In today’s modern world, the threat of a lawsuit is an everyday reality. The dangers are even more real for staffing companies since they have a large turnover of temporary employees. And for those without a dedicated human resources (HR) department, or formal training to deal with the myriad of laws, rules and regulations that exist to protect employee rights, things can quickly turn sour. The need for staffing insurance has never been more apparent.


Statistics show that employment lawsuits have increase dramatically in recent years. One disgruntled worker can put an entire business at risk if he or she brings a lawsuit or discrimination charges against a manager or owner, despite whether the accusations are valid or not. The cost to defend those allegations alone can put a company out of business, not to mention the reputational loss often associated with such claims.


Employment Practices Insurance Greatly Aids a Business


To help mitigate risks, Employment Practices Liability Insurance (EPLI) has become a major element of small business insurance needs. EPLI generally covers a company for accusations of wrongful termination, sexual harassment, discrimination and workplace torts.


Here are seven reasons EPLI is a must for small businesses:


  1. Employee lawsuits and discrimination charges are excluded under standard general liability policies


  1. Every employer, large or small, can be the target of legal action from past, present, and prospective employees


  1. Employees file over 90,000 charges per year with the U.S. Equal Employment Opportunity Commission


  1. Employees win 70% of jury trials


  1. Many jury awards can exceed $1,000,000


  1. Employer defense costs can easily exceed $200,000


  1. Owners’, directors’ and officers’ personal assets can be at risk


Midsize businesses with 15 to 250 employees are sued more frequently than larger businesses, often due to inadequate HR/employment law management, ineffective loss prevention programs, and valuable unprotected assets to target.


A Professional Employer Organization (PEO) can help navigate a business owner through many of the HR issues that prompt suits and charges. While there is nothing that will guarantee that a disgruntled employee won’t sue, a PEO can go a long way in decreasing the likelihood by implementing better employee relations, thereby greatly reducing many risks.


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