Running a business has enough challenges for any business owner. And with the inflation and employment situation that we currently find ourselves in, it's enough to make a business owner pull out all of their hair. I know it has for me anyway.
But when outside lawsuits stemming from things out of your control threaten your business, those challenge levels rise in an unwanted hurry. Having the right protections in place will give you peace of mind while the legal action against you, an employee, and/or your company takes suit.
While you may have an employee handbook today to guide your employees in proper behavior, it's also important to have Employment Practices Liability Insurance. This is a type of business insurance that protects employers from the expenses of being sued (legal costs, settlements, damages) by employees for the actions which they take on behalf of their business.
There are four main pillars to this coverage:
1) Discrimination
2) Wrongful termination
3) Harassment
4) Third Party
We will explore each pillar, including what it covers and how you can protect your company with employment practices liability insurance.
One of the most frequent employment-related claims is discrimination. It can happen with hiring, firing, and even internal promotions. It's wildly important to have documented processes in place for the elimination of discrimination through an employee handbook, but it is just as crucial that you protect yourself from potential problems that simply come with an accusation.
The definition of discrimination in the workplace is behavior that negatively impacts people, and can be based on any number of things, though it has traditionally involved race or gender.
"Discriminatory practices or policies at work" are examples of behavior that has been shown time and again to have an adverse effect on minority groups, gender groups, or people living with disabilities. It's important not only because these actions hurt individuals by limiting opportunities, but this can also create a hostile environment where creativity can't thrive. As a result, productivity plummets which is not a good recipe for healthy, business growth.
Though most well-meaning, business owners would not look to discriminate, it doesn't prevent employees from claiming you or your policies put them in a situation of emotional distress as a result. Therefore, it's important to make sure that you are protected from an employee lawsuit.
Let's face it. If you've been in business and hired people for any time at all, you've likely had to fire someone. It's almost inevitable. And though you may take the most careful steps possible for documenting work behavior and performance, this doesn't prevent a wrongful termination lawsuit from hitting your business doorstep for a breach of employment contract.
When an employee is fired, they may feel hurt or angry. They can easily see that a career opportunity has been removed from their future. It's important to understand why this happened so the firing doesn't turn into an employee claim of wrongful termination.
Bringing a wrongful termination suit usually begins when an employee thinks they are fired for an unjust cause. All it takes is a former employee "believing" their employer fired them for unlawful reasons to put your business on the line for having to pay back wages, benefits, punitive damages, and even covering the legal fees of the claimant. Fortunately, an employment practices liability coverage can handle such claims for you.
Harassment claims can come in many sizes, shapes, and forms. The claims can be made by employees against both supervisors and other employees. No matter how much preparation is done by Human Resources to mitigate this risk, inappropriate workplace conduct can happen at anytime. One employee making a claim can bring trouble to the whole company. That is why it is important for companies to have both a clear workplace policy on harassment and an employment practices liability insurance policy to protect against your business.
Do you know that four out of five sexual harassment claims are due to just one employee?
Harassment at work is defined as any unwanted contact made between an individual and their co-workers. This could include physical gestures, emails or phone calls with offensive language, etc., but it also covers anything that makes you feel uncomfortable. An invasion of privacy occurs when someone shares information about your personal life without permission such as “spying” on social networks sites like Facebook. While this may seem harmless to you, your employment practices insurance may need to defend your business if it helps violate a restraining order that was put in place by an employee against someone in their life. It's important to realize
These claims can be made by both W2 employees and independent contractors. Since unwanted contact leaves room for multiple types of claims, it is important to do ongoing training to limit your employment practices liability risks.
You could have the best employee, company, products and/or services around, but that doesn't guarantee all the people your company interacts with will experience the same. If one client, vendor, supplier, distributor, or customer has a bad experience with your company employees, services, or products, you may see a lawsuit. This is one of the risk factors that can be more difficult to manage since employees can be off site and out of your immediate control or processes when something happens. This makes managing employment claims even tougher.
Additionally, if someone gets sick due to a product, if one of your employees damages the property of a client, or if a supplier slips and falls at your location, it's good to have coverage in place that will protect businesses against claims made for property damage, bodily injury, or other liability issues.
To be clear, this does not protect you like professional liability insurance. But it does offer insurance coverage for the interaction that your employees or independent contractors with other parties that could result in compensation claims.
Understanding that these risks are typically not covered by a basic Business Owners Policy, you are likely wondering how to secure this valuable insurance policy. The first step is to identify and work with an independent insurance agent who specializes in commercial Texas insurance. These agents have the specific knowledge which allows you to properly mitigate the cost of employment practices which can save you substantially over time.
Insurance for Texans is an independent insurance agency, we work on your behalf to secure the best business insurance policy possible whether that is general liability or employment practices liability insurance. Our agents work with many insurance companies to provide you the best options for risk mitigation services. We are business owners just like you, and we know what type of coverage is necessary and think through the "What is?" along with the "What if?"
Hit the button below to begin a conversation about employment practices liability insurance and other coverage that your business needs.