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Suit Yourself

Protect your company from employee lawsuits.
September 1, 2007
URL: http://www.entrepreneur.com/article/183070

You know employees can sue you for discrimination or sexual harassment, but did you know that they could also sue for negligent evaluation or deprivation of career opportunity?

You can make your legal minefield a little less treacherous with employment practices liability insurance, which typically pays for defending many types of employee lawsuits and for judgments and settlements (but not for punitive damages or civil or criminal fines). EPLI can be purchased alone or as an endorsement to your general business policy.

Even if you think you're doing a good job respecting employees' legal rights, this coverage is worth considering. But "EPLI should not be viewed as a panacea against employee lawsuits," says D. Allen Miller, managing director of HR consulting firm Business Advantage International Inc. EPLI "is intended to provide a safety net that mitigates risk for employers who have effective policies and practices ingrained in their company culture. Over time, EPLI does little to protect bad employers from bad management practices," Miller says.

Jacquelyn Lynnis a freelance business writer in Orlando, Florida.