Employment Practices Liability:
What's My Exposure?

For business owners, the workplace is a minefield. Many employers feel that almost any encounter with employees could be construed as racial discrimination, sexual harassment, or age bias. In fact, a survey of small business owners found that 92 percent believe they will face an employment claim – no matter how carefully they manage their employees.

The numbers support this statement. In 2017, 84,254 charges were filed with the EEOC. Half of these claims targeted smaller businesses.

Even though 75 percent of claims are found to be groundless, defense costs are high. In 2017, a record high $482,000,000 was paid in claims settlements. In estimate, the average Employment Practices Liability claim settles for $125,000, and 25% of the claims were for $500,000. Click here to see the most recent statistics, legislation, and information about EPL claims.

Employment claims can be distracting and emotional for business owners. They may feel betrayed by employees they've known and trusted. It can take more than a year to resolve and many businesses suffer while owners fight a claim.

What concerns owners? A recent survey found discrimination claims based on race, age, gender, or other factors are what they fear most, followed by sexual harassment and wrongful termination. The results mirror official reports.

Small business owners agreed to share their experiences. Here's what some had to say:

  • "I was stunned to learn that defending a suit could cost upwards of $40,000."
    Michael, telecommunications firm owner
  • "Legal fees cost about $25,000, not to mention our lost time and productivity."
    Steve, tool shop owner sued by a longtime employee for wrongful termination
  • "It was the hassle factor that was so damaging. The entire ordeal caused a lot of sleepless nights."
    Owner of a small manufacturing plant
  • "I spent $25,000 in lawyer fees in a case that didn't end up going anywhere."
    Jeff, the owner of a golf course, accused of discrimination

Employment Practices Liability coverage is a simple and affordable solution specially designed for businesses to provide protection against employee claims. Contact your independent insurance agent to find out more about Employment Practices Liability coverage.

The Employment Practices Liability coverage described here is in the most general terms and is subject to the actual policy exclusions and conditions. For specific coverage details and policy exclusions, refer to the policy itself or contact a Central Agent.

Statistics courtesy of Hartford Steam Boiler.

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