You hire people you trust and try to treat them fairly. A lawsuit might be the last thing on your mind, especially when your team is small. Still, a claim about how you treated a worker can lead to legal fees. Employment practices liability insurance, or EPLI, is designed for certain claims like these. It can help pay to defend and settle covered claims, such as harassment or unlawful firing.
Some owners I work with have never heard of this coverage. Others have it but may not know how much it pays. I want them to understand the risk and what they can do about it. That needs to happen before there is a dispute.
A hiring mix-up can create a real dispute
I dealt with a dispute caused by a mix-up between a staffing firm and the company using its services. A worker had moved for a job that was not there. The worker was owed money for the move, and we discussed filing a claim. That experience showed me why clear hiring plans matter to both the business and the person taking the job.
I’m not describing that as a confirmed insurance payout. A dispute over promised payments can face different coverage rules than a claim of bias or harassment. Some policies exclude money owed under a written job contract or for certain wage and expense claims. We would need to review the facts and the policy to see what might be covered.
Your other policies serve different purposes
A customer’s fall is the sort of claim general liability may cover. Claims about how you treat your staff call for a different review. EPLI can help with covered claims of discrimination, harassment or wrongful termination, which means an unlawful firing. It can also address retaliation, such as a claim that a worker was fired for reporting harassment.
Workers’ comp deals with job-related injuries and illness. Its employers liability section covers certain lawsuits tied to those injuries. Despite the similar name, it is not the same as employment practices coverage.
An umbrella is not something I would assume fills this gap. We need to check the policies it sits above and what it excludes. Extra limits for employment claims may need to be bought on their own.
Check what the limit has to pay for
The limit is one of the first things I check. Some owners already have a small amount of this coverage in a business policy. I want to know what that limit must pay for and how it fits the needs of the business.
On some policies, legal fees use up part of the same limit that pays a covered settlement. That leaves less money to resolve the claim as the defense bill grows. The business may also need to pay part of the claim itself. That amount is called a deductible or retention, and we should review how it works.
I would not choose a limit based only on the size of the team. I would look at how the business hires, pays and manages staff. Then I would compare coverage options and costs with the owner. We should also discuss how much the business could pay toward a dispute without putting jobs or cash flow at risk.
Some claims can come from customers, too
I also look for third-party EPLI, which can cover certain claims from people outside your staff. Customers or vendors might claim they faced harassment or discrimination while dealing with your business. The coverage may be built in or need to be added. I check instead of assuming that it is there.
That does not mean the policy covers every unhappy customer. A poor-service complaint or refund dispute is not enough by itself to establish coverage. We need to look at what the person claims happened and what the policy actually covers.
Put support in place before a complaint
In applications, I have seen carriers ask about staff counts, the highest salaries, handbooks and turnover. Those questions help us look at how the business runs, not just how much insurance costs. They also give me a chance to ask where the owner needs help.
A handbook is a place to start, but staff need to know how to raise concerns. Managers need to know how to respond and who can help. Federal workplace guidance recommends clear rules, more than one way to report harassment and training for staff and managers.
As your agent, I can help you find support to make those changes. That may mean help with a handbook, staff training or an issue that calls for an employment attorney. I would bring in a qualified human resources or legal professional when their skills are needed. You should not have to figure out every part of employment law on your own.
We should also review when your policy requires you to report a claim. A written demand or agency complaint may count as a claim before a lawsuit is filed. Report it promptly under the policy’s rules rather than wait for a court date.
At Craddock Insurance, we can review your coverage and discuss the way your business hires and manages staff. We will look at your limits, third-party protection and the resources that may help you avoid disputes. The goal is to help you treat people fairly and have a plan if a claim arises.
Coverage depends on the policy’s terms, exclusions, limits and reporting rules. This article provides general information, not legal advice. Speak with a qualified human resources or legal professional about specific workplace issues.