Employment Practices Liability
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Did you know that your company could be sued for its employment practices even if you do not have or solicit employees? You could get an employee resume in the mail for instance, and throw it away because you have no interest in hiring staff. Later unfortunately, the person who sent you that resume could file legal actions against you claiming that you discriminated against them in some way.
Employment practices liability insurance, or EPLI, is a package of protections that specifically focus on how you interact with and treat your employees. This coverage applies to companies who do not hire staff as well as those who only employ temporary or part time workers, and businesses which maintain full time staff. If one of your workers or applicants feels that your company participated in unfair business acts, they may file a lawsuit against you.
An employment practices liability insurance policy protects you from legal actions brought by your staff and prospective employees. EPLI coverage works to provide for your legal defense by paying for professional attorneys and related reasonable expenses that arise during litigation. It may also pay punitive damages, settlements and judgments that are awarded if the lawsuit is lost.
Some of the claims that may arise from employees include:
Wrongful termination charges can arise from a disgruntled employee when your company is merely downsizing, or when they disagree with the reasons they were terminated. Similar allegations can arise when an employee does not get the promotion they desired, or when job seekers do not get hired.
Retaliation lawsuits are increasingly common. When an employee feels that the company or a senior manager is acting adversely to them because of a complaint or legal action, it may generate additional lawsuits for retaliation. According to laws enforced by the U.S. Equal Employment Opportunity Commission, an employer may not participate in adverse activities in response to complaints and lawsuits against them. In other words, if the employee believes they were threatened, given low performance marks, or were passed over for a promotion solely due to the allegations or legal steps they have taken, they will likely file a retaliation lawsuit.
Accusations of discrimination traditionally have been related to race or gender, but age discrimination complaints are on the rise as well. Technology companies may be at a higher risk for discrimination charges, because the industry as a whole does not have many women or minorities. Technical employees are often young, white males and that may leave your company open to discriminatory allegations just because the numbers are skewed.
Harassment accusations spawn from legitimate issues as well as simple misunderstandings. Your company may hold a holiday party for instance, and serve alcohol. In the midst of the celebration a department manager offers to drive a subordinate employee home so that she doesn’t have to call a taxi. The employee declines yet the offer is repeated multiple times throughout the evening. The department manager may feel that he is being nice and trying to help while the employee may feel as if she is being harassed or pressured. If the employee is greatly disturbed by the incident, your company may find itself facing a harassment suit because of it. The employee may claim that the company is liable because it provided alcohol which created a hostile work environment.