PEO Employment Practices Liability Insurance (EPLI) is one of the smartest reasons for your company to work with a professional employer organization. Did you know that 6 out of 10 employers in the United States have had to deal with employment lawsuits in the past? 60% is not a number to take lightly when considering the importance of PEO Employment Practices Liability Insurance. Such employee-related lawsuits happen with greater and greater frequency as shark-like lawyers looking for an easy payday circle the waters. In fact, did you know there is a higher likelihood of a business being sued by an employee than by either a third party like a competitor or a customer?
PEO Employment Practices Liability Insurance = Protection
If employee lawsuits were routinely thrown out of court, then the threat would not be so huge. However, there is a number that’s even more frightening than the 60% of employers facing such lawsuits in the past. Indeed, a more alarming statistic is that disgruntled employees end up winning such employment litigation cases 68% of the time. Given the threat to the financial stability of your company, PEO Employment Practices Liability Insurance is needed. EPLI provides companies with insurance coverage, including the cost of legal defense for facing discrimination, sexual harassment, wrongful termination, workplace torts and a variety of other employment-related claims.
The rise of the Internet has led to a much more significant threat posed by a disgruntled employee. In the modern world, employees have become not only more diverse and independent but also more knowledgeable and resourceful. Such knowledge and resourcefulness have led to a sharp rise in employment-related lawsuits. Such lawsuits affect companies across the board, no matter how large or small. In fact, being a small to mid-sized companies do not offer any protection whatsoever from employee-related claims. Is it surprising to you that 41% of all EPLI claims are against companies with 15 to 100 employees? Given this proven fact, safeguarding your company with PEO Employment Practices Liability Insurance is essential regardless of your company’s size.
Regardless of your company’s size, employee lawsuits are much more than just an inconvenience. Employee-related claims are an expensive distraction for your management team. In the face of the reality that employee lawsuits are becoming much more common, PEO Employment Practices Liability Insurance has become a necessity for businesses large and small. Did you know that over the last 20 years, employee lawsuits have risen roughly 400%? In the same period, wrongful termination suits have jumped up more than 260%.
The Safety Net of PEO Employment Practices Liability Insurance
In 2017, you are more likely to be sued by an employee than to have a fire at your facility. Yes, you could need PEO Employment Practices Liability Insurance more than you need a fire department. Although your offices won’t burn to the ground, the financial damage of employee lawsuits can be extreme. On the average, the cost of settling and employee-related lawsuit out of court is over $75,000. Even worse, the average jury award if you decide to go to court and end up losing is over $217,000. Ultimately, the average total of an employment claim’s expense, including settlement, compensatory award and defense cost, comes out to more than a quarter of a million dollars without EPLI coverage. When it comes to a small to mid-sized business, six figures in financial damage can be fatal even in a profitable year. Without PEO Employment Practices Liability Insurance, such financial hits end up closing the doors of many once prosperous business entities.
Additionally, the threat is much greater than any employer would naturally expect. Indeed, when it comes to case law in regards to employee rights to equal opportunity and treatment in a workplace, the definition is broad. Such case law extends to every step of the employment process from recruitment and hiring to promotion and termination. Moreover, the term “employee” applies to any past, present or potential hired personnel at a place of business. Any hired staff is considered to be an employee under these legal guidelines from payroll staff to independent contractors. Even a temporary employee that works for your company for a single day has the right to sue you for violation of legal rights as employees.
Ultimately, the price of not being protected against these lawsuits is much greater than the price of taking preventive measures. EPLI insurance has become one of the basic costs of doing business in the 21st century. PEO Employment Practices Liability Insurance can help protect and provide your business with legal defense aid and financial coverage in employment lawsuit claims.
PEO Employment Practices Liability Insurance vs. EPLI Insurance
Although EPLI insurance can be acquired on your own, it makes so much more financial sense to embrace the PEO Employment Practices Liability Insurance model. By working with a professional employer organization like Total HR Management, you can access EPLI insurance with coverage ranging from $1 to $2 million. PEO Employment Practices Liability Insurance also comes with many other tailor-made service options that can help your company. Such relevant service options include recruitment and selection expertise, background checks to reduce risks of future employment lawsuits, and educational training support for managers and employers on how to handle correctly difficult employee situations.
Most importantly, PEO Employment Practices Liability Insurance offers the advantage of a professional employer organization’s large employee pool to improve rates and lower costs. The price of EPLI insurance is rated accordingly to a company’s size and expected lawsuit risk. PEOs also can reduce this risk by providing a broad, yet comprehensive range of HR functions, including writing employee handbooks, providing anti-harassment and anti-discrimination training to help decrease chances of employment lawsuit claims. Insurance companies understand that a business that has employed a PEO to manage its human resource duties will have better HR administration. As a result, insurance companies are much more likely to provide EPLI coverage for PEOs at a much lower rate.
A Win-Win EPLI Outcome with Total HR Management
Total HR Management offers a win-win EPLI outcome for our client companies. By working with us, we help your company to lower costs while safeguarding the future of your business. To learn more about the PEO Employment Practices Liability Insurance service options offered by Total HR, please call us at (800) 975-5128 today.
No Legal Advice Intended: This blog includes information about legal issues and legal questions. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. You must not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider.