Employment Practices Liability is an area of law in the United States that deals with the following types of events:
- Wrongful termination
- Sexual harassment
- Invasion of privacy
- False imprisonment
- Breach of contract
- Emotional distress
- Wage and hour law violations
The acts that provide the foundation for these violations are as follows:
- Title VII of the Civil Rights Act of 1964
- The American with Disabilities Act (ADA) of 1990
- The Civil Rights Act of 1991
- Age Discrimination Employment Act (ADEA) of 1967
- Family and Medical Leave Act (FMLA)
The Equal Opportunity Employment Commission (EEOC) interprets and enforces these laws.
The Employment Practices Policy is becoming necessary as more and more businesses are facing lawsuits from current, previous, and potential employees. Employee confidential data and its electronic storage have become a hot issue. There are both state and federal laws that govern an employer’s liability to its employees.
When should Employment Practices Liability Insurance Coverage be secured? Before your first employee is hired, the coverage should be in place. Most investors and directors will require this coverage as part of the D & O coverage as they can be held liable for suits relating to employment practices.
Why is Employment Practices Liability Insurance needed? Cases against business owners are on the rise and three out of every five firms will be sued for an employment practices violations by an employee. Every employer must realize they can be a target of legal action by current, previous, and prospective employees. Even if the lawsuit is groundless, it can be very expensive from a time, resource, and financial standpoint. New technology companies or fast growing companies are often prey to these types of claims because their management team has not yet designed or implemented procedures for hiring, firing, or disciplining employees. If a company has employees, it needs Employment Practices Liability Coverage.