Even with good HR policies and practices, employers can face employment related allegations and lawsuits. An Employment Practices Liability Insurance Policy helps protect businesses against such employment related Claims. Employment practices liability insurance protects both the organisation and its employees against personal grievance claims brought by current, prospective or former employees.
In today's legal landscape, employment-related lawsuits are on the rise. An employer is more likely than ever to face employee related lawsuits like sexual discrimination or harassment claims.
Even false allegations by employees require defence in courts which incur legal fees, thus causing losses to the business. Hence, it is very important for businesses to have an Employee Practices Liability Insurance Policy (EPLI Insurance) in place to defend and settle employee claims.
The cost of not getting covered by an Employment Practices Liability Insurance Policy is particularly high due to the following reasons.
Increase in Wrongful Termination Lawsuits - As companies downsize and lay off employees during recessions, disgruntled former employees are more likely to file wrongful termination suits alleging discrimination, lack of notification, etc. This can lead to an increase in EPLI claims.
Wage and Hour Disputes - Due to cost-cutting, businesses may violate wage and overtime pay regulations. This leads to employee lawsuits which falls under EPLI.
Discrimination Claims - Often the targets of layoffs and terminations are women, minorities and older workers. Allegations may arise claiming discriminatory firing which is an Employment Practices Liability Claim (Claim).
When these types of claims occur, proper EPLI coverage with adequate limits helps businesses to reduce the impact.