Employment practices liability insurance (EPLI) is a type of liability insurance that protects an employer from claims made by employees related to their place of work. This could include wrongful termination, discrimination, sexual harassment, and other workplace-related incidents, each of which has the potential to become a costly problem for the employer. With EPLI coverage, employers can protect themselves against financial losses associated with these claims, as well as the legal costs of defending against them.
But knowing how to get the most out of EPLI coverage and navigate the claims process can be difficult. Employers need to take the right steps to prevent discrimination, harassment, and other workplace issues from occurring in the first place. This starts with clear policies and procedures, adequate training, and maybe a little help from a human resources team like Remote.
Let’s take a closer look at EPLI and how to implement it correctly.
The Problem of Workplace Lawsuits
There isn’t a single company that’s immune to lawsuits. Whenever anyone deals with day-to-day business operations, with contracts, negotiations, and all their related activities, there’s a possibility of disagreements happening. That’s why it’s important for businesses of all sizes to have protection from the potential cost of a lawsuit.
The Growing Problem of Workplace Discrimination
The rates of discrimination charges in the workplace have escalated in 2022. Employers of all sizes, including many Fortune 500 companies, have been hit with costly lawsuits related to discrimination in the workplace. Despite the prevalence of anti-discrimination laws all around the country, potentially discriminatory practices are still commonplace in many workplaces.
For example, 55% of workers surveyed say they have personally experienced discrimination. Another 61% say they’ve witnessed workplace discrimination directed toward others. While most involve allegations of managers discriminating against employees, conflicts between coworkers have also become a major issue.
Many of these cases go unreported. As many as 32% of employees actively avoided reporting a workplace discrimination incident because they weren’t sure it was serious enough. Over time, this can seriously affect a company’s ability to maintain a healthy working environment. Employers are legally required to take necessary steps to prevent and address discrimination in the workplace.
This can easily turn into an enormous problem for employers. The average employee lawsuit can cost as much as $500,000, which is enough to put many companies out of business. Employers need to be proactive when it comes to preventing workplace discrimination, and EPLI coverage can help cover this cost in the event of a lawsuit. It provides a way for businesses to prop up their defenses and protect themselves against costly legal claims.
But What If a Company Doesn’t Discriminate?
Some employers feel like they don’t need EPLI coverage since, after all, they don’t practice or allow discriminatory policies in their workplace. This may be true, but it doesn’t change the reality of the legal system — even corporations with the best intentions can still be exposed to lawsuits related to discrimination. Differences of opinion happen, and even the most well-intentioned CEO can find themselves on the wrong end of a legal battle if they’re not careful.
So, it’s important for employers to understand that EPLI coverage isn’t just about protecting against intentional acts of discrimination. It’s also about providing protection from any accidental or unintentional acts of discrimination that may occur in the workplace. Having EPLI coverage is by no means a sign that the company practices discrimination; it’s simply a way to protect a business in an often litigious business environment.
Every so often, the perception of discrimination, regardless of its reality, is enough to bring on a devastating lawsuit. Companies have to prepare for that possibility, and EPLI coverage is an essential part of that preparation. It’s one of the best and most accessible ways to protect a business from potential legal fees, damages, and other costs associated with employment discrimination claims.
The Role of EPLI in Reducing Employee Lawsuits
EPLI is a type of liability insurance that provides financial protection to an employer in the event of an employee-related lawsuit. The policy covers any costs associated with defending against and settling these lawsuits, which can quickly overwhelm a company’s resources. Businesses can use EPLI to protect themselves against a variety of potential claims, including:
- Wrongful termination
- Sexual harassment
- Violation of the Family and Medical Leave Act
Having EPLI coverage offers a way for companies to manage their risk of employee lawsuits, which can be a costly problem for employers.
How Employers Can Get the Most Out of EPLI Coverage
Simply having an EPLI policy isn’t enough to protect a company completely. Employers have to take proactive steps to ensure they’re doing everything they can to create a safe, discrimination-free workplace. That could involve updating their policies and training procedures, bringing in new human resources professionals to help, or even hiring a third-party consultant to audit their workplace practices.
These measures can help employers provide a higher quality, and safer, work environment for their employees. They can also help identify potential problems before they become lawsuits, which can save businesses a lot of time and money in the long run. Workplaces that take these steps also create a more positive environment where employees feel safe, respected, and valued.
Remember, EPLI coverage isn’t a silver bullet, but it can be an important part of an employer’s risk management strategy. It provides businesses with financial protection in case they face an employee lawsuit, and their presence provides businesses owners great peace of mind. With the right strategies in place, employers have a better chance of avoiding expensive legal battles, protecting their assets, and creating a workplace where everyone feels free to give their best effort.
How Resourcing Edge Can Help Businesses With Their EPLI Needs
Resourcing Edge has worked with clients from all industries to provide tailored human resources solutions, including EPLI coverage and its related applications. Their team of experienced insurance professionals can join with internal human resources teams to analyze a company’s needs, identify any potential risks, and provide guidance on the best course of action.
Performing a detailed audit of present employee practices is an important step toward exploring potential vulnerabilities. This could involve evaluating current policies and training procedures, or interviewing employees to gain insight into their work environment. Doing that allows companies to identify and root out possible liability issues before they become problems, saving themselves a lot of financial and emotional strain in the long run.
Resourcing Edge also provides ongoing support for businesses that wish to remain compliant with the ever-changing network of business regulations around them. These laws tend to change every year and are often different from one jurisdiction to the next. Employers often struggle to stay up-to-date on the latest developments, lacking the resources to adapt their business practices accordingly. A team like Resourcing Edge can provide the guidance and expertise to ensure businesses remain compliant with these laws.
A Human Approach to Workplace Issues
When it comes to employee relationships, understand that even small missteps can lead to costly litigation. Avoiding future litigation begins with vigorous human resources policies — regularly updated and enforced consistently. These will vary from one company to the next, but often include things like:
- Increasing sensitivity to discrimination, harassment, and retaliation issues
- Clear documentation of employee performance reviews and disciplinary actions
- A series of defined protocols for handling grievances
- Open communication policies to ensure all employees feel safe bringing up any issues
This last one is an especially important point. Employees must feel free to provide open and honest feedback about how they’re treated — and be comfortable that their concerns will be addressed. Companies need to put in place the right policies and procedures, but they also need to address any issues that arise in a timely, respectful manner. This can make all the difference when it comes to avoiding a lawsuit that nobody wants.
As important as adequate EPLI coverage is, employers should look at it as a piece of their broader risk management strategy. Investing in proactive workplace policies helps employers build a culture of respect and trust, which itself is the best defense bulwark against litigation.
And if that doesn’t work, EPLI will be there as a net to catch any potential legal issues that may arise. That’s why it’s so important for businesses to have a comprehensive understanding of their insurance needs and the best way to protect themselves against any kind of liability-related litigation.
Resourcing Edge can help them get there.
A Safer, More Effective Workplace for All
Employment practices liability insurance is a must-have. Without it, companies would open themselves up to all manner of potential lawsuits. But neither should companies view EPLI as a one-stop shop for all their employee litigation protection needs. There’s a lot that can be done to shore up the workplace and prevent liability issues from arising in the first place.
That’s where Resourcing Edge comes in. They take a more holistic approach to employee relations, building a workplace that is healthier, safer, and more effective for everyone involved. And with the right EPLI policy in place, employers can rest assured that they have the resources to protect themselves. Reach out to Resourcing Edge to learn more about how they can help.