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Want Cheaper EPLI Insurance? Take These Steps to Avoid Cause for Claims.

by EINSURANCE

If you’re a small business owner operating in today’s economy, you probably think that people should just be darned happy to still have a job to go to. That’s a risky mindset because it could put raise your exposure to lawsuits from employees who don’t share your point of view.  Sure, you’ve invested in employment practices liability insurance, but it doesn’t absolve you from the responsibility to conduct your business in a manner that is above reproach.  A few simple precautions and a little bit of common sense will help you avoid giving employees cause for lawsuits. And, as we’re fond of pointing out, when you don’t have claims against your insurance policies, your premiums tend to be cheaper.

If you can’t afford a dedicated human resources department, at least have one or two people on staff who are charged with understanding best employment practices (one of them should be you). There are many online resources that can bring you up to speed on what you need to succeed; EPLI provider should be able to help, too. Here are a few things you’ll need to do and need to keep in mind to obtain or maintain low EPLI premiums.

  • Have a clearly written employee standards manual that defines skill requirements for every position in your company, sets for performance standards and explains processes like evaluation, promotion, disciplinary action and cause for termination. Don’t assume that everyone knows what sexual harassment or discrimination means. Spell it out. Give a printed copy of the manual to all employees along with a form for them to sign saying they received the manual. Keep those forms on file.
  • Have a training session for anyone who is in a supervisory/managerial position or in a position to interview job candidates. Don’t wing it; bring a professional in to help you with this. There are so many innocent things someone can say or do that are potentially disastrous. These include but aren’t limited to giving advice, implying judgment, promising an outcome or putting off action on a complaint.
  • Sounds like a no-brainer, but the best way to prevent an employee lawsuit is to not hire a problem in the first place. Do background checks, credit checks and drug testing. Follow up on the candidate’s references. Do whatever you can legally do to avoid hiring a loser.
  • Address complaints promptly and professionally, and put everything in writing. Whatever you do, don’t try to offer an explanation for alleged bad behavior; it could come back and bite you as being dismissive or disbelieving. Ask non-judgmental questions and listen to the answers.

Your EPLI policy will cover defense costs, judgments and settlements up to the policy limit for your business, former and current employees and officer for a variety of work-related claims. But it’s so much better and will result in cheaper employment practices insurance premiums if you never have to file a claim at all.

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