These are tumultuous times for small business owners. The economy has not only made running a business difficult, but managing the business is difficult as well.
Small business owners can no longer look at their employees as one big happy community working together for common good. When the effective unemployment rate is at 15% (or higher depending where you look), employees get desperate.
Your employees are not your friends. Your employees are not your family. And even if they are. . .
Your Employees Are Your Employees
Gone are the days of losing your job and quickly jumping into a new one. So when a business decides to let an employee go, every “T” must be crossed and every “i” must be dotted.
More and more former employees are looking for ways to cash in on being fired.
According to an article in the NY Times by Paul Sullivan, a report released in March from the Equal Employment Opportunity Commission said claims were up 15 percent last year, to 95,402. The highest number in the agency’s 44-year history. Mr. Sullivan hypothesizes that with the unemployment rate continuing to increase, this trend of discrimination and wrongful termination claims will likely climb again this year.
So how do you protect your business against such claims?
There is an insurance product, (outlined below from this III.org article), called Employment Practices Liability or EPLI. Employment Practices Liability provides protection against many kinds of employee lawsuits, including claims of:
- Sexual harassment
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
- Deprivation of career opportunity
- Wrongful infliction of emotional distress
- Mismanagement of employee benefit plans
Employment Practices Liability is overlooked far too often by small business owners for various reasons (employees are considered family, don’t want the expense, assume coverage included in Business Owner Policy, etc.). Considering the amount of coverage an Employment Practices Liability policy provides a business the cost of such a policy is very inexpensive.
If you are a small business owner or decision maker in your business, I highly recommend taking a longer look at an Employment Practices Liability policy. I’ve personally have had clients as small as five employees deal with claims related wrongful termination.
And these types of cases can get ugly and expensive.
Respect Employment Practices Liability
The headaches and legal expense associated with a wrongful termination or discrimination case are horrible. The legal expense alone picked up by the insurance carrier, even in frivolous lawsuits, make the policy a worthwhile investment.
Employment Practices Liability provides a solution to those concerns. You shouldn’t have to sweat terminating an employee that is under-performing.
Yours in Insurance,
Insurance Protection Photo via Shutterstock