Professional Insurance Programs

Claims Brought Against You Don’t Have To Be True To Be Costly

Let’s consider claims arising from the employer/employee relationship-Employment Practices Liability (EPL).  Regardless of the validity of the claim you will be put in a position of expending time and resources (financial and non-financial) to respond.  The case will either be settled out of court or go through trial proceedings. If you go to trial you will have legal fees and perhaps a judgment against you resulting in a monetary award to the claimant.

What constitutes grounds for an EPL complaint? The following are the main categories; within each of these main categories there are lengthy definitions which are broad and far reaching.

  • Discrimination (race, religion, gender, national origin, age ect)
  • Sexual Harassment (unwelcome advances, requests for sexual favors, verbal, visual, and physical conduct of a sexual nature- Quid pro quo or a Hostile environment)
  • Wrongful Termination (employee is fired or laid off for illegal reasons, not consistent with oral and written agreements)

EPL lawsuits can happen at even the best run practice.   There is no substitute for sound policies and procedures.  Some questions to consider:

  • Do you have an updated employee manual?
  • Do you have a formalized interview, hiring and termination process?
  • What about your review process?
  • Are you documenting appropriately?
  • Do you and does your staff understand current Sexual Harassment definitions?
  • Do you have a Sexual Harassment policy outlined and a reporting process in place?
  • Are you taking advantage of the online Human Resources tool available through Professional Insurance Programs-HR360?
  • If an EPL suit was brought against you, do you have coverage in place to offset the legal fees? What about any settlement amount?

Most commercial insurance policies will include or allow for the endorsement of EPL coverage.  Consider the amount of coverage offered and ask whether legal defense is “inside” or “outside” the limits.  Some carriers offer a standalone EPL policy with deductible options and higher limits. Premiums typically are dependent upon the number of employees you have and the deductible and limits you choose.  When deciding upon the limit, remember that protection against legal defense costs are as much a reason to purchase coverage as the fear you/your practice will be deemed liable for damages. A significant amount of discovery is typically required to build a defense resulting in EPL claims being disproportionately more costly to defend.

The WDA has partnered with West Bend Mutual in offering both basic coverage on your commercial policy and a standalone option.   Your advisor at Professional Insurance Programs is available to discuss the options available and best suited for you and your practice.

Be proactive and take the time to review your policies, procedures and training with regard to employment practices. Seek legal advice for the review of your employment manual.  Times have changed.  You and your practice are not immune to employment practices complaints.