As a business owner, have you ever wondered what would happen if one of your employees, either current or former, were to file suit against you and your business? These kinds of suits, which include claims, include:

• Breach of employment contract
• Career opportunity denial
• Discrimination
• Failure to employ or promote
• Infliction of emotional distress, wrongful
• Mismanagement of employee benefits
• Sexual harassment
• Wage and hour disputes
• Wrongful discipline
• Wrongful termination

When you are notified of the potential suit or claim, you may ask yourself the following questions:

• Do I need an attorney on retention?
• I am a small business with only a handful of employees, do I really need a human resources department?
• Is it worth having employees?
• Did we do something wrong?
• Are we documenting properly those things regarding employees?
• How can my business protect itself?

This is just a sample of questions that business owners with employees may ask themselves from time to time. Regardless of your experience, there is an option that will benefit those businesses with employees. Please note: If capable, the above-referenced points will offer additional protection to your business. Furthermore, there are several tools available through your service providers, current insurance carriers, etc.

To assist business owners further, there is an insurance policy that offers additional coverage or protection – the Employment Practices Liability Insurance (EPLI) policy. The EPLI policy is a stand-alone policy with its own liability limits. The policy covers legal costs associated with employee-related claims. Regardless of whether your business wins or loses the suit, the EPLI policy will reimburse business owner the defense costs. In some ways, the EPLI acts as a prepaid attorney for employee claims. Please note: Depending on the insurance carrier, there may be an endorsement available to provide EPLI as part of general liability coverage form. Please contact your carrier and/or agent to determine whether the coverage is available.

EPLI is not included on the certificate of insurance nor is it required on a contract basis; however, for business owners with employees – the argument can be made that the coverage is necessary. The cost of the EPLI policy varies depending on business type, the number of employees, employee turnover, previous claim history, etc. With EPLI coverage, the policy is specifically underwritten to the business.

If you have any questions regarding employment-relating exposures, EPLI, etc., please contact us at Northgate.