Posted By:

Kathy Eastman on May 15, 2014

What is EPLI and Why Your Business Should Have it in Place

With a plethora of policies in place to protect workers, having employment practices liability insurance (EPLI) is incredibly important these days. defines EPLI as “a type of coverage that protects businesses from the financial consequences associated with a variety of employment-related lawsuits.” Some common lawsuits that business owners may encounter stem from discrimination due to race, gender, age and disability.

They can also be due to other issues like wrongful termination, workplace harassment, wage violations and emotional distress. While you hope that you never have to deal these types of claims, arming yourself with employment practices liability insurance is a smart move that can keep your business above water in a worst case scenario. Here are some specific reasons why you should have it in place.


Why Your Small Business Should Have EPLI

In many cases, the businesses that are most susceptible to a backlash from employee lawsuits are small to mid-sized companies and startups. This is because they don’t always have the formal policies concerning employment practices that large companies have. Many lack a legitimate HR department, so they’re ill equipped to handle employee disputes.

The problem is that it doesn’t take much in this day and age to receive a lawsuit. In fact, you don’t even have to actually hire an individual to get sued. From the moment that an initial interview takes place, you’re at risk because a disgruntled person who doesn’t get a position could claim that they were discriminated against. Having EPLI should safeguard your business’s assets and prevent serious legal backwater.


Higher Volume of Lawsuits

With multiple laws like the Civil Rights act of 1966, the Equal Employment Opportunity Act of 1972, the Americans with Disabilities Act of 1990 and the Equal Pay Act of 1963, getting hit with a lawsuit is something that’s conceivable for all businesses. Regardless of your professionalism and how well you run your business, you’re never completely safe. Couple this with an increase in the U.S. Equal Employment Opportunity Commission filings, it’s almost a necessity to protect yourself. According to the Atlanta Business Chronicle, “EEOC filings reached 99,922 in fiscal year 2010, a significant jump from 80,680 filings in 1997.”

While it’s debatable as to the exact reason behind this spike in lawsuits, it’s suspected that it relates to the unemployment problem that still plagues much of the United States. Ever since the Great Recession of late 2007 to mid-2009, many people have been unable to maintain a steady job. Unfortunately, this has led to some people being out work and turning to desperate measures where they simply file a lawsuit to see what happens.

Due to these reasons, it’s more important than ever to get some form of employment practices liability insurance. Even if it’s frivolous litigation, you can’t be too safe, especially in today’s economic climate. This should greatly reduce your risk as a business owner and thwart any threats that could ruin your finances and reputation.




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