Employment Practices Liability Insurance is a relatively new form of liability insurance. It provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. It covers your firm, including its Directors and Officers.

Employment Practices Liability Insurance is needed as soon as you start to hire employees. Most investors and directors will require that you carry this coverage as part of your Directors and Officers Liability Insurance since they can also be held liable in suits relating to employment practices.

Cases against employers are on the rise. It is estimated that three out of five firms will be sued by an employee. Companies are finding that they are vulnerable from the pre-hiring process through the exit interview, even if the employee was never hired, or only at the company a matter of days.

It can happen to ANY firm. We have all experienced it. It could be a joke told in the break room, an employee you had to fire, a “friendly” programmer, or that person you chose not to hire. Every employer faces the reality that it will be the target of legal action from past, present and prospective employees. Even if the claim is groundless or fraudulent, the defense of a suit can be expensive in time, resources and financially.

New technology firms are especially vulnerable. Newer and fast growing companies are often prey to these types of claims because their management team has not yet designed or implemented procedures for hiring, firing, and disciplining employees.

We definitely recommend Employment Practices Liability Insurance to any company that has employees.