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Several months ago, a potential client called me to discuss several employee issues (e.g., employment discrimination, retaliation and wrongful termination) with me. During our conversation, I suggested his company purchase Employment Practices Liability Insurance (EPLI) to provide suitable legal protection in the event a past, present, or potential employee ever sued his company on any of those human resources issues. He said he did not have $6,000 for $1 million of coverage and thought EPLI was an unnecessary cost. Two months later, his company was sued by a former employee for $505,000. Sixty percent of American companies are sued by former employees every year. The employee wins nearly two-thirds of the cases, with an average verdict of $200,000 (not including punitive damages). EPLI protects the company, its directors, officers and other employees against a broad range of human resources claims, including discrimination, constructive discharge, sexual harassment, retaliation, wage and hour, wrongful termination, and other claims. Once covered, the EPLI carrier will normally reimburse the insured company for expenses (e.g., legal fees, settlements, judgments) incurred by handling the lawsuit regardless of outcome. Key Points. The following 10 issues must be considered when deciding to adopt EPLI coverage that provides maximum protection. It should also include employment related misrepresentation, wage and hour, wrongful deprivation of career opportunities, negligent evaluation of employees, failure to adopt adequate employment policies, defamation, and retaliation.
Summary. While not intending to increase costs to landscapers who are already overburdened by administrative expenses, EPLI should be viewed as another strategic shield protecting the company, its executive team and employees from people who feel they are entitled to something that is not theirs: the company’s money.
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