Purchasing Coverage for Employment Practices Liabilities

You’re potentially at risk of an employment practices claim from the moment you interview a prospective employee. Small businesses run a much greater risk simply because they don’t often have substantial coverage in place for this exposure. So, anytime you choose not to hire an interviewee, that individual could allege that the decision was due to some sort of discrimination.

Unfortunately, lawsuits that challenge employment practices, such as wrongful termination, discrimination, harassment and privacy violations, along with claims under federal and state employment statutes, have escalated in recent years, perhaps due to improper training of those tasked with the responsibility of interviewing job applicants. Connecting with an Insurance Agency in Needham can help determine if your company is at risk.

EPL claims costs can affect your bottom line

A variety of laws are in place to protect the rights of people you hire or are considering hiring. The cost of insuring your business with employment practices liability insurance (EPLI) will depend on a variety of factors, such as the number of people you employ, and whether or not you’ve had prior suits lodged against the company. Other factors that may come into play is your percentage of employee turnover, and if you currently have established rules and practices in place.

The number of suits filed annually under the Fair Labor Standards Act (FLSA) has more than tripled in the past decade. While somewhat alarming, this is a fair indication of the litigious nature faced in today’s society and just how essential having employment practices coverage really is.

EPLI policies issued on a claims-made basis

Usually written on a claims-made basis, policies can cover claims resulting from specified wrongful employment acts or omissions that are made against the insured during the policy period. There may exist concerns over whether or not the circumstances surrounding the alleged wrongful employment practices constitute a claim and if so, when such a claim was actually first made, which would give rise to a reporting obligation by the insured.

One needs to consider whether the conduct at issue is covered under “wrongful acts” and “loss” under the EPLI policy’s insuring agreement. In fact, there may be questions concerning the doctrine of inferred intent as well as exclusions that can be found in EPLI policies. These are issues that are best discussed with an Insurance Agency in Needham to get the expert knowledge of an agent that regularly deals with questions related to this coverage.