06/ 01/ 2005
by Lena Basha
When Kim King’s business was hit with an employment practices lawsuit two years ago, she didn’t spend much time worrying about it. Not only was it a bogus claim, but thanks to her employment practices liability insurance policy, the owner of King Security Systems didn’t have to take care of any of the logistics.
“I would have had to hire my own attorney,” says King, who employs 480 workers in the San Francisco Bay area. “With EPLI, it went to the insurance company. They handled all that. All I had to do was answer questions and provide documentation.”
In 2003, the Equal Employment Opportunity Commission received 81,293 employment practices complaints, proving that EPLI is something all small businesses—especially fast-growing ones with high turnover rates—should consider.
EPLI covers your business against employee claims such as discrimination, emotional distress, mismanagement of employee benefits, sexual harassment, wrongful termination, wrongful discipline and more.
Even if you know your business’ employment practices are fair, anyone can be hit with a lawsuit. Just ask King. After her company was awarded a federal contract, King had to hire employees fast. A handful of workers who had worked on the job under a previous contractor weren’t hired, so they filed a discriminatory lawsuit against King. “We didn’t hire them because by the time they applied, we had already filled all the positions,” she says. “And they weren’t the caliber of workers we would have hired anyway.”
The three disgruntled workers also sued the federal agency.
“You can never foresee when someone is going to break or bend the rules or make false accusations, no matter how closely you follow anti-harassment procedures,” King says. “You have to cover yourself. The legal fees are so astronomical that one lawsuit could put you out of business.”
Like with any other type of insurance, the premium depends on various risk factors, such as the type of business, number of employees and lawsuit history.
*Learn more about EPLI in “Liability” in the “Insurance” section at http://www.NFIB.com/toolsandtips.
