Employment Practices Liability (EPL) Insurance exists to protect you and your business from potential disaster due to claims brought by current or past employees, or prospective employees (people you didn’t hire), for alleged negligence arising out of any of the following:
- Sexual or other harassment
- Discrimination
- Wrongful Termination
- Retaliation
- Wage and hour violations (“wage theft”)
- Numerous other tort causes of loss (wrongful or negligent acts)
Even if you’ve never been on the receiving-end of an employee lawsuit, or EEOC complaint, you’ll find the following statistics concerning:
- 1 out of 4 employers has an EPL-related occurrence every 5 years
- As many as 41% of EPL-related lawsuits are brought against private companies with less than 100 employees.
- The average cost to litigate an EPL claim is nearly $250,000, with private employment-law attorney rates averaging $350-650 per hour.
- The average cost of an EEOC settlement is about $40,000.
- The average cost to defend a nuisance suit is now above $30,000.
- The rate of age and gender-related discrimination and retaliation claims has risen dramatically over the last decade.
Given the increasing # of EPL claims seen in the daily business news headlines, it’s no surprise that employers are seeking protection in this area before they have problems of their own. And in addition to providing coverage for many of these scenarios, one of the biggest advantages of EPL insurance is that it is pro-active in nature (verses the reactive respond-once-you’ve-been-sued nature of General Liability many SMBs are used to): most EPL policies make resources available to their employer customers before a claim arises with the added benefit of a broad range of FREE Employment Practices services, including a call-before-you-fire HELP-Line for assistance with termination scenarios, employee manuals, proper policies and procedures, and general questions regarding HR practices.
But what if you’ve already protected yourself with good EPL coverage, what else can you do to better prepare for this increasing trend of litigation against employers?
Navigating Common EPL Claim Types
The following are some current trends in EPL claims, and actions you can take now to better prevent or defend yourself from them.
Retaliation Claims on the Rise
One of the more startling employment practices liability insurance statistics is that more than half of EEOC claims filed in 2020 involved claims of retaliation.
Action plan for employers:
- Establish a policy against retaliation and educate teams
- Implement a confidential process for managing complaints and communicating the anti-retaliation policy to complaining employees
- Document everything
#MeToo Movement Results in Spike of Sexual Harassment Claims
Sexual harassment claims represented roughly one-third (31.7%) of all EEOC claims filed. This includes LGBT-based sexual harassment charges, which have risen steadily for the past five years.
Action plan for employers:
- Develop clear policies against sexual harassment
- Provide training to prevent sexual harassment
- Create a company culture that does not support sexual harassment
Gig Economy Leads to Increased Wage and Hour Litigation Threat
Fair Labor Standards Act (FLSA) lawsuits increased dramatically over the last decade. Many of these lawsuits involve worker classification disputes.
Action plan for employers:
- Be ready to prove that your workers are classified correctly
- Keep up with new laws, such as AB5 in California
- Use the FSLA Handy Reference Guide
The Gender Pay Gap Remains
Full-time salaried women earned 80.7% of what men earned in 2020, according to the U.S. Bureau of Labor Statistics.
Action plan for employers:
- Create non-gender-specific policies that help all succeed, such as flexible hours and parental leave
- Develop mentorship opportunities for all
- Provide equal pay
Marijuana Legalization Impacts the Workplace
As of January 2020, at least 11 states allow recreational marijuana usage and more allow medical marijuana.
Action plan for employers:
- Keep up with new legislation on marijuana usage in your state
- Review relevant laws before firing or not hiring workers over marijuana usage
- Create drug policies that focus on maintaining a safe workplace
Like their larger counterparts, small and medium-sized businesses can be the target of potentially devastating EPL lawsuits. Helping protect thousands of businesses like yours, Eclipse Insurance can customize coverage to safeguard your company against any employment-related risks.
For more information about EPL insurance and other insurance and risk management solutions, please contact us today at 800-530-4448, or info@eclipseinsurance.com.
About the Author
Larry St. John is a 20+ year veteran of insurance and risk management for the construction and electronic security industries.
He can be reached at LStJohn@eclipseinsurance.com
