Traditional liability insurance does not offer protection against discrimination and harassment suits. Separate coverage known as Employment Practices Liability Insurance (EPLI) will provide the protection you need for both the cost to defend these claims as well as to pay potential judgments or settlements.
You need EPLI coverage and this is why::
- A spa staff member reports to a supervisor that while on a day off, she was taken advantage of by another staff member. She does not want to involve the police but says that she does not feel safe around the perpetrator. After an investigation, you are not sure what happened, but decide to terminate the alleged perpetrator. He threatens to sue for wrongful termination. The victim says if you don’t fire him, she will make a claim for sexual harassment/hostile workplace.
- A long-term senior spa staff member is no longer functioning at an acceptable level and you inform her that she is being relieved of her duties. One week later, you receive a letter from her lawyer claiming age and sex discrimination, as well as breach of contract.
- An experienced massage therapist is hired by a resort. After a few months, she fails to receive the benefits she believes were promised to her. After a few more months, she was terminated for recurring tardiness and several unpleasant interactions with clients. She claimed she was wrongfully terminated and the resort had breached an implied contract and sought to recover benefits, punitive damages, and fees.
The average settlement for a discrimination claim is forty thousand dollars, with ten percent of claims resulting in awards of $1 million or more. Even if you are ultimately exonerated, legal fees to defend such cases average $125,000. Sexual harassment settlements averaged $20,000 in 2014 and are steadily on the rise, as are the number of claims filed. Anti-discrimination/harassment laws almost always provide that in the event of a successful claim, the employer is also responsible for the employee’s legal fees.
Ask AMSkier to help you make sure you have the coverage you need. Contact Gretchen Ruddy (GretchenR@amskier.com) for more information.