05/26/10

Employment Related Practices: A Growing Concern

Workplace discrimination claims are at an all-time high and small-business owners might feel vulnerable.  With a difficult economy and new employment laws making charges and lawsuits more likely, every business owner should consider purchasing Employment Practices Liability Insurance (EPLI). 

 

EPLI is a form of liability insurance that provides protection for an employer against claims made by employees, former employees, or potential employees.  It covers claims of discrimination, wrongful termination, sexual harassment and other employment-related allegations. 

 

Last year 53% of businesses surveyed indicated they had been sued over an employment related practice and currently 30% of lawsuits in the court systems are employment related claims.  Of those claims, the employee wins 60% of the time and the median compensatory award for wrongful termination is $250,000. 

 

The risk of an employment related claim is real and growing.  The US Equal Employment Opportunity Commission reported that discrimination claims reached the second highest level ever in 2009 with more than $376 Million awarded to employees.  Even an unfounded claim can cost an employer a substantial amount of money to defend. 

 

Actual Claims Scenarios:

 

  • A Bend, Oregon jury awarded $250,000 in damages to a tire store employee for emotional distress he claimed to have suffered from his ex-supervisor.  The employee filed suit against both his employer and his ex-supervisor accusing the supervisor of intentional infliction of emotional distress and sexually-explicit and verbally demeaning comments for two years.

 

  • An employee who desired to email a pornographic joke to only a single recipient accidentally pressed the wrong button, sending the off-color joke to the company’s entire workforce.  The employer made the employee send a follow-up email apologizing to the workforce.  Two months later, during a company downsizing, an employee sued for a hostile work environment and used the email as evidence.

 

  • A trucking manager alleged that he was defamed when a co-worker complained to a supervisor that she overheard plaintiff make inappropriate sexual remarks about young girls.  Without conducting an investigation, the plaintiff was terminated from his job.  $11.2 Million verdict in favor of the plaintiff; $10 Million in punitive damages.

 

If you are interested in getting a quote on EPLI coverage for your business, give us a call, we can usually provide an indication of cost in just a couple of minutes with a minimum of information about your business.