Most investors and directors will require that you carry this coverage, either as part of a Directors and Officers Liability Insurance or on a stand along basis, since they can also be held liable in suits relating to employment practices.

Employment Practices Liability Insurance is needed as soon as you start to hire employees. Since 2000, the number of employees alleging discrimination, wrongful termination, sexual harassment and retaliation has increased. EPLI policies shield employers from claims of harassment, discrimination, failure to hire, wrongful termination, and includes all current, former, and perspective employees, directors and officers, even the corporate entity.

The cost of EPLI coverage varies on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past. Such lawsuits, which range in size and scope, have been spawned by several factors:

  • Professional plaintiffs’ bars’ eagerness to sue employers for employment-related issues
  • Laws expanding employees’ rights in the workplace opening the way for new “causes of action” to be brought against employers, plus broader rights of recovery.
  • Increased third-party litigation brought by customers, consumers and clients seeking legal recourse for alleged discrimination or harassment
  • Directors and officers named for their role in day-to-day operations

Krauter & Company can help you take steps to prevent employee related lawsuits, and educate your managers and employees to minimize the occurrence for such issues in the workplace. Regardless of your business type or the effective employment practices and procedures, you are still vulnerable to employment-related liabilities. Therefore, it is important to create effective hiring and screening programs to avoid discrimination in hiring.