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Business Solutions Center
Why You Need Employment Practices Liability Insurance
If you own a small business, you may be overlooking a very important type of insurance that can end up saving you big in the unfortunate event that you find yourself facing a lawsuit from an employee who feels you have done them wrong. Such claims are very common. Often, they are substantiated, and other times they are not.
Such suits may allege discrimination (based on race, sex, sexual orientation, religion, age, disability, etc.), wrongful termination, harassment, or other legal complaints. The average cost of an employee lawsuit has risen 26 percent over the past three years, and a third of claims are made against small businesses ¹. While it is important that workers are treated fairly, you must protect your business from claims that can severely damage your ability to adequately operate.
That's where Employment Practices Liability Insurance (EPLI) comes in. EPLI can protect your business against such claims, providing financial protection and online risk management support materials, such as self-audit checklists, training modules, and links to federal and state legal resources.
In some cases, preventing these types of suits seems easy. Don't discriminate, don't harass, etc. But one person's perspective doesn't always align with the reality of the situation, and in some cases, complaints simply lack legitimacy. What if, for an example, you know an employee has stolen something, but you are unable to prove it? Prevention isn't always easy, but in addition to insurance, background checks can help you reduce the likelihood of hiring someone with a history of theft. According to a recent report from CNBC ², workplace theft costs businesses $50 billion a year.
To help prevent such crimes, Easy Small Business HR founder Dianne Shaddock says ³, "Address swiftly any situation where an employee is caught stealing, even if it is their first time. Another thing that employers may want to consider is conducting criminal background checks before hiring any new employees, to weed out those with a history of theft. Keeping a reliable accounting system and an open line of communication in the office can also go a long way towards preventing workplace theft."
If trust isn't there, a business owner can hardly justify keeping an employee around, and if said employee feels they have been wrongfully terminated (or even simply intends to convince others of this), the business owner may have even more financial trouble on his/her hands. EPLI is there to help cover you in such a case.
Nationwide is making it easier for small businesses to obtain EPLI through their insurance agents. Eligibility has been expanded from businesses with 30 employees to 50 employees, though those with up to 250 can also get protection through Nationwide's General Liability offering. Additionally, EPLI coverage is now available for Farm and Special Agribusiness customers.
- Source: Gen Re Study. See the EPLI Brochure for more information.
- Source: CNBC: https://www.cnbc.com/2017/09/12/workplace-crime-costs-us-businesses-50-billion-a-year.html
- Source: EasySmallBusinessHR: https://easysmallbusinesshr.com/2011/06/workplace-theft-statistics-the-latest-statistics-and-how-to-prevent-theft