Pub. 1 2019-20 Issue 2

http://wvcar.com 36 WVADA Even Great Employers Get Sued — Are You Protected With Comprehensive EPLI? S ix out of 10 employers are sued for employment-re- lated practices. That’s all employers, good and bad. In fact, there has been a 400% increase in employee law- suits in the last 20 years. There has been a 260% rise in wrongful terminations in that same period. Does your dealership have an insurance policy to protect against these type of claims, including wrongful termination, sexual ha- rassment and discrimination? Do you know what it covers and how it pays? Many employers think they have coverage when in reality they do not; it is not a standard coverage in a liability policy. While some insurance carriers include a small amount of coverage in their business owners policy (BOP) or package poli- cy, it may not have all the features of a standalone policy issued by an insurer who specializes in EPLI coverage. Here are questions to ask when reviewing an employment-re- lated practices liability (EPLI) policy: • What is the definition of a claim? Is it a written demand or notice of incidence? • What are the reporting requirements? • What is thedefinitionof awrongful act?What are theexclusions? • Are the limits of defense (payment for legal defense) inside or outside of the policy limit? Can you purchase additional defense coverage? • Is the liability limit quoted adequate compared to the net equity of your business? • Does it cover third party claims? • Is it a “duty to defend” contract or a reimbursement? • Is defense for wage and hour disputes covered? • Is workplace violence included? Is it a sublimit of the policy or additional coverage? • Can the insurer enter into an agreement to settle without your consent? What are the costs of not having EPLI? The cost of settling employee lawsuits out of court averages $75,000. If the case goes to court and you lose, $217,000 is the average jury award. The financial strain on a business goes far be- yond the dollar amount. Factor in the value of the distrac- tion for the management team, eroding employee produc- tivity and morale, plus the 18 to 24 months to get a verdict. This represents a substantial economic loss. Purchasing a comprehensive EPLI policy with sufficient limits to cover your business exposure is the first step to peace of mind. Below are tips to ensure you get the best price and reduce your risk of a costly EPLI claim: • An employee handbook reviewed by an attorney must be provided to all employees and include clear anti-discrimina- tion and sexual harassment policies, hiring practices includ- ing background checks and drug testing procedures, at-will employment/grounds for termination, and specific chain of command for complaints. • Signed receipts acknowledging the policies and procedures in the employee handbook should be required annually. • The reporting systemshould include aWhistleblower provision. • Management should take an extensive course (often provid- ed free of charge through the insurance carrier) to protect against harassment and discrimination • Established policies and procedures for third parties includ- ing sensitivity training While the questions and tips provided in this article aren’t in- clusive of all options or procedures, it is a great conversation starter with your insurance agent or advisor. Understanding the risk and exposure will help guide you to protect your busi- ness and future. t For more information, contact Tina White at Garlow Insurance Agency, Inc.: 304-757-6880 ext. 204 or tina@garlowinsurance.com. Garlow Insurance Agency has been serving West Virginia business owners for 25 years. Tina is currently an agent/advisor specializing in garage/dealer- ship insurance.