Part of doing business in Maryland is the fact that the possibility exists that an employee will try to sue the employer. Even small businesses could face a lawsuit brought by an employee. For this reason, it is important that businesses carry employment practices liability insurance (EPLI).
What is EPLI?
EPLI is insurance coverage that protects businesses against lawsuits brought by employees claiming their rights as an employee were violated by the employer. These types of lawsuits are on the rise, according to the Insurance Information Institute. EPLI can protect against claims of sexual harassment, discrimination, breach of contract, wrongful termination and more. The type of EPLI coverage a business needs depends on the type of business being run, how many employees work at the business and other risk factors, such as prior lawsuits. EPLI reimburses businesses against the cost of having to defending themselves against a legal claim.
How can businesses prevent employee lawsuits?
Having insurance can help when an employer is sued, but there are a variety of tactics businesses can take to minimize the change that they will be sued by an employee in the first place. Effective hiring programs can protect against discrimination claims. In addition, corporate policies should be included in employee handbooks as well as posted throughout the workplace, so there is no confusion. Having a proper internal process for handling instances of alleged harassment or discrimination can also help avoid a lawsuit. Finally, if there is a dispute keep a paper trail by documenting all steps you took to try to resolve the dispute.
What happens if you are sued by an employee?
Unfortunately, even if you have EPLI you may still be sued by an employee, and most EPLI policies do not cover everything that could possibly happen leading up to a lawsuit. If your business is facing an employment law claim brought by an employee, you will want to take the appropriate actions to address the claim in a way that reaches a reasonable and satisfactory resolution.