Posted on: April 24, 2017 by Manchester Specialty
Today’s litigious landscape and evolving business regulations require that a comprehensive insurance program includes Employment Practices Liability Insurance (EPLI) to protect against employment-related claims. This is true for all types of organizations across all industry sectors, including home health and hospice providers. According to the insurance association Trusted Choice, employee lawsuits have increased by 400% during the past 20 years, with wrongful termination suits skyrocketing more than 260%. Also, it’s not only large corporations being hit with employment-related suits. About 41.5% of employee lawsuits are brought against private companies with fewer than 100 employees. The financial damage of employee lawsuits can be dramatic, with the cost of settling out of court averaging $75,000, and the average jury award hitting $217,000 if the case goes to court and the employer loses, according to Trusted Choice.
EPLI insurance is designed to respond to allegations involving employment-related issues from employees, job candidates, and former employers. These allegations include everything from discrimination (age, race, gender) and sexual harassment to wrongful termination, breach of employment contract, negligent evaluation, failure to employ or promote, wrongful discipline, deprivation of career opportunity, and wrongful infliction of emotional distress, among others. In addition, the home health care industry is also subject to third-party claims; for instance, if a client creates a hostile work environment for a caregiver by repeatedly making harassing comments.
An EPLI policy will provide coverage for legal costs, regardless of whether an organization wins or loses a case. The policy will also pay for judgments and settlements. Typically a policy will not pay for punitive damages or civil or criminal fines.
EPLI claim examples run the gamut. For example, a recent case that is now in litigation involves a former chief information officer (CIO) of an in-home oxygen and respiratory services provider. The CIO claims he had been offered a significant compensation package to join the company, including a salary, signing bonus, annual bonus, and relocation expenses to move his family near the firm’s headquarters where he purchased a home. He was fired five months after joining the company and has now filed a wrongful termination suit, alleging the employer ended his employment after tapping into his “specialized knowledge” to help with an acquisition. The suit also alleges that he received positive evaluations of his work during his short time at the company and was told by management “everyone enjoys working with you.” The suit also says “he received no substantially or even marginally negative performance review or criticism during the duration of his employment.”
Other types of claims may arise from the following situations: An employee handbook details a disciplinary procedure that requires two warnings with intervention prior to termination, but a caregiver is given one warning regarding late arrival and then terminated; an employment ad in a local newspaper states ‘English must be a first language,’ which is deemed discriminatory; or a highly paid nurse in the hospice industry is replaced by a younger, lower-paid nurse, and sues for age discrimination.
In addition to offering EPLI coverage, some insurers also provide loss prevention tools to help insureds minimize the possibility of an employment-related lawsuit. These tools may include a free online resource for companies seeking assistance with employment issues; discounted loss prevention consulting services from pre-approved, top law firms; access to HR consulting firms; and a toll-free hotline to a nationally recognized law firm.
Employers should also take the following measures in their organizations to help mitigate employment-related claims. These include:
Keeping up with changes in employment regulations and changing public attitudes has created increased liability for businesses – even for the most diligent employer. A client may have strict employee guidelines in place, but it’s impossible to know how employees will react to their workplace environment. With EPLI coverage, a client can be better protected to sustain the costly expenses incurred for defending an employment-related claim.
Manchester Specialty provides the home health care and hospice industry with Management Liability insurance, including EPLI coverage. For more information about our products and services, you or your local agent/broker can contact us at 855.972.9399.
Sources: I.I.I., Trusted Choice, Law 360
Posted in: Employment Practices Liability