EPL Insurance: Protecting Against Employee Lawsuits
When you’re interviewing a candidate for a position, you might have an inclination to ask questions that violate federal and state equal opportunity laws because you’re trying to gauge the overall fit for the company.
For example, the position you’re trying to fill can be very demanding and require long hours. Experience tells you that candidates with young children may have a lot of outside demands. Asking the candidate about children, even if it’s in a roundabout way, violates laws set by the Equal Opportunity Employment Commission.
Risk Factors for Employee Lawsuits
Applicable to all types of businesses, from the restaurant to the busy start-up, asking any of the following questions is a huge liability for your company:
- Age of an applicant
- Current or past alcohol or drug use
- Asking if a candidate has ever been arrested
- Culture or natural origin. Even if the question is out of genuine, natural curiosity. The “where are you from?” question is a big no-no.
- You cannot ask if an applicant is disabled, but you can ask if they are capable of performing essential job functions as you would with any candidate
- You cannot ask about marital or family status. However, you can phrase the question around the demands of the position, such as “This position requires overnight travel twice a week. Does this travel schedule present a problem for you?”
- Appearance
- Race-related questions
- Gender or sexual orientation
- Religion
Risk Management for Businesses
You can significantly lower your employment practices liability risk by paying attention to the following:
Employment Handbook: Detail your company workplace policies and procedures. Processes for hiring, termination and continued employment should be clearly outlined. Be sure to include an at-will statement and equal opportunity statement.
Phone Interview: Known internally as the “phone screen”, the initial call will weed out unsuitable candidates before you bring them in for an in-person interview. Assuming you structure your questions correctly, it’s very hard for a candidate to win an EPL claim since you never saw them to begin with.
Record-Keeping: Maintain records for interviewing, onboarding and performance evaluations. Many employers invest in ATS software that not only saves money in recruiting, but also provides one database to track the process of each applicant. If you get sued, you can search for the person in the system, know exactly what happened, and use that information to defend yourself against wrongful discrimination.
Managing Risks with EPL Insurance
EPL coverage is essential to protecting your business from employee and candidate lawsuits. If the candidate doesn’t get the job or if you terminate an employee, they can turn around and sue for discrimination.
Coverage depends on a number of factors, such as how many people you employ, claims history, the percentage of employee turnover, and whether or not you have established HR policies in place. Often written on a claims-made basis, the incident resulting from a claim had to occur while you had coverage in place. If you drop your insurance coverage at any time or don’t purchase tail coverage, your business may take a huge hit financially from such an exposure.
Consider the following facts:
- 41.5% of employee lawsuits are brought against companies with 100 employees or less
- The average cost of settling out in court is $75,000
- The average award is $217,000 if you go to court and lose
The good news is you can manage this exposure with a custom EPL insurance policy. To speak with a trained professional about EPL coverage, call Brian Kilcoyne at 617-612-6515 or fill out our handy quote form below.
