It’s easy to feel as if employing people is a legal minefield. This is mainly because there is so much potential for lawsuits over wrongful termination, harassment, discrimination and workplace conditions. Employment practice liability insurance (or EPLI) is a coverage designed to protect the insured against the risks associated with running a business. EPLI policies cover a range of risks such as wrongful termination, sexual harassment, contract violations, and wage and hour law violations. In a world where courts tend to favor the employee, whether they are right or wrong, an EPL policy can be the difference between keeping a business open or not.
EPLI policies often cover the business itself, as well as individuals like company directors.
Employment practice liability insurance policies are usually written to cover cases that come out of unintentional actions (or failures to act) rather than deliberate acts of discrimination or other wrongful practice. Employee discharge is a big risk for an employer. While an employer has the right to hire and fire at will, an employee can threaten to sue for wrongful termination. Even if the employer is innocent, the legal fees to prove it can add up quickly so the easiest way is to simply settle the suite.