Just as there are several types of liability insurance coverage for businesses, employment practices liability coverage is yet another type of business liability insurance. Employment practices liability coverage covers businesses against claims filed by employees for their legal rights as employees being violated. These claims include discrimination, wrongful termination, retaliation, and workplace harassment.
Generally, the number of lawsuits filed by employees against their employer has been rising, causing most companies to become financially affected.
Employment-related claims affect businesses and companies of different sizes and can damage businesses, affect employee morale, financially cost businesses, and damage business reputations. For this reason, liability insurance is needed to prevent financial breakdowns as well as to handle the situation properly.
How Does Employment Practices Liability Coverage Work?
Employment practices liability coverage covers employment claims filed by a current, past, or prospective employee of a business or company.
These employment claims include demotion, harassment, and so on. It pays for settlements and damages channeled to claimants and the cost of defending your company or business from lawsuits.
This insurance may also cover administrative action files against a business or company. However, some insurance policies cover defense costs as an add-on to the policy limit, while other policies have them in limits.
What Employment Practices Liability Cover
While most business-related suits are filed against large companies, no company is above these lawsuits. Employment practice liability coverage covers several employee lawsuits, irrespective of the type of company or business. These lawsuits include:
- Discrimination
- Employment contract violation.
- Promotion or employment failure.
- Career opportunity deprivation.
- Inefficiency of employee benefits plans.
- Sexual harassment.
- Unjust termination.
- Careless assessment.
- Unjust discipline.
- Wrong administration of emotional distress.
If ever your business or company gets sued for any of the above cases, this liability insurance will cover the judgment and settlements related to the claim filed. However, whether or not your company loses or wins the suit, your insurance policy will pay the legal cost.
What Employment Practices Liability Does Not Cover
While quite several cases are covered by this liability insurance, there are several cases this insurance does not cover. These lawsuits include:
- Hour and wage law violations.
- Labor argument.
- Federal law violations.
- Punitive damages.
- Property damage and bodily injury.
- Breach of workers compensation law.
- Dishonesty or fraud.
- Unemployment insurance.
- Civil fines or penalties.
Some employment practices liability coverage covers punitive damages, but it is only available in states. Aside from this, it is not covered by this insurance coverage.
Who Needs Employment Practices Liability Coverage?
While this insurance seems like a good idea, you and your business may not need it. In cases like this, it is important to be aware of who does and does not need it. However, the following are those who need employment practices liability coverage:
- Non-profit organization.
- Public companies.
- Financial institutions.
- Private companies.
Businesses that fall under the above list are more at risk of facing employment suits. For this reason, they need to get this employment practice liability coverage.
How Much Does Employment Practices Liability Coverage Cost?
How much this insurance coverage costs depends on several factors that insurance companies use in determining cost as well as the type of insurance company. Some employers offer this insurance coverage to their clients at no additional cost. These factors include:
- Business type.
- Number of employees.
- Several risk factors of your company.
Another factor insurance companies consider is whether or not your company or business has been sued over employment practices before time. After evaluating these factors, insurance companies determine how much they will charge for insurance coverage.
How Does Employment Practices Liability Coverage Help Businesses?
It can be a big challenge to defend a single employment claim without EPL coverage. It can also cause a big financial drawback and even crush the business. As long as you have the right coverage, the following are ways this insurance can help businesses:
- Price of goods sold.
- Revenue
- Non-operating expenses.
With these benefits, it is a good idea to get employment practice liability coverage.
Why Do I Need Employment Practices Liability Coverage?
If you have a business or company and you are wondering whether or not you need this insurance, it is important to determine the potential cost of an employment claim.
A limited number of damages a cover can regain in an intolerance suit has been set by federal law. If a business doesn’t have EPLC, the business will have to pay the cost of these suits out of pocket.
