Employment practices liability insurance is generally used to help protect businesses from potential lawsuits that accuse a business of using inappropriate employment practices. For-profit businesses, however, aren’t the only organizations that can benefit from this type of insurance coverage. If you run a nonprofit organization in Massachusetts, here’s why your organization may want and EPLI policy.
Is Employment Practices Liability Insurance Right for My Nonprofit Organization?
What Are Employment Practices Liability Policies?
Employment practices liability insurance policies are a specialized form of liability insurance policies. They offer broad protections against lawsuits that might arise from a business’ employment decisions and actions. Some examples of incidents that a policy (depending on its terms and conditions) might cover include:
Discriminating against an employee or potential employee
Wrongfully terminating an employee
Fostering a hostile workplace environment
Allowing sexual harassment to occur in the workplace
Most EPLI policies offer protection for businesses from incidents like these. Many also extend the protections they offer to a business’ executives and employees.
Because almost any business can be accused of using discriminatory or illegal employment practices, most businesses that have employees should carry EPLI coverage. In fact, it’s often wise for businesses to get coverage before hiring their first employee because policies frequently cover the hiring process as well as employment.
Why Do Massachusetts Nonprofits Need Employment Practices Liability Coverage?
Some nonprofit organizations in Massachusetts should have employment practices liability coverage simply because they have employees. Nonprofits that employ people are employers, and they can be sued for using discriminatory or illegal practices just as businesses that employ people can. Nonprofit status generally doesn’t protect an organization from employment-related lawsuits.
Nonprofit organizations shouldn’t only consider EPLI coverage once they have employees, though. Nonprofits that have employees may face risks beyond those presented by paying workers, and those that don’t have any paid employees could still be sued.
Volunteers are often extended protections similar to those given to employees -- and volunteers can sue if they believe their rights have been violated. For nonprofits that rely on volunteers, this is a major potential risk. In some regards, it’s even greater than the potential risk faced by for-profit businesses because nonprofits frequently have more volunteers than comparable businesses have employees. Anyone who volunteers for a nonprofit in some official capacity, whether on a regular basis or as a one-off favor, may file an employment-related lawsuit.
Here are a few instances where a volunteer might decide to sue a nonprofit organization for discrimination or illegal practices:
A nonprofit unfairly prevents someone from volunteering because they’re handicapped
A nonprofit’s volunteer coordinator illegally discriminates against certain volunteers
A nonprofit ignored a volunteer’s claims that they were sexually assaulted while volunteering
For many nonprofit organizations, even an unfounded claim can be devastating without adequate insurance. Most nonprofits operate on tight budgets and don’t have the financial resources to fight or settle a significant lawsuit. Nonprofits also usually have a difficult time raising money from donors to defend themselves in such lawsuits. Without sufficient resources or insurance, the legal fees and settlement associated with a suit can ruin a nonprofit.
How Can Nonprofits Get Employment Practices Liability Insurance?
For help understanding and finding employment practices liability insurance, contact an independent insurance agent in Massachusetts. An independent agent who’s familiar with this type of insurance will be able to explain what coverages would be beneficial for a nonprofit to have, and they can request quotes for policies that have those coverages. They can then help compare the available quotes and select the option that’s best suited for your nonprofit organization.