Business Owners Are at Risk Now More Than Ever - Employment Lawsuits are on the Rise

Business Owners Are at Risk Now More Than Ever – Employment Lawsuits are on the Rise

Lawsuit rates rising higher than ever- what does this mean for you?

Many business owners are extra precautious in terms of protecting everything that they have built. As business owner, you most likely have purchased insurance policies to protect your business from the usual risks such as weather, fire, flood, theft, etc., but are you protected from employee lawsuits? This may sound like an outlandish thought, however, the rate of employee lawsuits filed against employers is rising higher, more so now than ever.  Did you know that you are more likely to be sued by an employee than to see your business burned in a fire? You may be more at risk than you previously thought. So how do you protect yourself against this kind of threat? Employment practices liability insurance (EPLI) is a type of insurance policy that is focused on directly protecting business owners in the event of a lawsuit filed against them by employees. This protection covers the cost of settlements, judgements, and the legal expenses for defending yourself in the court. These types of lawsuits can be filed for more reasons that you probably think.

Types of Lawsuits Covered Under EPLI Coverage

  • Wrongful termination
  • Failure to hire or promote
  • Unpaid interns
  • Illegal background checks
  • Discrimination against employees or prospective employees

*some examples include pregnancy and genetic discrimination

  • Retaliation
  • Employment related libel, slander, humiliation, mental aguish infliction of emotional distress, defamation or invasion of privacy
  • Employment related misrepresentations to employee or applicant
  • Breach of contract
  • Other violations

Wouldn’t this already be covered by my other Liability policy?

Contrary to popular belief, lawsuits of this nature are not covered under other liability policies that you may have purchased for your business. Unless you have an Employment Practices Liability Insurance policy in place, you do not have any protection against these risks. You are not alone, according to statistics, “6 out of every 10 non buyers of EPLI coverage mistakenly think they are protected under other policies.” Can you imagine the stress of dealing with a lawsuit that you think you are covered for and later finding out that you have absolutely no protection at all? It is very important to look over your commercial insurance policies to check if you need to obtain further coverage.

Not only are a large number of business owners unaware that they are exposed to this risk, but the likelihood of this happening to them has significantly increased over the last two decades. This factor greatly amplifies the necessity for EPLI coverage. Can you believe that over the course of the last 20 years the number of employee related lawsuits has jumped up by around 400%? If that wasn’t enough, during that same period, lawsuits filed for wrongful termination have risen more than 260%! Despite these frightening statistics, business owners are still leaving themselves in a very vulnerable position if they have not yet obtained EPLI coverage.  This is one mistake you probably can’t afford to make.

Only big companies get sued, right?

You would think that this type of risk would only pose a threat to the big businesses with a lot to lose but, businesses of all sizes are at risk in today’s world. Unfortunately, lawsuits against employers are being seen more often with small business as well. Statistics show that it is estimated a little over 40% of small businesses with less than 100 employees have gone up against lawsuits from former employees.  The hit that a small business would have to take from a lawsuit without EPLI would be devastating, whether found guilty or not.  Do you know how much the average payout for a lawsuit of the nature is? “The cost of settling out of court averages $75,000, and the average jury award hits $217,000 if you go to court and lose.” On top of the expensive payouts in court, a lawsuit will be stressful and very distracting for your team and other employees. It can take anywhere from 18 to 24 months before a resolution takes place.   The result of this nearly guarantees a decrease in day to day productivity and work performance happening from within the business that could ultimately drive your customers away.  How much can you risk losing?

But I’m a great boss, my employees would never sue me!

Most would assume that this is only a cause for concern if you treat your employees poorly, however, even great bosses find themselves in employment related lawsuits. You can do everything in your power to ensure that you treat every individual fairly and with the utmost respect and remain exposed to this risk. Depending upon state laws, as a business owner, you may be held liable for the actions made by your managers and supervisors in the work place. If they are not properly trained or informed on laws regarding anti-discrimination, you are at risk. Even after that, no matter how many precautionary and preventative measures that you take, the only way to fully protect yourself from the possibility of a lawsuit is to have EPLI coverage. Don’t let yourself be deceived, not a single business is exempt from this risk.

How long are you willing to leave your business exposed to the risk?

With these rising numbers and inevitable exposure, there really isn’t any time that you can afford to leave yourself and your business without proper coverage to transfer this risk out of your hands. Take the first step today to protect yourself by contacting Lee Insurance Agency and let us find the best plan to fit the needs of your business and yourself. We are an independent insurance agency that represents all the A rated insurance companies in Texas. Unlike captive agents, we hold the great ability to shop your insurance with all our companies at any time. We believe strong footing in customer service, knowledge, and experience is what makes us stand out from the others as an agency. Contact is today by phone at 1(888)393-7914, online at our website (, or on our Facebook page!

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