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Why Your Club Needs Employment Practices Liability Insurance

Clubs—and businesses of all kinds—come up with all sorts of reasons for not carrying Employment Practices Liability Insurance (EPLI). They do their best to make sure their employees have a safe workplace free from harassment and discrimination, so they can’t imagine a scenario in which an employee would file a lawsuit. Some believe they’re simply too small—others, that because their employees are like family, they won’t have to worry about an employee lawsuit.

Unfortunately, that’s not the case. From the moment you start the pre-hiring process to the final exit interview (and even long after an employee leaves) the risk of an employee-related lawsuit is always present, no matter your size. Some studies have estimated that businesses have at least a 10.5% chance of having an employee lawsuit brought against them. And based on data from the U.S. Equal Employment Opportunity Commission (EEOC), 41.5% of employee lawsuits filed are against private companies with fewer than 100 employees.

EPLI can protect your club from claims or lawsuits filed by employees, former employees, and candidates regarding their employment relationship with an employer—protecting your business from expensive litigation.

What is EPLI?

Employment Practices Liability policies provide protection from wrongful employment practices such as breach of contract, wrongful termination, or discrimination. As a business that hires, fires, and provides compensation, lawsuits are always a very real threat, regardless of how well you feel you are prepared for them.

Lawsuits can result from a variety of situations—from someone’s unknown personal bias to a baseless accusation of a disgruntled employee looking for a quick payout. On average, cases that lead to a defense and settlement payment cost $160,000 and take almost a year to resolve the claim. 

EPLI is an effective solution for protection from the following wrongful employment practices:

  • Harassment
  • Discrimination
  • Actual or alleged wrongful dismissal, discharge, or termination
  • Employment-related misrepresentation
  • Employment-related libel, slander, humiliation, defamation, or invasion of privacy
  • Wrongful failure to employ or promote
  • Wrongful deprivation of a career opportunity, wrongful demotion, or negligent evaluation
  • Wrongful discipline
  • Vicarious liability for intentional acts
  • Punitive damages
  • Coercion or humiliation in relation to race, marital status, gender, age, physical and/or mental impairments, pregnancy, sexual orientation, and any other protected class established by federal, state, and local statutes

Additional Benefits to EPLI

There are several reasons to choose EPLI. Many policies also offer the following inclusions and add-ons:

  • Consultation, HR assistance, and other risk management consultative services
  • Coverage for defense costs outside the policy limits
  • Third-party liability coverage
  • Wage and hour coverage for claims alleging wage and hour violations
  • Volunteer workers can be added as additional insureds
  • Extended reporting periods may be added

Of course, preparation is always best defense. Even if the suits are groundless, they can severely impact your club’s reputation for years to come, so it’s worth putting extra effort into reducing your club’s chances of having a suit filed against it.

One service that’s been shown to be effective is implementing an employment practices risk management strategy. This service, often available through your broker or insurance company, gives policyholders access to training and human resource consulting. By adopting basic risk controls, your club is better equipped to handle an accusation and can significantly lower the threat of a claim. Taking proper steps to provide training and creating a plan can save you hundreds of thousands of dollars should a case arise.

Wondering if your current EPLI coverage is adequate for your club, or need to get a quote? Contact our team today for a free coverage analysis or to start the quote process.

David A. Harnois, CCM, CPL, is a proud employee owner of VGM Insurance & Financial Solutions, specializing in commercial and group program business. VGMI&F provides insurance and equipment finance solutions for clubs in all 50 states through their ClubProcure endorsed program. Contact David at 319-800-6676 or at david.harnois@vgm.com.

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