THE number of employment-related claims has increased dramatically in the past decade. And while multi-million dollar verdicts against large corporations make the headlines, claims against smaller companies are becoming more common.
Faced with that possibility, owners of small and mid-sized businesses are giving increased attention to State Farm Employment Practices Liability Insurance (EPLI).
During the 1990s, Congress passed several laws affecting the employer/employee relationship. Laws such as the Americans with Disabilities Act and the Family Medical Leave Act have created new avenues for litigation against employers. The Civil Rights Act of 1991, for instance, allows victims of intentional discrimination to request a jury trial and seek compensatory and punitive damages. Many states and municipalities also have enacted their own statutes and ordinances.
Volatility in the economy, the changing nature of the employer/employee relationship and the publicity that surrounds large jury verdicts are often cited as causes for the increase in employee claims against employers.
EPLI protects the employer against claims by employees (or applicants for employment). Common allegations include discrimination (including age, gender, religion, race and sexual orientation), harassment and wrongful termination. An important feature of EPLI is the inclusion of legal defense costs.
For some organizations, EPLI coverage can be combined with Directors and Officers Liability coverage (D&O), usually for a nominal increase in premium. Directors and Officers Liability protection is important, because in some cases, these executives can be found personally liable for negligent acts, errors or omissions in the performance of their duties.
State Farm also offers a policy appropriate for not-for-profit organizations that includes D&O and EPLI coverage.
Businesses can take steps to reduce the possibility of employee lawsuits. For example, companies may have legal counsel review policies and procedures regarding harassment, hiring and firing. Additionally, the Equal Employment Opportunity Commission offers several publications intended to help small and mid-sized businesses www.eeoc.gov).
Stop by my office for more information on these policies.
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If you suspect a scam, call the NICB hotline at 1–800–TEL–NICB.
For information about auto insurance and insurance fraud, contact your insurance agent.
( Published on August 8, 2009 in Asian Journal Los Angeles p. C5 )
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