• Robert Truska

What Is Employment Practices Liability Coverage?

One of the newer forms of liability coverage for businesses—employment practices liability coverage—is designed to protect you as an employer from the potential liability that comes along with having employees and following all of the appropriate laws in relation to them.

You do your best to hire fairly and treat your employees appropriately, but that doesn’t mean you will never encounter a situation where you or your company are accused of doing the opposite. Unfortunately, suing an employer for discrimination based on age, race, gender, or several other protected factors is not uncommon these days. Being faced with such a lawsuit can do serious damage to your company financially, even if you win the suit.

Employment practices liability insurance can protect you from this sort of lawsuit and the financial fallout, but that is not all. It can also protect you in the case of sexual harassment and wrongful termination suits, as well as a host of other possible situations that can arise when an employee feels unfairly treated.

These lawsuits have become so common that employment practices liability coverage has become a must for anyone with employees. In many cases, you will be required to carry it by your directors and investors, because they too can be held accountable in the case of a lawsuit. This coverage will protect not only you, but all of the people in your company who might become the target of a lawsuit. This includes your directors and managers—everyone who is in a position of authority and might be involved in accusations of unfair employment practices.

From the moment you start to interview a potential employee right through their termination process, whatever their reasons for leaving, you are vulnerable to a potential lawsuit. There is no reason to risk having your business destroyed or damaged in a serious way because of a misunderstanding or an employee who isn’t happy about their termination. Remember that there does not need to be any real grounds for the suit; all it takes is to have to fight an expensive battle in court to leave your company struggling, especially if you are a startup. Every company, new or old, needs to be protected. Carrying the right liability coverage is an absolute must for all companies from the moment they start to think about hiring.

If you are not certain that you have employment practices liability coverage, take the time to go over it with your insurance agent. If you know you don’t, call your agent and protect your company right away.

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