Who Needs Employment Practices Liability Insurance?

Employment practices liability
Employment practices liability

Many often wonder what the differences are between employment practices liability insurance and general liability or workers compensation coverage. This uncertainty can lead many to overlook such coverage as part of their companies’ insurance packages, thinking worker’s compensation coverage is enough to protect them from incidents involving their employees. Yet while such coverage generally provides adequate compensation to employees if they’re injured on the job, it offers none in the event of an employee complaint of discrimination or unfair treatment. That’s where an employment practices liabilitypolicy comes in handy.

Why Get It?

Recent studies have shown that most companies face more exposure from treatment and discrimination practices than they do from employee injury. This makes sense given that a majority of the funds awarded in settlements are meant to cover emotional damages and general “pain and suffering.” Plus, discrimination complaints are for more likely to generate negative publicity than one involving a random workplace injury.

Who Really Needs It?

No company is immune to a liability complaint. Yet it’s the medium- to small-sized companies that don’t have the resources to invest in adequate legal representation that are particularly at risk of a huge financial loss from such a lawsuit. An employment practices liability policy provides protection to these companies in the event of such a complaint, offering them the means to settle with disgruntled employees without straining financial resources.

For a staffing company, such a policy provides protection for incidents with employees in their own offices as well as when they are working for clients. Such coverage is vital to protect both theirs and their clients interests.

To avoid the need for employment practices liability insurance coverage is to potentially gamble with a company’s financial future. On the other hand, securing such protection means that one is adequately prepared to deal with these issues as they inevitably arise.