Employment Practices Liability Insurance (EPLI) – Why You Need It and Ways to Avoid Employment-Related Lawsuits

Written by Sarah Lim, CA Lic# 0M52397

Employment Practices Liability Insurance (EPLI) – Why You Need It and Ways to Avoid Employment-Related Lawsuits

All types of employers in any size company are sued by employees more often than you think.  In recent years, over 100,000 administrative actions were filed with federal and state regulators.  Whether you employ 1 person or 100 people, EPLI can protect you from the financial responsibilities an employment lawsuit can incur.  EPLI provides financial protection from claims that involve discrimination, retaliation, sexual harassment, etc.  EPLI can also protect you from administrative actions involving wrongful discharge, defamation, invasion of privacy, etc.  Lastly, EPLI will cover the cost for defense specializing in employment law.   

Of course, while having EPL insurance is reassuring, the ideal situation would be if you didn’t need to use the insurance at all.  The following are six strategies to avoid employment-related lawsuits: 

1)    Create and document policies and procedures – Review your employee handbook and practice policies annually to ensure that all relevant laws are up to date, as well as during the on-boarding of newly hired personnel.  Employee handbooks should cover things like definition of employee, differentiate between salaried and contract employees, full- vs part-time personnel, and seasonal vs independent contractors.  Make sure each employee signs their handbook acknowledging that they understand your policies.

2)    Keep a log and know your options – Maintain an updated record of all HR-related issues.  Make sure the personnel in your human resources department are trained to report and communicate all things related to employee issues in a timely manner so as to follow claims filing guidelines.  Have a conversation with your broker about what your options to correct the situation will be if/when issues arise.

3)    Understand third-party risks – Did you know you can be liable for the actions of others you are associated with in regards to running your practice?  These third party individuals can be anyone from a vendor, to a patient/client, to an employee.  To avoid any potential lawsuits involving third-parties, train your employees to: 1) understand the risks involved in third-party employment practices, and 2) interact with third parties without increasing risk.

4)    Monitor employees – You can use all kinds of technology to monitor employees as well as use as a defense against a complaint.  However, make sure to publicly notify all employees of all monitoring practices, and only monitor in public areas.

5)    Know your rights – If there happens to be a claim filed against you, the following should be done during the claims process: 1) Discuss your rights as an employer with your claims adjuster, and 2) Never be afraid to speak up against fraudulent claims.

6)    Obtain a comprehensive EPLI policy – California Attending Physicians can help you secure the right policy for your business and amend policies and procedures after a claim is resolved to ensure a successful policy renewal.

Contact California Attending Physicians. We are a Specialized Insurance Brokerage Firm for Physicians in California handling Medical Malpractice, Business Owners, Commercial & Workers Compensation Insurance. In addition, Premium Financing is available and can be bundled with your Malpractice Insurance for a Interest Rate Reduction.

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