The Need for Employment Practices Liability Insurance in Today’s Environment

This past year has brought to the forefront many workplace issues that businesses need to address – from sexual harassment to discrimination to gender inequity and pay leave. As a result employers, including those in the home health care industry, should take another look at their company culture and all of their practices to ensure that there is zero tolerance for certain behavior in the workplace and that proper procedures are indeed in place. Businesses should also be taking a fresh look at their Employment Practices Liability Insurance (EPLI).

The Employment Practices Landscape

It’s important for businesses to revisit their sexual harassment policies, complaint and investigation procedures, and training programs – particularly in light of the storm of sexual harassment allegations and incidents that continue to surface. Be sure the training goes beyond focusing on simply avoiding legal liability and truly connects with employees.

Organizations should also look at how recent legislation in many states and cities banning salary history questions during the interview process could affect their hiring practices. In an effort to combat wage disparities based on gender, these laws generally prohibit employers from asking job applicants about their prior or current compensation and relying on salary history to set pay levels. It’s important for home health care providers to be familiar with the laws in their states/cities to ensure compliance in hiring new employees.

Paid family leave is another area for businesses to review. California, New Jersey and Rhode Island currently offer paid family leave, with New York having recently joined the list in January 2018. Washington State and Washington, D.C., have also passed such laws, but they won’t take effect until later. Employers need to understand the calculations and other mechanisms of the law and how any new requirements compare to current employer offerings. Any changes should be reviewed legally and reflected in the organization’s employee handbook.

EPLI Coverage

In addition to reviewing an organization’s employment practices, it’s also prudent to review the type of coverage in place in the event of an employee-related dispute or lawsuit. Employment Practices Liability Insurance is designed to respond against allegations made by employees, former employees and candidates of employment violations committed by employers and/or their employees, including sexual harassment, discrimination and wrongful termination. It provides the cost to defend a lawsuit as well as for settlements and judgments.

Why is EPLI so important? According to Trusted Choice, about seven out of 10 businesses don’t carry EPLI insurance despite that, over the last 20 years, employee lawsuits have risen roughly 400%, with wrongful termination suits jumping up more than 260%. In addition, the likelihood of an employer being hit by a discrimination charge of any kind is higher than employers may realize. In 2016, U.S. companies had at least a 10.5% chance of having an employment charge filed against them, according to the latest data of employment charge activity from the Equal Employment Opportunity Commission (EEOC) and its state counterparts. Employment charges are typically the first step toward employment suits. Employment discrimination charges can be based on race, sex, disability, age, national origin, religion, color and others in addition to sexual harassment. Most employers with at least 15 employees are covered under EEOC laws.  

Furthermore, a business that employs between 1-50 employees is more likely to have an EPLI claim than a Property or General Liability claim. The financial damage of employee lawsuits can be significant; the cost of settling out of court averages $75,000, and the average jury award hits $217,000 if the case goes to court and the employer loses.

Manchester Specialty specializes in insuring the home health care and hospice industry, and offers EPLI solutions to help protect organizations in the event of employment-related allegations. For more information about this coverage and other industry-specific insurance products, you or your local insurance agent can contact us today toll free at 1-855-972-9399

Sources: Insurance Journal, Trusted Choice