I have a Business Owners Policy (BOP); am I protected if one of my employees sues me?
Typically, employment related claims are excluded from standard “BOP” policies. This type of exposure is best covered by an EPLI (employment practices liability) policy.
Lawsuits brought by employees or ex-employees are often very costly and time consuming. Management can face large financial and reputational risks when treatment of employees veers outside the bounds of legally acceptable practices.
The good news is, such lawsuits generally don’t occur without warning, and are usually the final link in a long contentious chain of poor management-employee relations. The following are four practical suggestions that can help management break, or better yet completely avoid this costly chain.
Train Your Managers
Fundamental, but always helpful. Management training can, among other things, sensitize managers to the kind of issues such as wrongful termination and discrimination that pose common legal risks. Training raises managerial awareness, a first step in prevention.
A key function for all managers everywhere, when serious employee-related issues occur, is to document them diligently. Having a thorough, accurate record of a past history of employee problems can prove invaluable to management should allegations of management impropriety later be raised. Good records make good management. Sometimes the best offense is a good defense. But better still is to:
Recognize “situations” before they become problems
Managers need to develop their own “risk antennae” that help them become aware of potential employee-related minefields – for example, repeated serious run-ins with especially argumentative, cantankerous (i.e. potentially litigious) individuals. When such situations are recognized early, they can be defused, or at least handled carefully. Of course it’s difficult to expect managers to become experts in the nuances of employment law… which brings me to my last and perhaps most important point:
Consult with Human Resources and attorneys on a preventative basis
Some of the best risk-mitigation aids managers will ever have are just a text, email or phone call away. Most organizations, and all large organizations, have HR and/or lawyers on staff or retainer for delicate, troublesome employee matters.
Taking actions to prevent costly employee lawsuits is a little like a poker game. There’s a lot of bluffing, but when a serious game is finally underway, stakes are high. The best protection against employee related claims is to follow proper protocol. Additionally, procuring an Employment Practices Liability (EPLI) insurance policy is a great way to protect your business in the event of sometimes unavoidable employee related claims.
Gregg Knepper is the co-founder of Integrated Coverage Group. With over 10 years of insurance industry experience, he helps businesses of all sizes assess their vulnerabilities and create comprehensive coverage plans that reduce exposure. Gregg is the co-author of this article. Some content has been provided by The Hartford.
- On October 23, 2014