It’s really easy for your employees to sue you for discrimination, harassment, wrongful termination or anything they want to make up. They do not even need a lawyer. All they have to do is file a complaint with the state EDD department and the state will serve you a demand for damages and info. Then you have to hire a lawyer to defend yourself. Even if you win with the state EDD pro employee bureaucrats the employee can still hire an attorney and sue you.
If the EDD finds against you they will prosecute you for free. We had an employee do this and the EDD ran up $5000 in legal bills on our end just so they could justify their jobs before finding the case without merit 9 months later. Good thing we had paid $3000 a year for coverage.
Here is an example of what could happen to any company. A man was fired by his employers 5 years ago. According to him, a few days after he told his supervisor about an unethical business practice he found his company was indulging in, he was fired on grounds of his age (he was 71) and the need to cut the wage bill. He sued to company for wrongful termination and age discrimination. He recently won the case and the
total award, on different grounds, was $3.5 million. In the meantime the company he worked for was bought up by another business and that business is now stuck with the cost.
The question here is not whether the man had a legitimate claim or not. The new owners of the company are stuck with a huge payout, not to mention the cost of the legal fees they have borne. If it has EPLI, it is protected. If not, that kind of payout is going to have a serious effect on the bottom line.
And what happens to the manager who conducted the due diligence before the take over? Maybe the facts of the case convinced him that the employee could not win and that the chance of having to pay out a large sum of money was so small it was a risk worth taking. Maybe he acted in the best interest of his employer. But now that the case has been lost, what happens to him? Is he busy working on his resume?
However, if there was EPLI, then any risk was covered and the manager, his company
and the bottom line are all protected.
With Employment Practices Liability Insurance, a business is typically covered against:
- Wrongful termination of employment
- Workplace discrimination
- Workplace harassment
- Emotional distress
- Some defamation claims
- Some privacy based claims
We had one client that declined the EPLI coverage. The next year they lost a $750,000 sexual harassment case against a manager. The manager was fired AND the CONTOLLER also was fired. If you are in charge of buying your companies insurance protect your job and buy EPLI. We live in CALIFORNIA after all.
It could happen to any business. Why risk it happening to you when EPLI can provide an effective line of defense?