Why Do I Need Employment Practice Liability Insurance?

Why Do I Need Employment Practice Liability Insurance?

Business owners strive to hire qualified and capable employees. However, every hiring decision does not always go as planned. Even if an employee is terminated for legitimate reasons, every termination can open up the door for a potential lawsuit. Read on to learn from one business owner’s experience and find out how Employment Practice Liability Insurance (EPLI) can help protect you and your organization from costly, frivolous lawsuits.

When Mary, a Virginia business owner, received a complaint that her sales manager made crude, disparaging remarks to a female employee during a trade show, Mary took the claim seriously and conducted an investigation. During the course of her investigation, Mary spoke with another employee who witnessed the incident firsthand. According to this employee, the sales manager’s actions were offensive and harassing. Ultimately, after much deliberation, Mary fired the sales manager for his behavior.

Weeks later, the employee that witnessed the incident sued Mary for $500,000, claiming that after the incident, Mary had passed her up for promotion and assigned her poor sales territories, all because she came forward with the details of what happened at the trade show.

Although the lawsuit was groundless, Mary racked up hefty legal bills defending herself against the allegation.

Lawsuits like this can come out of left field and are much more common than you may think. Three out of five employers will be sued by prospective, current, or former employees while in business. EPLI will help mitigate these risks by providing resources to defend yourself and your business against a lawsuit.

Insurance experts predict that Employment Liability will only become more complex as costs for litigation and damage awards continue to climb. Call us at Midwest Insurance Group to learn more about EPLI and to discuss your employment related risks.