Small Commercial

February 24, 2010

The Shocking Truth About Employee Lawsuits

Think only big companies get hit by employee lawsuits? Think again. Court records and
Employment Practices Liability Insurance (EPLI) claims show some eye-opening facts no small company can afford to ignore:

• Private companies are more likely to have an employment practices claim than a general liability or property claim.
• 3 out of every 5 employers are sued by former employees.
• 65% of all companies that have ever fired an employee have been hit with an
  employment related lawsuit.
• More than 40% of all employment practices claims are filed against firms with fewer than 100 employees.
• The average award in all federal court employment cases in 2008 was $493,534, which reflects a 45% increase since 2000. This compensation does not include punitive damages or attorney fees.

Employment Practices Liability Insurance is more important than ever to protect businesses from catastrophic loss. EPLI protects employers from claims filed by employees who feel they have been unfairly and illegally been mistreated, wrongfully terminated, or denied a raise or promotion.

Employee Lawsuit Claims Going Up Fast

In 2008, charges against employers went up dramatically:

• Discrimination up 15.2%
• Harassment up 20%
• Retaliatory treatment up 22.6%

The legal landscape for employers continues to change with the passage of laws such as the Lilly Ledbetter Fair Pay Act of 2009 and the Americans with Disabilities Act Amendments Act of 2008.

Layoffs, downsizings, salary freezes and reductions in benefits can be used by past and present employees as evidence of "tangible adverse employment actions" to file charges of discrimination, harassment, retaliation and wrongful termination against employers.

Fight the Upward Trend with EPLI

Employment Practices Liability Insurance can be purchased as a package or as a monoline policy to offer protection against such risks including:

• Sexual harassment
• Discrimination
• Wrongful termination
• Breach of employment contract
• Negligent evaluation
• Failure to employ or promote
• Wrongful discipline
• Deprivation of career opportunity
• Wrongful infliction of emotional distress
• Mismanagement of employee benefit plans

Separate EPLI Policy Provides Best Coverage

Other business policies, such as General Liability, provide no employment practices liability coverage. Endorsements are available, but they almost always provide insufficient limits and lack the breadth of coverage of a separate EPLI policy. Also, any employment practices claims against a GL policy reduce the limit available for other exposures.

EPLI covers not only actual, but also alleged acts of discrimination, harassment, retaliation, wrongful termination and others. Coverage for intentional injuries (caused by employees without the employer's knowledge or consent) also is available. EPLI coverage may be invalidated if a law is being broken.

EPL premiums start at $500 for a $100,000 limit and $1,000 for a $1,000,000 limit. Minimum premiums vary by state. Retentions start at $1,000 for most classes in most states.

Three Ways to Get EPLI Quotes from Combined

• Log on to QuoteExpress and click on Special Products
• Call the phone quote system at 888-845-1625
• Send a manual application

If you would like to talk to someone, please call the Commercial department at 214-295-1600, ext. 1022.