Does Your Employers Practice Liability Insurance Cover Social Media Risks?


Businesses large and small are using social media tools for communication, marketing and even recruiting. Many are doing so without understanding the liability risk they run. In addition to professional liability exposure, you could be exposing your business to employment-related lawsuits, which your Employers Practice Liability Insurance (EPLI) policy may not cover.

The typical EPLI policy can provide coverage for the cost to defend and indemnify an employer against claims including discrimination, sexual harassment and wrongful firing, up to the limits of the policy. But policies, and their exclusions and limitations, vary widely depending on your insurer. Many insurers have only recently begun to address the employers practice risk issues that surround digital technology including websites, social media sites and corporate blogs.

One of the biggest problems with the use of social media in your business is that the lines between personal and professional use are blurred. So much so, in fact, that the Information Systems Audit and Control Association (ISACA) identified lack of control over corporate content as one of the top five risks businesses need to prepare for when using social media. ISACA said the risks stem from users not understanding the potential harm their behavior could have on a company.  For example, one employee could post photos or a statement about another employee who might construe it as harassing or discriminatory. As the company’s owner, you could be sued for damages. And it doesn’t even have to be a current employee who is defamed. It could be a former employee, a volunteer or a job applicant who feels derogatory content caused him or her harm, such as a bad evaluation, wrongful discipline, deprivation of a career opportunity or emotional distress.

Your first line defense against employer practices social media risks is a well-crafted policy statement in your employee manual regarding the use of social media on and off the job. The guidelines should clearly state where, what and under what conditions an employee can post to any social media platform about your company, clients, employees, former employees, job applicants and volunteers. They should also spell out the disciplinary action that will be taken for any breech of policy. You may also want to require other employees to report any defamatory content. Along with the written guidelines, you should conduct departmental meetings to explain the dangers improper use of social media pose for the company and to answer questions.

If you use social media for recruiting, you need to establish guidelines for that application as well. Experts advise that at minimum you use a standard screening process for all applicants, advise them of which, if any, social media sites you’ll search as part of the hiring process, and never “friend” or otherwise establish a social media relationship with an applicant.

Finally, review your current EPLI policy in regard to your social media risk exposure. If you aren’t certain, contact your insurer to see if you are covered for these eventuality. If not, you may be able to purchase an endorsement. You can also shop for competitive EPLI quotes on this site.

Please read our other articles in this series, which discuss professional liability and social media risks and product liability and social media risks.

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