EPLI and Restaurants: Are You Covered?

Employment Practices Liability Insurance (EPLI) provides coverage to businesses against claims made by employees alleging wrongful termination, failure to hire, failure to promote, and other employment-related issues. The number of lawsuits filed by employees against their employers is on the rise. Lacking credibility, the claims made resulting in million dollar verdicts often do not support or even suggest a finding of liability. Although most suits are filed against large corporations, no company is safe from such lawsuits. Restaurants, bars, and other mom-and-pop establishments risk employees making allegations against them. It is important to recognize that small companies are also in need of EPLI.

With claims at an all-time high, a difficult economy, and new employment laws enabling charges and lawsuits, EPLI coverage is becoming an affordable necessity for smaller companies. The cost of coverage depends on the type of business, the number of employees, and various risk factors including whether your company has dealt with employment practices issues in the past. Obtaining EPLI coverage is extremely cost effective for a business. Even more so if the business has deep pockets, giving the employee extra incentive to file a claim. Proper coverage offers financial protection against employee-related claims and risk management services. Additionally, it helps protect against errors and omissions claims and provides real value for small business customers.

Employers should implement policies and procedures addressing allegation exposures as a result of the actions of both employees and third parties alike. There are two basic types of third-party claims that can be bought against a company. First, your employee claims to have been harassed by a third party. Second, someone under your employment (full-time, part-time, temporary, seasonal, contacted- it’s irrelevant) harasses or discriminates against someone while representing your company. The rate of third-party claims is increasing as well. If your company is frequently in direct contact with the public, you are more prone to third-party claims. Third-party EPLI is intended to protect your business and employees from allegations of various wrongful acts committed against those associated with your business.

Some businesses mistakenly go without ELPI coverage or assume they are covered under their general liability policy. But going without coverage can be a costly decision. If a restaurant, bar, or other small business owner considers the potential impact a lawsuit can have – time spent away from their business, emotional stress, effect on workplace morale, and overall damage to their reputation- it is sensible to take action and avoid possible claims by purchasing EPLI coverage.

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