Why Restaurants Need Employment Practices Liability Coverage

employment practices liability coverageYou’ve read about lawsuits on social media, watched the news, and furrowed your eyebrow thinking, “That stinks, but I have a great group of staff. What that guy is going through won’t happen to me.”

Wishful thinking; your most-trusted server retires and now you must hire a new face. While he looked great on paper, his resume failed to mention his habit of being chronically tardy. You give him a “last chance” warning which results in a complaint to the health department about unsanitary food-handling conditions. He shows up late again and you terminate him. Shortly after, you get sued for allegedly firing him for making a complaint to the health department. What just happened? Your former employee saw his fate and retaliated against you.

The Financial Impact of Lacking Employment Practices Liability Coverage

According to the Equal Employment Opportunity Commission, the average cost of an EEOC lawsuit exceeds $250,000. This is more than a small, family restaurant can make in a year!

One EPL claim can cripple your business, and we didn’t even begin to talk about third-party claims. A drive-by “customer” looking for a money-grab can claim that your business is handicapped inaccessible and settle in court for $15,000 to $20,000. The settlement alone won’t cripple your business, but when you add up the cost for an attorney, you’re still looking at a huge sum of money being taken out of your profits.

Traditional and third-party employment practices liability coverage are separate agreements within a policy and H&K Insurance recommends you opt-in to both.

How to Prevent EPL Claims

  • Create an employee handbook
  • Require employees to sign an “employment-at-will” policy
  • Hold annual harassment and discrimination trainings
  • Document all reviews, complaints and situations that lead to termination of employment

Noticed a gap in your restaurant insurance coverages? Call Brian Kilcoyne at 617-612-6515 to receive a customized EPL quote.

Brian Kilcoyne marries restaurant owners with custom policies all throughout the Greater Boston Area. He prides himself in protecting your assets just as much as he takes pride in watching his son do battle on the wrestling mat and skiing with his family. No matter if he’s in front of a client or atop a mountain, Brian puts forth his best effort in everything he does. Email him at briankilcoyne@hkinsurance.com today.