EPLI: Protecting Employees and the Business in the #MeToo Era

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While fostering a discrimination- and harassment-free work environment has always been important to good employers, it has become an even greater priority in recent years. With high-profile sexual harassment scandals, as well as racial and gender equality issues making headlines on a regular basis, operators of businesses of all sizes and across all industries have to be prepared should an employee make an accusation of unfairness, discrimination or wrongful termination against the company.

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Consider these cases of employment practices liability (EPL) claims:

  • A former employee sues a business, claiming sexual harassment in the workplace and failure to prevent sexual harassment on the part of the company.
  • A former employee files a lawsuit which alleges the company engaged in gender discrimination and whistleblower retaliation.

What recourse does the business owner have? How will he or she retain a good lawyer and cover the legal fees? If the business owner does not have appropriate and adequate insurance coverage in place, the costs of defending EPL claims can skyrocket quickly and cost the business exponentially.

Unfortunately, even if management has worked diligently to maintain a harassment- and discrimination-free work environment, a building and lumber material dealer could find themselves named in a lawsuit brought forth by an employee who feels wronged in some way. When that happens, the dollar signs quickly add up because even baseless allegations must be defended.

According to the EEOC, 76,418 charges of equal opportunity employment violations were filed with them in 2018. During that same time period, the commission resolved 90,558 charges of EEO violations and secured $505 million from employers for victims filing the claims. Charges were based on employer violations related to race, sex, national origin, religion, color, age, disability and equal pay, among other things.

When broken down by company, the average cost of such a claim could be catastrophic to a small-to-mid-sized business. According to an August 2018 article in HR Magazine, Hiscox found that the average cost for the defense and settlement of an employment law-related suit is $160,000.

Best Practices in EPLI Risk Management

Society has changed at a rapid pace over the past year or so under the #MeToo movement and other calls for equality. As a result of these shifts, changes are being made across the country at the state and federal levels to update statutes and employment laws, as well as employer record keeping and training requirements.

Retaliation is one of the fastest growing EEOC charges and forms a part of many multi-charge EPL insurance claims. Other specific drivers of EPL-related actions against employers in today’s workplace include issues stemming from: social media, mobile devices, marijuana legalization, telecommuting/job sharing, pregnancy, and the Defense of Marriage Act. Existing employees, former employees and even rejected job applicants have a legal right to file actions against employers.

Business owners, including lumber and building material dealers, can take steps to make sure their businesses are up to date on new requirements and more.

First, employers should make sure they have comprehensive employment practices liability insurance (EPLI) in addition to their business owners policy because it is not always included. EPLI, as it is commonly called, allows businesses to protect themselves against these issues. An EPLI policy will cover the legal cost of defending against these claims. While many employers believe their general liability insurance provides adequate coverage for these employment practices violations, they are incorrect.

The Right Partner

In addition to securing adequate EPLI coverage, creating an actionable risk management plan will be critical. While larger employers may have internal human resources departments and legal teams to assist with claims of wrongdoing against employees, small-to-mid-sized companies often do not. The landscape is changing and becoming more challenging for employers to navigate. This is why trusted partners, like your business’s insurer, can be invaluable. Some insurers provide EPLI programs, not just coverage. These programs provide resources that can help you understand recent changes in employment practices, assist in risk management, and provide legal advice.

While the wood industry may not have considered EPLI coverage essential in the past, it should now. Working with an insurer who knows the ins and outs of the risk exposures facing lumber and building material dealers can help you navigate these newly emerging risks.

EPLI coverage provided through Pennsylvania Lumbermens Mutual Insurance Company provides broad coverage and meaningful limits at affordable premiums. Aside from covering charges brought by employees, it also covers any potential charges brought by customers or vendors. And, to support small-to-mid-size policyholders who may not have such resources in house, the coverage offers:

  • PLM Employer Protection, an online loss prevention program
  • A toll-free legal advice line
  • Specialized claims handling by experienced professionals
  • Access to experienced employment law firms

To learn more about EPLI coverage provided by Pennsylvania Lumbermens Mutual insurance Company, visit our website at https://www.plmins.com/epl/.

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