Employment Practice Liability Insurance Policies are Now a Necessity as Risks are Becoming More Severe

In today’s world, companies are facing more employment-related lawsuits. The probability that a company faces an alleged employment practices violation continues to increase and so does the severity of the losses from this type of lawsuit. Additionally, there are immeasurable damages to the reputation of the company and its employees. Since the consequences of these lawsuits are extremely detrimental, it is not just recommended, but necessary, for companies to have updated employment policies and procedures, as well as an Employment Practices Liability (EPL) insurance policy.

There are four trends that are increasing the exposure of EPL:

  1. Juries typically pay more attention to emotional damages than lost wages. Allegations from the claimant regarding harassment and/or discrimination could include embarrassment, anxiety, depression, lost sleep, health complications, etc. In this case, it is difficult to create a monetary value for the damages that occurred.
  2. Social Media has increased reputational risk. The #MeToo movement has raised awareness about sexual harassment by allowing victims to share their stories, but the movement also increased company profiles and potentially false claims. Due to the power of social media, a company may not even have a chance to defend themselves since a story can rapidly develop and the reputational damage is already incurred.
  3. Plaintiffs’ attorneys go after disability discrimination cases. Practices that violate the Americans with Disabilities Act can also expose risk to a company and lead to a large settlement. The most common risk exposure is that a company’s website is not accessible for the deaf and blind.
  4. State regulations differ, which elevates complexity. Not only do companies need to be continually monitoring federal regulations, but each state has varying laws and regulations that a company must ensure compliance with. Specifically, there are different state-based laws regarding the LGBTQ community, as well as discrimination based on physical appearance. This is an important factor for multi-state employers to keep in mind.

As these EPL trends continue to grow, it is important that your company has risk control and risk transfer strategies set in place. That way, if there is an EPL claim, there is a strategy in place to mitigate the risk. One item to consider is to ensure your employees are able to raise concerns without fear. The best way for change to occur is from the top down.

If you do have an EPL policy, be sure to review it because many policies come with a free service(s) from the carrier. If you’d like to discuss Employment Practice Liability insurance policies, please contact me.