way to safeguard your business is by purchasing EPLI insurance. While workers’ compensation and general liability insurance are mandatory, EPLI is optional, so many business owners are not even aware of its existence. Some agencies do not offer EPLI coverage or offer simple policies from a limited number of carriers. An experienced broker will not only recommend this type of coverage but also present you with a range of options. Premiums will depend on the size of your workforce, the amount of coverage, the number (if any) of prior allegations, and whether your company has anti-discrimination and anti-harassment policies in place.

The plain truth is that there is no possible way to monitor all of your employees’ actions at all times. You have too much to do already, and at a certain point, preparation and trust will need to kick in. To really secure your company’s future in this regard, talk to your JGS agent about EPLI insurance—and seriously consider this important investment.


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