{ business solutions } EPLI: An Ounce of Prevention H
ave you heard of EPLI? It stands for Employer Practices Liability Insurance, but if you don’t have it, it might as well stand for
Easy Pickings for Lawyers Intruding into your business … And you may as well have invited them in.
Did you know that 65 percent of em- ployers who have fired an employee have been hit with a lawsuit? I know you’re probably saying to yourself, “Not me!” Right? Maybe you should be thinking “Not me (at least not yet).”
What is it that makes you so different to think that this will never happen to you? I know that you are a nice person, but is that enough? You see, it really doesn’t matter if you are in the wrong or not. Someone only has to say that you made an inappropri- ate remark or asked the wrong ques- tion during a hiring interview. Now you must hire an attorney because the other party already has one, or will seek one. Are you prepared to pay potentially thousands of dollars to defend yourself? The average cost to defend an Employment Practices claim is $150,000. The average jury award, if the case goes to verdict, is $250,000—and 10 percent of all wrongful termination and discrimination awards exceed $1 million. Other important facts regarding EPLI include:
A small employer is more likely to have an employment claim than a general liability or property loss claim.
Allegations of sexual misconduct affect one in 10 medical offices.
An employer can be liable for discrimi- nation by its employees towards a non- employee (patient or any third party) even when the employer’s acts them- selves were not discriminatory.
20 focus | MAY/JUN 2015 | ISSUE 3
Not unlike any other insurance that you have, EPLI mitigates or transfers the risk. We believe that is important, because as a small business you have exposure, and you should definitely have this coverage. Your office in- surance, the Business Owners Package (BOP)
members and MDIS clients are automatically signed up for. It is a free member benefit of a Human Resources library and guide. To receive your login, contact MDIS.
We recently checked with an attorney and the cost was $1,800 to $2,400 for an employ- ee handbook for a small business. That didn’t even include insurance, so once again you are getting extra value by working with MDIS. An em- ployee handbook is required by the EPLI carriers before they will insure you because it is the first line of your defense. If you do not have one, they will help you develop something suitable.
which includes general liability, business per- sonal property and real property may actually include a small amount of EPLI. Usually from $5,000 to $15,000 may be included, but may not cover defense costs. This is what we call a “teaser” and it simply is not adequate. These are used by some insurance companies just to be able to say that particular coverage is included. So, if you aren’t careful, you may end up with a policy that tries to cover every- thing and doesn’t do a good job of covering anything.
Regardless of if you have EPLI coverage you can do yourself a favor and make sure you have an Employee Handbook that is up to date (see suggestions on next page). Templates are available through HR 360, an extensive website with downloadable and customizable resources, which all MDA
In conversations with dentists regarding EPLI, some have expressed a concern about the cost. The cost depends on how many employees you have. Dentists are generally small employers so an EPLI policy typically runs around $1,500/year for an employer with one to 10 employ- ees. Yes that is a significant sum, but let’s look at it from an actual cost perspective. EPLI is a necessary business expense and it is tax deductible. That means if you are in a 34 percent tax bracket, your actual cost is less than $1,000. Considering defense costs and possible jury awards, it would seem that “an ounce of prevention is worth a pound of cure” rings true with this coverage. f
CONTACT MDIS at 800-944-7550 to learn more about EPLI or other coverages. We always provide you with honest answers, practical solutions and personal service. The information represented here is general in nature and should not be taken as legal advice. For such matters you should consult an attorney or legal professional.
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