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By September 28, 2017April 6th, 2018Commercial Insurance, Insurance

Four little letters – EPLI – cover a huge range of very serious issues. EPLI stands for employment practices liability insurance and deals with wrongful termination, discrimination, sexual harassment, and other workplace situations.

It’s one of the fastest-growing legal issues. In 2016 the Equal Employment Opportunity Commission (EEOC) helped U.S. employees receive $482 million in discrimination compensation alone. And, in the years since some major Supreme Court decisions and lawsuits are on the rise overall.

Here are five things you need to know about EPLI.

SEE ALSO: What is Cyber Liability and Data Breach Coverage?

1. It’s not just a big business issue.

Any business with at least one employee should be concerned about employment insurance. A small or family business owner might think, “We don’t need insurance. We’re a family here.” But huge employment issues can be triggered by the smallest of incidents. Imagine having to let someone go simply because it’s your slowest time of year. If they allege that the reason was discrimination, you’re facing a costly legal battle. Remember, you don’t have to be in the wrong to be sued.

2. Many lawsuits are over new definitions of discrimination.

The EEOC’s official statement of enforcement and litigation data explains that discrimination occurs in “both overt and subtle forms.” Subtle forms can be harder to detect or exist outside earlier definitions of discrimination. Most people are aware of discrimination based on race, sex, age, religion, and national origin. Claims are increasing in newer areas like equal pay, gender affiliation, retaliation, disability, and genetic information.

3. Courts are expanding who can sue.

A 2011 Supreme Court decision widened the definition of who can sue for employment discrimination, ruling that a former employee could sue for retaliation against his fiancee. This came on the heels of a 2006 decision that included “adverse action” as prohibited employer behavior. This means an employee can sue for discrimination not just after being fired or demoted, but for more nuanced things like being denied the most profitable clients.

4. The average lawsuit costs $235,000.

Even in cases where the lawsuit is unfounded, it can be extremely expensive to deal with. Small and mid-size businesses might not be able to survive the financial hit. The EEOC found that the average cost of fighting a discrimination case was $235,000 during a year that saw the largest number of cases in the agency’s history.

5. Your policies affect your insurance premiums.

When you contact an insurance agent about EPLI, they’ll run a risk analysis and take some basic factors into account: type of business, geographic area, employee count, industry. But did you know your own employment policies are also a contributor to your overall cost? If your policies are lax, that creates risk. Risky businesses are more expensive to insure. Make sure you have an employee handbook, ethics code, anti-retaliation policy, and ongoing training on workplace policies.