Why Your Company Needs Employment Practices Liability Insurance

A small business faced a wrongful termination claim from a former employee who alleged discrimination based on age. The employee sought damages amounting to $250,000, which could have severely impacted the company’s finances. Fortunately, the business had Employment Practices Liability Insurance (EPLI). The insurer covered the legal defense costs, which totaled approximately $50,000, allowing the company to effectively defend against the claims without depleting its resources. Ultimately, the case was dismissed, and the firm avoided a potentially damaging payout, showcasing how EPLI can protect businesses from significant financial burdens while ensuring they can focus on their operations.

In today’s complex employment landscape, businesses face a myriad of challenges related to employee relations. EPLI is a crucial coverage that protects businesses from claims made by employees regarding employment-related issues. This coverage is essential for several reasons.

1. Rising Employment Claims: The number of employment-related claims, including wrongful termination, discrimination, harassment, and retaliation, has steadily increased over the years. According to the Equal Employment Opportunity Commission (EEOC), the agency received over 70,000 charges of workplace discrimination in recent years.
2. Protection Against Financial Loss: Legal fees can quickly accumulate, even for claims that are ultimately unfounded. EPLI helps mitigate these financial risks by covering the costs of defense, which can include legal fees and potential rewards to the employee. This allows businesses to focus on their operations rather than worrying about potential legal expenses. Without EPLI, businesses risk significant financial loss that could jeopardize their stability and growth.
3. Compliance with Employment Laws: Employment laws are constantly evolving, and businesses must stay informed about compliance requirements. EPLI can cover claims arising from negligent employment practices, such as failing to properly train employees on harassment policies or not following appropriate disciplinary procedures. This coverage serves as a safety net, ensuring that businesses are not held liable for unintentional oversights.

The risks associated with employment practices are real and can have devastating effects on your business. In an era where employee rights are increasingly prioritized, having robust EPLI coverage is not merely advisable; it is essential for any forward-thinking organization.  Securing EPLI coverage is a proactive step you can take to safeguard your business against the challenges of today’s employment landscape. Don’t wait for a claim to occur—secure your business’s future with EPLI today and call us at 1-800-247-5930 ext. 4050.

Pharmacists Mutual Insurance Group is a nationally recognized leader providing insurance and risk management within industries including pharmacy, healthcare, and more. This information is intended to provide general  information only on certain risk management topics, and is not intended to provide any coverage determinations or coverage positions, nor is it to be construed as providing legal, medical, or professional advice of any form whatsoever. Learn more about how we help our members mitigate their risks.