Can Your Business Handle a Claim of Improper Employment Practices?

Your business may be covered under a worker’s compensation policy for bodily injury to employees and a general liability policy for property damage, but does your business have Employment practices liability insurance? Failure to carry this insurance could be catastrophic for a business with employees.

Coverage for Allegations of Mistreatment of Employees

Businesses that have workers or staffing agencies that place employees can be sued when staff allege that they may have been mistreated on the job. Common allegations can include sexual harassment, discrimination, retaliation and wrongful termination. Other allegations of mistreatment that may not be as common can include negligent evaluation, failure to promote, invasion of privacy and defamation of character.

Individuals with these allegations can bring lawsuits against a company. If the company has coverage for employment practices, the insurance can pay for attorneys and the court costs involved in its defense. It can also cover the financial penalties associated with court decisions issued against the company in favor of the employees. A company’s risk for allegations of employee mistreatment can increase according to the size of its workforce.

What it May Not Cover

There can be some liabilities that an employment practices policy may not cover such bodily injury to employees, property damage or acts that may be dishonest or intentional. Having employment practices liability coverage may not exempt businesses from their responsibility for compliance with laws regarding compensation or those prohibiting specific types of discrimination.