Are you protected against employee lawsuits? If not, it’s time to learn about an important insurance coverage called employment practices liability insurance (EPLI).

Do you ever worry about one of your employees suing you? Maybe you dismissed the thought because you only hire temporary workers and high school students. Unfortunately, even these workers can be risky. Here’s why.

Disputes between employers and employees can develop quickly. All it takes is one incident—an alleged wrongful firing, discriminatory speech or behavior or sexual harassment—to spark a legal fight. Theoretically, someone who works only for a day could sue you over a real or imagined incident.

Do you believe temporary employees and students lack the legal smarts to sue you? Not true. Employees who are reasonably well informed or who have astute family members might see litigation as a profitable option. Or they might genuinely, but mistakenly, believe you wronged them and view the legal system as a path to justice.

Finally, don’t forget that a person doesn’t have to be an official employee in order to sue. The moment you begin interviewing candidates for a job gives them an entrée to accuse you of unfair hiring practices.

That’s why it’s important to protect yourself against employee lawsuits, even from those who might only work for you briefly. The way to do that is to purchase a form of insurance called employment practices liability insurance (EPLI).

What is Employment Practices Liability Insurance (EPLI)?
Employment practices liability insurance protects your business against employee allegations of emotional or financial harm. Such claims take many forms. They may allege that:
•    You or someone else in your company sexually harassed them.

•    You wrongfully terminated their employment.

•    You discriminated against them based on their age, sex or race.

•    You retaliated against them for some reason or defamed them.

•    You invaded their privacy.

•    You engaged in other forms of wrongdoing.

When employees decide to sue, you must defend yourself. This will involve hiring an attorney, which can be expensive. If your lawyer advises you to resolve the claim out of court, you may have to pay a large settlement. If you decide to fight in court and lose, you’ll face more legal fees and a potentially even larger court judgment.

Bottom line? Being sued can get expensive . . . fast! If you lack insurance, you’ll have to pay for your legal costs out of your own pocket. If your business has few liquid assets, you may have to dip into personal savings to make good. No personal assets? Then declaring bankruptcy might be your only solution.

Fortunately, EPLI coverage can prevent these bad outcomes. It covers your expenses and any settlement or judgment the legal system renders. Most importantly, it protects your business and personal assets so you can continue doing what you love: running your own nursery or landscape business.

Do Small Businesses Really Need EPLI?
Clearly, the answer is “Yes.”

According to the commercial insurance research firm Advisen, even small companies face a large EPLI legal exposure. Its study found that firms with 100 or fewer employees experience an EPLI claim at least once every three years and they lose their cases 51% of the time.

Even more alarming is the fact that more employees are suing their employers these days. Thanks to the #MeToo movement and other societal trends, they’re more willing to defend their rights than at any time in the past. In fact, the U.S. Equal Employment Opportunity Commission (EEOC) documented 67,448 charges of workplace discrimination in fiscal year 2020. It also secured $439.2 million from employers for discrimination victims.

In short, never assume your nursery or landscaping business is too small to get sued or that your employees would never resort to legal action. Instead, do business defensively. Protect yourself by purchasing employment practices liability insurance.

What EPLI covers
EPLI covers expenses resulting from employee lawsuits against your nursery or landscape business. These typically center around:
•    Discrimination of a protected class

•    Retaliation

•    Violation of the Family and Medical Leave Act (FMLA)

•    Wrongful discipline

•    Wrongful failure to promote

•    Wrongful termination

•    Harassment

•    Sexual harassment

•    Breach of contract

•    Mismanagement of employee benefits

•    Slander

•    Invasion of privacy

If an employee charges you with any of these violations, your EPLI insurer will provide you with a defense attorney at its own expense. It will also pay for settlements or judgments that arise from a legal process. However, your coverage won’t apply to criminal conduct and fines, civil penalties or losses other policies cover. Claims from wage and hour violations of federal and state law are another exclusion. These usually involve conflicts over wage and overtime calculations and job classifications. However, you can purchase an EPLI endorsement (modification) that provides such protection for an extra fee.

Some EPLI Details
You may have heard of employment practices liability insurance, but think you can’t afford it. Thankfully, this form of insurance can be surprisingly cost-effective. As with most types of insurance, what you’ll pay depends on the nature of your business, revenues and workforce, among other factors. After you apply for coverage, an insurance company underwriter will review your information and provide you with a premium quote based on your risk profile.

How much protection can you buy? Policy limits (coverage amount in dollars) typically start at $1 million and increase from there based on your risk factors and available budget. To save money, you can elect to pay a percentage of each claim out of your own pocket. This is called a deductible or retention. Selecting a higher deductible will allow you to reduce your EPLI insurance cost.

Concerned about your wage and hour risks? As we mentioned earlier, standard EPLI policies don’t cover such disputes. However, your insurer may be able to add this feature to your policy (also known as an endorsement). Not sure if you need it? Contact your Gallagher insurance representative for a quick coverage check.

Learn more about available coverage at gallagheraffinity.com/mnla. Or contact MNLA’s insurance expert Ashley Thomas of Gallagher Affinity at 918.764.1619 or ashley_thomas@ajg.com for a coverage review or EPLI quotation.