Insurance: Consider employment practices coverage

BY CAROLYN B. RZEWSKI, CPCU, CPIW
If your company has not purchased an employment practices liability policy, you may want to give it serious consideration. This type of policy protects companies and individuals against loss (damages and defense costs) arising out of employment practice disputes. The most common allegations include discrimination, sexual harassment, wrongful termination, failure to employ or promote and wrongful discipline.

Studies have shown that an employer is more likely to have an EPL claim than a general liability or property loss. More than 40 percent of all employment practices claims are filed against private employers who have between 15 and 100 employees. In 2008 there were more than 95,402 private sector charges filed, which represent a 15.2 percent increase from 2007. It has been determined that the average cost of a claim against a smaller company is around $50,000 when payment is made to the plaintiff.

An employer can also minimize the odds of an EPL claim by establishing a few risk management practices. Maintain an employment practices handbook. Document employee supervision and set up grievance procedures. Circulate written discrimination and sexual harassment policies annually to all employees. With sound risk management practices and an EPL policy, your business assets should be well protected. ■

Carolyn B. Rzewski, CPCU, CPIW, is vice president of Rogers & Gray Insurance Agency Inc. She can be reached at (508) 760-4607 or rzewskica@rogersgray.com.

Published in Cape & Plymouth Business October 2009