Ascend Small Business
October 28, 2021

Do small businesses need employment practices liability insurance (EPLI)?

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Do small businesses need employment practices liability insurance (EPLI)?

EPLI is a type of small business insurance that helps you pay for lawsuits related to workplace discrimination and harassment.

 

The United States has several federal laws that make it illegal for employers to treat prospective, current, and former employees differently based on their sex, color, race, ethnicity, age, religion, or disability.

 

Most of these laws technically only apply to businesses with 15 or more employees. The Equal Employment Opportunity Commission (EEOC) may not be able to intervene when microbusinesses are involved, but employees still have the right to sue your business for discrimination and harassment issues on their own. Additionally, most states have their own employment laws, some of which apply to smaller businesses.

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Employment lawsuits are often among the most expensive disputes to settle and litigate. In wrongful termination cases, for example, former workers can sue for back pay – their whole salary – and there is no cap on these damages.

 

Below, we take a closer look at the types of businesses that may benefit from employment practices liability insurance.

 

Why do small business need EPLI?

To be clear, any business can be sued for workplace discrimination and harassment allegations. You’ve read about some risk mitigation techniques in earlier posts such as “The small business guide to avoiding discrimination and harassment in the workplace,” but sometimes conflicts slip through the cracks.

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According to the Conflict Solutions Center, a California-based nonprofit that specializes in workplace mediation services, managers and supervisors spend 30 to 40% of their time dealing with workplace conflicts. Sure, you can prevent hiring and firing discrimination by following EEOC guidelines. And you can intervene when you’re notified that an employee is harassing another employee. But what if:

  • Communication breaks down and you remain unaware of the conflict?

  • A supervisor is harassing an employee, making it difficult for the victim to report the issue?

  • Despite your risk management strategies, an employee feels she was passed up for a promotion for discriminatory reasons

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Which industries face the most workplace discrimination claims?

The EEOC routinely collects data about employment, charge frequency, and litigation statistics. Their report “Characteristics of private sector employment [PDF]” uses charge receipts from 2002 to examine discrimination allegations based on industry. Below is a list of the top five industries for various discrimination charges:

 

Race-based charges:

  • Transportation services

  • Personal services

  • Auto repair, services, and parking

  • Membership organizations

 

Gender-based charges:

  • Automotive dealers and service stations

  • Personal services

  • Transportation services

  • General building contractors

  • Agricultural production (crops)

 

Nationality-based charges:

  • Auto repair, services, and parking

  • Apparel and other textile products

  • Personal services

  • Transportation services

  • General building contractors

 

Age-based charges:

  • Motion pictures

  • Communication

  • Personal services

  • Miscellaneous manufacturing industries

  • Automotive dealers and service stations

 

Disability-based charges:

  • Miscellaneous manufacturing industries

  • Transportation services

  • Personal services

  • Automotive dealers and service stations

  • Local and interurban passenger transit

   

Any questions? Please don’t hesitate to contact one of our team.

Matt.price@ascendbroking.co.uk  |  Office: 01245 449062  |  Mobile: 07841 020712