Twenty years ago, EPLI wasn’t widely used in the United States; even a decade ago, most companies didn’t buy it. Today, while many companies have stand-alone EPLI coverage, only about 20 percent of businesses with fewer than 50 employees had it as recently as 2015, according to Advisen, a data, media, and technology solutions provider for the commercial property and casualty insurance market.

EPLI for Small Business

Over the years, the EEOC, the federal administrator of employment practice laws prohibiting discrimination, has simplified the process of filing a charge or claim. Additionally, with access to information online, along with exposure to high-profile discrimination and harassment cases in the media, more employees are aware of their rights.

Without an HR department or, at least, an employee handbook, small businesses are more likely to be involved in an employment claim than their larger counterparts. In fact, according to the 2015 Hiscox Guide to Employee Lawsuits, businesses with fewer than 500 employees have an 11.7 percent chance of having an employee file a claim or suit for discrimination.

Poor judgment is bad for business

Understanding your employees’ rights is paramount to protecting your business. In 2016 alone, employee accusations ranging from discrimination to wrongful termination led to the EEOC securing more than $482 million in settlement payouts secured for employees who filed such charges.

Here are several statistics to think about:

• 80,000 EEOC discrimination charges are filed annually
• The average cost of defending an EPLI case in court is between $200,000 and $300,000
• The average cost to have a meritless claim dismissed is between $10,000 and $15,000
• $700,000 is the average jury award in wrongful termination lawsuits
• $58,000 is the average amount paid on a sexual harassment complaint
• 55 percent of employment claims result in money awards to employees
• The probability of the plaintiff winning an EPLI-related case at trial is 51 percent
• $2.7 million is the average amount of punitive damages awarded in employment cases

For more information on these statistics, see the Resources section at the end of this article.

Learn More About EPLI Coverage

Understanding what EPLI coverage is and how it affects small business owners is the key to ensuring that your business is covered in the event of an employment practices lawsuit. Read our article “Building a Case for EPLI Coverage” to learn more. Then subscribe to our blog to get a once-weekly email notification about new content.

This material is for informational purposes only, summarizes coverages and services that may be available in a policy, and is not legal or business advice.  Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose.  Readers seeking resolution of specific questions should consult their business and/or legal advisors. Individual coverage may vary and may not be available in all states.  In the event of a conflict with the material herein, the terms and conditions of any issued policy will control.

Resources

Equal Employment Opportunity Commission

The American Bar Association

Insurance Journal

Conflict Solutions Center

Complete the picture: A spotlight on the United States Employment Practices Liability Insurance market, a study conducted by Advisen, September 2014