Employment-related practices liability insurance protects large and small firms

Employment-related practices liability insurance is a somewhat new type of business liability insurance that provides protection for a job provider against claims made by workers, former employees or those who have sought employment but were turned down. Employment practices liability insurance also protects against losses caused by accusations of age, sex, race or disability discrimination, wrongful termination of employment, sexual harassment and other job related allegations. Such insurance plans provide coverage for businesses and their directors and officers.

Employment practices liability insurance is necessary when businesses first start to hire workers and is required by many investors and directors as part of the directors and officers liability insurance coverage to protect against potential lawsuits that might arise during the course of doing business. Lawsuits against job providers have been on the rise in recent years, and studies show some 60 percent of job providers will be sued by their employees at some time. Businesses are vulnerable to such lawsuits from the moment they begin the hiring process until even after an employee leaves the company.

Even firms that did not hire a worker can suffer losses from that worker if sued and accused of unlawful hiring practices, such as engaging in some form of hiring discrimination. If a lawsuit with no merit and that eventually is beaten can inflict a great deal of cost, and employment practices liability insurance can help protect against the costs of defending even a losing lawsuit as well as one that results in a financial judgment against the insured party.

Employment-related practices liability insurance is particularly useful for new technology companies, which are especially vulnerable to losses arising from employment practices. Because they are so new, such companies do not have seasoned management teams and typically are more prone to making errors, resulting in a greater need for employment practices liability insurance.

But any new company and not just technology firms have a heightened need for employment practices liability insurance. When a new company has no firmly set procedures for hiring, disciplining and firing workers, they can make a great deal of errors resulting in costly lawsuits and legal settlements. Employment practices liability insurance helps keep them viable and moving forward when companies that do not have them might go out of business.

And with states and the federal government having gotten strict with employee privacy laws, there are many new ways for even long established companies to be protected by employment practices liability insurance coverage. And the increased use of electronic means to store data means and growing number of companies are vulnerable to data breaches and potential violations of state and federal privacy laws that could result in costly lawsuits and legal settlements. Employment-related practices liability insurance can help protect against such potential calamities that sometimes are beyond the control of job providers.
So to keep a firm financially secure and protect against the potential of legal liability arising from improper employment practices, employment practices liability insurance is a potential answer. By Mike Heuer