What is Employment Practices Liability Insurance?
Employment practices liability insurance (EPLI insurance) helps protect businesses from lawsuits that accuse businesses of illegal employment practices. Depending on the terms and conditions of an EPLI, it might provide coverage for suits that accuse a business of:
- Discriminating against pregnant job applicants
- Running illegal background checks
- Not paying interns properly
- Discriminating against workers based on their race, ethnicity, or gender
- Permitting sexual harassment in the workplace
(These are just a few examples of the types of accusations that a policy may protect a business from).
What Massachusetts Businesses Can Benefit from EPLI Insurance?
Any business that has at least one employee might be accused of not following all required employment practices. Therefore, most businesses in Massachusetts that have one or more employees ought to consider getting an EPLI policy. A small cafe in Springfield, MA and a major corporation based in Boston, MA could both be sued over employment practices -- regardless of whether they actually broke the law -- and both can benefit from coverage. The same is true for almost every other business in the state that has employees.
Additionally, non-profit organizations may want to secure EPLI coverage regardless of whether they have employees. The protections that EPLI policies provide often can be extended to include volunteer situations, and a policy might help protect an organization if a volunteer claims they were discriminated against or harassed. Although the likelihood of a volunteer making such accusations may be low, few non-profits have the financial resources necessary to legally defend themselves from such accusations without significantly hurting their financial situation.
Do Businesses That Follow Employment Laws Really Need EPLI Insurance?
Almost any employee could file a lawsuit alleging that they were mistreated by their employer -- regardless of whether they actually were. Such accusations, even if they’re unfounded, can drain a business’ finances. Legal fees for such cases can easily total thousands, if not tens or hundreds of thousands of dollars.
Because almost any employee or applicant can make such accusations most businesses -- regardless of whether they follow all applicable laws -- can still benefit from EPLI insurance. The coverage can help pay for a business’ legal defense if it’s accused in a covered case.
When Should Businesses Look for EPLI Coverage?
Businesses should consider obtaining EPLI coverage before they hire their first employee. Most policies cover hiring practices and decisions, but they usually only provide coverage for incidents that occur while the policy is in effect.
Similarly, non-profit organizations that want to EPLI coverage to protect them from volunteers’ accusations ought to look for a policy before they begin bringing on volunteers. If a policy isn’t in place when volunteers are being screened, an organization probably won’t be protected if someone claims they were discriminated against during the process.
How Can Businesses in Massachusetts Get Employment Practices Liability Insurance?
Massachusetts businesses might be able to get employment practices liability insurance through a workers compensation insurance policy, either as a standard coverage or an add-on. Businesses that can’t obtain EPLI insurance through a workers compensation policy often get a stand-alone EPLI policy. An independent insurance agent can help businesses explore both of these options.
