COVID-19 threw the employment market into turmoil. There were many people who became unemployed during the pandemic. As businesses reopened, many more people were hired. When there is more employee turnover, there are more chances for employment practice lawsuits. Here’s what you need to know about employment practice liability and why you should consider purchasing employment practice liability insurance.
The Basics of Employment Practice Liability
There are many laws regarding hiring, firing, and other employment practices. There are certain things that businesses cannot do to their employees. They can’t discriminate against them based on their gender, race, sexual orientation, disability, national origin, or religion.
Employment practice liability insurance would cover cases brought against your company for those reasons. However, that’s not all that employment practice liability insurance covers. In addition to discrimination, it usually also covers:
- Sexual harassment
- Wrongful termination
- Breach of employment contract
- Wrongful discipline
- Failure to employ or promote
- Wrongful infliction of emotional distress
- Negligent evaluation
- Mismanagement of employee benefits
- Deprivation of a career opportunity
- Invasion of privacy
- Wrongful retaliation
- Employment-related defamation
- Lack of appropriate pregnancy and lactation accommodations
There are many ways that things can go wrong when somebody is terminated or not hired, and the bar to litigation is consistently being lowered. In the next section, we’ll discuss why you should consider employment practice liability insurance.
Why Your Business Needs EPLI
Employment practice liability insurance is often used as gap coverage. Most employment lawsuits are not covered by general business insurance. Most directors’ or officers’ insurance only protects the individual from litigation, not the company as a whole. Therefore, you should strongly consider employment practice liability insurance for your company, as it would fill in inevitable coverage gaps.
The amount of employment-related lawsuits and the dollar amounts of settlements have been steadily increasing since 2020. According to the linked Forbes article, employment-related lawsuits increased by 5% in 2020 compared to 2019. The total dollar amount of the top ten settlements in 2020 also increased by 18% from 2019.
Some states see more employment-related lawsuits than others because of the laws governing the rights of businesses and employees. Employers in the state of Alabama are 39% more likely than the national average to face an employment-related lawsuit. The legal costs and settlement payouts from an employment-related lawsuit can hamstring and even cripple your company. It is for this reason that you should consider investing in employment practice liability insurance.
