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Employment Practices Liability Insurance for IT Businesses

In order to run a successful business, you rely on the help and expertise of your talented team. But what happen when a prospective job candidate sues your business, citing their disability as the reason they didn't get the position? Or when a former employee alleges your IT startup wrongfully terminated their employment?

Employment Practices Liability Insurance, for each of these scenarios, can help your IT firm avoid the devastating court costs and settlements that can accompany these claims.

What is Employment Practices Liability Insurance?

Employment Practices Liability Insurance (EPLI) safeguards your IT business against the high cost of lawsuits due to discrimination, harassment, wrongful termination, and other potentially devastating charges. Employment Practices Liability Insurance can cover your business from the cost of legal defense, settlements, and other court fees when your business is sued for violating a person's or group's civil rights or failing to provide a fair, acceptable environment for them to complete their work.

Your EPLI can cover your business when one of your company's leaders

  • Mismanages employee benefits
  • Wrongfully terminates employment or an implied contract
  • Wrongfully disciplines or demotes an employee
  • Sexuallyharasses an employee
  • Damages an employee's reputation due to slander or libel
  • Discriminates based on age, gender, religion, race, or other factors
  • Breaches an employment contract
  • Invades an employee's or prospective employee's privacy
  • Causes emotional or mental distress
  • Makes negligent decisions related to hiring, promotions, or compensation

EPLI covers claims brought against your IT business by former, current, or prospective employees. When your company leaders violate legal protocols in the workplace—even unintentionally—you could face an overwhelming lawsuit. Given that the nature of these claims usually boils down to your word versus the plaintiff's, most companies would rather not risk a million-dollar settlement. Employment Practices coverage ensures your business has the means to weather such suits.

Tech Firms and IT Businesses: When Do You Need Employment Practices Liability Insurance?

Chances are, if you watch the news with any regularity, you've seen a few high-profile examples of Employment Practices Liability cases. Laws such as the Americans with Disabilities Act and the Family Medical Leave Act define acceptable practices for employers and have led to an increase in workplace lawsuits. If you're concerned you or your IT business's leaders may violate the terms of employment protocol, it's best to outfit your company with this policy in case you ever need it.

Evidence in EPLI cases is little more than the employer's words against the employee's, meaning that the case's outcome often depends on the quality of legal representation each side has. Because settlements can run into the millions of dollars when your business is found liable, these claims may be more than enough to bankrupt a small IT business. Even when your company is not liable, the legal defense can also sap your finances.

Employment Practices Liability Insurance ensures your company has the funds to survive an unexpected lawsuit. If you have questions, talk to a TechInsurance agent today.

EPLI for IT Businesses: What You Need to Know

When shopping for Employment Practices Liability Insurance for your IT firm, there's no shortage of options. Here are some tips to keep in mind to ensure your policy is a good fit for your protection needs.

Know How "Claims-Made" Coverage Works.

Employment Practices Liability Insurance is usually available on a "claims-made" basis, which is based on two principles:

  • Your claim will only be covered if the incident in question occurred while your insurance policy was active
  • Your policy must still be in force at the time the claim is filed

In order to receive coverage, your claim must meet both conditions. For example, if you purchase the policy only to cancel it once a contract is finished, you leave your business vulnerable to claims that can be filed later. Depending on your state's statutes of limitations, a claim might occur months after you've completed a project and canceled your policy. In this scenario, you would have met one condition of your policy (the insurance was in force during the time the incident occurred), but failed to have your policy in force at the time the claim was filed.

Understand How Your Premium Is Calculated.

The cost of your EPLI depends on your:

  • Business's size
  • Industry
  • Company's risk profile
  • Hiring and firing practices
  • Employee turnover rates

Additionally, your insurer may request to see your written company and personnel policies to help them determine your coverage costs. TechInsurance can help you acquire a policy that adheres to your budget and your risk concerns. Apply for a quote today!

Consider the Exclusions and the Deductible.

Always read your policy and know its exclusions. You don't want to be caught off guard when a claim you think is covered actually isn't. Some EPLI policies limit coverage during:

  • Mergers
  • Acquisitions
  • Major staff reductions

Your Employment Practices Liability policy will likely come with a deductible, which is the amount you are responsible for paying before your coverage kicks in. Once the deductible is paid, your policy will cover any legal defense costs, judgments, or settlements, up to your limits. If you sign on for a larger deductible, you may pay a smaller premium, and vice versa. However, you should never agree to a deductible that will jeopardize your finances—the purpose of insurance is to reduce your financial burdens in the first place!

Directors & Officers Insurance Includes Limited EPLI Coverage.

If your IT business has been considering a Directors & Officers Insurance policy, know that this coverage also includes Employment Practices Liability coverage – but there are some drawbacks. For example, D&O Insurance:

  • Has more limitations than a standalone EPLI policy
  • Has more exclusions than a standalone EPLI policy

For the upmost protection when faced with a lawsuit alleging your company violated a person or group's civil rights, you may consider purchasing an additional EPLI policy.

Employment Practices Protection Tips for the IT Office

Tech firms that want to run a safe workplace and reduce their risk of an Employment Practices Liability claim should take these tips to heart. They can also help reduce your EPLI premium.

  • Create and document fair personnel policies. Avoiding employment-related claims means your IT startup must conform to consistent and sound personnel practices. These guidelines should be written down and incorporated into your team's regular training. Be sure to outline courses of action for when one of your guidelines has been breached.
  • Establish a safe space for employees to air their grievances. When your company has an open door policy, your employees will feel they can safely voice their concerns regarding your processes and practices without fear of retaliation. Ensure that any inappropriate activity reported will be investigated fairly.
  • Check with your agent before you cancel your EPLI policy. Because your policy works on a claims-made basis, you won't be able to receive coverage for claims filed after your policy has been terminated. Be sure to talk to your insurance agent to determine how to safeguard your business from risks during this time. Certain limited-time coverages are available to raft you through the transition between EPLI policies.

Online Business Insurance Quotes for IT Businesses

Protect yourself and your tech firm's leaders with an EPLI policy built just for the needs of your business. When you're ready to see your options, simply complete our quick online application for free business insurance quotes from the country's top-tier carriers.

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