Employment practice liability insurance, provides coverages to employers against claims made by employees alleging discrimination, (based on sex, race, age or disability), wrongful termination, harassment and other employment-related issues, such as breach of contract.
Employment practice liability insurance is usually written on the claims-made form. A claim had to occur during the coverage period since employment claims often come months or even years after the alleged incident. An employer might be vulnerable if coverage is dropped or lapsed. A Tail coverage is highly recommended if coverage is terminated.
Employers may purchase EPL or EPLI coverage as a standalone policy or as an endorsement to a Business Owners policy (BOP). Most BOP policy has a limit between $5,000 - $10,000 included.
Review any loss exposure with your insurance agent; purchase adequate amount of EPLI. To significantly lower your risk exposure, do the following:
- Understand the State’s employment laws
- Develop a handbook with company policies and procedures for discipline or termination of an employee
- Develop a hiring and screening program
- Create a job description, defining skills and performance expectations
- Conduct periodic performance reviews of employees and note in employee’s file
- Create an effective record-keeping system to document employee issues as they arise, and the company’s resolutions
- Institute a zero tolerance policy regarding discrimination, substance abuse and any form of harassment. Make sure you have an open door policy in which employees can report infractions without retributions