When Employees Sue: The Value of EPLI Protection

Savvy businesspeople know: Business is risk. And on top of the investment risks you take in developing and marketing goods and services, there are also risks associated with hiring a workforce. American workers have a well-established set of rights, and one of their biggest tools for securing those rights is litigation.

On the one hand, an open and available system of civil action ensures that individual workers have recourse against big corporations. On the other hand, when anyone can sue, then businesses of any size are at risk of a lawsuit instigated by one of their own (or former) employees.

Your first line of defense is a knowledgeable HR department or PEO that can establish company practices that protect workers’ rights. But that won’t eliminate potential lawsuits, and no matter how water-tight your company is, you always run the risk of crossing paths, however briefly, with a disgruntled person ready to be aided by opportunistic lawyers. Being sued is always a risk, regardless of wrongdoing. It costs money to defend your company in court.

That’s why Employment Practices Liability Insurance (EPLI) is your last line of defense against worker-generated lawsuits (frivolous or otherwise).

There are a number of ways in which an employee or applicant might claim wrongdoing in a lawsuit, including wrongful termination or breach of contract, failure to employ and other forms of discrimination, sexual harassment or infliction of emotional distress, or mismanagement of employee benefit plans.

EPLI Protects  Your Company from Litigation 

  • Breach of contract
  • Wrongful termination
  • Discrimination
  • Sexual harassment
  • Benefit plan mismanagement

All of these types of lawsuits are covered by EPLI. Your policy can reimburse you for legal costs, regardless of the outcome of the suit. It may also cover settlements and other judgments made against your company.

Instruct your HR department or PEO to investigate qualified EPLI providers and to find a policy that best suits the needs and size of your company. The costs will be determined by variables like workforce size and the type of work you do, as well as whether your company has been subject to these types of suits in the past. (Again: Responsible corporate operations should be a primary goal in avoiding lawsuits—not to mention creating a happy, healthy work environment.)

You can’t avoid risk, but you can identify certain risks and prepare for them. You can’t eliminate the risk of employee lawsuits, but an EPLI policy ensure that your company doesn’t suffer the financial consequences.

Visit the Insurance Information Institute for more information.

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest
WP Feedback

Dive straight into the feedback!
Login below and you can start commenting using your own user instantly

Scroll to Top