Say 'Yes' to Employment Practices Liability
EPLI for PEOs
Although we highly recommend it, not all PEOs purchase Employment Practices Liability (EPL) insurance. No matter how many examples or claims situations you hear about, many still opt not to get the coverage. Common arguments include:
- “No, we don’t need it. We don’t offer this in our service agreements.”
- “We make sure our clients have their own EPL policy.”
- “It’s an additional expense we simply don’t want to incur right now.”
- “We hire the right people, and they wouldn’t sue us.”
Well, that’s not all true. Whether EPL is included in the PEO service package or not, PEO’s should keep in mind they could still be brought into a lawsuit for vicarious liability due to the actions of a client company, its employees or a third party.
How can your PEO minimize risk?
At the very least get protection for your own internal employees. According to the EEOC, the number of lawsuits filed by employees against their employer has been slowly but surely increasing over the years.
One example employers should be aware of was featured in PEO Insider’s October 2014 issue. Did you know that “unlawful discrimination" can be as simple as an employer’s reaction to learning about an employee who survived domestic violence? For example, you can be found liable for not hiring someone because he or she has a restraining order against a spouse or a partner, or taking some adverse action after learning about the abuse. Even if you didn’t mean to find out about it, you as an employer can be sued.
Defending discrimination or other workplace related lawsuits are expensive. Studies show the average defense cost is roughly $150,000. Awards to employees when the case is won could reach up to six figures. If the average cost to buy an EPL policy ranges from $2,500 to $50,000 (note this is an example; it could be higher depending on the size of the company or number of employees), the investment in coverage is worth every penny.
To avoid lawsuits, recognize and prevent the following discriminations:
- Equal Pay
- Genetic Information
- National Origin
- Sexual Harassment
To find out more about each type of discrimination, take a look at examples of ongoing or settled discrimination lawsuits on the EEOC’s website.
Employment Practices Liability should be included in your suite of insurance coverages. If you have questions or need help with EPL coverage, contact the ‘A’ Team.
- Liability E-Book
- Game of Tic Tac Toe: Employment Practices Liability
- Seven Tips for Preventing EPL Claims
- Differences in EPL Coverage
- Reporting Requirements for EPL Policies
- Sneak Preview of EPL Insurance Webcast
- Worst Case Scenario Savior: EPLI
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