EPLI, or Employment Practices Liability Insurance, protects you and your business when an employee sues you. If you are a business owner in Napa, California, please keep reading. Or share this with a business owner friend.
“You’re Fired!” It happens.
“Bob” has worked for you for many years. He’s generally been a good employee.
But lately, Bob has been going through a rough patch in his personal life. He’s turned grouchy at work. He occasionally yells at other employees for small mistakes, and worse, he has yelled at more than a few customers too. He is costing your company money.
You’ve talked with him numerous times, and you’ve warned him that his job is at risk. But Bob doesn’t listen. Things get worse.
Finally, you feel that you have no choice. You let Bob go.
Then Bob calls a lawyer.
Employees have rights.
In California, the antidiscrimination law applies to companies with as few as five employees. But even a company with only one employee can be sued for wrongful termination.
Defending lawsuits is expensive. And if you lose, paying damages can put you out of business.
Let’s see if “Bob” has any grounds to sue. Hmmm. Yes, he does.
- Bob is 57.
- Bob is divorced.
- Bob is being treated for Depression.
You know that none of these had anything to do with his termination. But Bob says otherwise.
Will a jury believe him? That’s the question on which your business hangs.
What does EPLI cover?
Employment Practices Liability Insurance covers legal costs, judgments, and settlements against owners and managers of a company when they are sued for all kinds of alleged behaviors, such as:
- Wrongful termination
- Sexual harassment
- Violation of privacy
- Unfair discipline
- Unfair failure to promote
- Creating emotional distress on the job
Important things to know about EPLI.
Employment Practices Liability does not cover criminal acts, punitive damages, or civil fines. You still need to follow the law to the best of your ability. EPLI is not a blank check to be a bad employer.
Also, employers need to put EPLI coverage in place before a situation arises. Once the circumstances arise that cause the lawsuit, it’s too late to go buy a policy.
Try to avoid claims.
- Be fair. Treat every employee as you would like to be treated.
- Be patient. Try to help people, not fire them. Patience solves many problems.
- Be detailed. Document your disciplinary actions, and share that written information with your employee. You and your employee should always be on the same page. When an employee is surprised by a termination, there’s a greater chance for a lawsuit.
Talk to an insurance agent experienced in EPLI. This type of policy is often not included automatically in your business owners policy. Even if you have EPLI coverage, the policies are not all the same. Check with an agent to see what’s covered, and take steps to safeguard your business today.
Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates helping clients with insurance needs for personal, commercial and business insurance. Bruce can be reached at 707-931-0186, firstname.lastname@example.org