By: Patti Maluchnik, CIC, CBIA
Georgetown Insurance Service, Inc.
Frederick, MD
Did you know that an estimated 60% of businesses will be sued by an employee at some point in time? However, despite this staggering number many businesses still operate without employment practices liability insurance (EPLI) in place to protect them.
The Risk is Real
Your business’ risk starts as soon as a potential employee walks in the door for an interview. Employees and potential employees can sue an employer for a number of reasons including discrimination, wrongful termination, sexual harassment, invasion of privacy, wage and hour disputes, illegal background checks, pregnancy, and health related employment discrimination.
Even if the claim turns out to be meritless or unwarranted, the business is still responsible for defending themselves and this defense often carries a hefty price tag and lost time. Furthermore, discrimination claims open businesses up to irreparable reputational damage which could affect not only hiring in the future but also business relationships.
Proactive Protection
As with most business challenges, the best defense is your offense. The same is true when it comes to preventing employee discrimination cases. By having sound hiring and human resources procedures in place, it is possible to minimize your business’ risk of employment practices exposure. Consider implementing or strengthening some of the following best practices:
- Have a proscribed screening program where you can eliminate unsuitable candidates prior to calling them in for an interview.
- Adhere to the same hiring practices for each potential employee.
- Conduct background checks.
- Have clearly defined roles, responsibilities, and expectations of progress and performance for every position/employee.
- Ensure that your company handbook details employment policies and procedures for reprimanding or terminating an employee.
- Have all employees sign a formal statement saying that they understand the company’s policies and have reviewed them.
- Conduct regularly scheduled performance reviews and document them in an employee’s file.
- Adopt a zero tolerance policy towards discrimination, harassment, and substance abuse.
- Have an open door policy so that employees feel comfortable reporting harassment or infractions without fear of retaliation or retribution.
- Document every infraction or incident and store in related employee files.
- Consider adopting a social media, email, and communication policy.
Why EPLI?
Rapidly changing technology and expanding communication channels have made it even more difficult for employers to protect themselves. Social media, email, texting, and even drones have blurred professional lines making claims more complicated than ever.
Even a company with top-quality procedures and policies in place is still open to liability. The only way to truly protect your company from the financial consequences of a claim is to have an EPLI policy in place. Just like you wouldn’t leave your door unlocked at night, you shouldn’t leave your business unprotected — particularly against one of the most common lawsuits a company can encounter.
As an insurance agency that works with businesses of all sizes, we cannot stress the importance of acquiring EPLI enough. From employees horsing around to age discrimination claims, we’ve seen and handled our fair share of claims. At Georgetown Insurance Service, we have the market knowledge and experience to protect your business.
This isn’t a random incident or an uncommon challenge. This is a problem businesses are likely to encounter at least once in their lifespans. With changes in minimum wage and the growing job market, claims are bound to continue increasing. The time to acquire EPLI is now.