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What is employment practices insurance and do I need it?

by | Jul 20, 2022 | Insurance Law

As a small or medium-sized business owner in California, you know that one negative event could cause your entire business to collapse. Running a business is often a delicate balance between adhering to employment laws, while still making decisions that are best for your business.

This is not always easy, and there may come a time when you find yourself facing a lawsuit for wrongful termination or some other violation of an employee’s rights.

A lawsuit can cost you hundreds of thousands of dollars

Although many of these claims can be settled, the cost of the settlement and any associated legal fees could be something from which you never recover.

Having an employment practices insurance policy could help you. Employment practices insurance is especially helpful for a small, medium or newer business that does not have a human resources department.

What does it cover?

Employment practices insurance is an optional insurance policy that covers the cost of any settlement from a claim made against your business. It also covers your legal fees.

The insurance covers settlements for a wide range of claims, including discrimination, harassment, libel, retaliation, slander and Family and Medical Leave Act Violations.

Additionally, it covers claims related to the hiring or firing of employees, such as breach of contract, failure to promote or wrongful termination. It even covers claims for things such as mental or emotional distress.

What doesn’t it cover?

There are some things employment practices insurance does not cover. Some of these things include claims regarding personal injury or property damage, professional negligence or intentional acts.

The policy applies to all types of employees, including full-time, part-time, seasonal, temporary and volunteer employees. Additionally, it covers claims from current and former employees, independent contractors and employment candidates.

Having a claim filed against you can be distressing, and you are likely to have many questions about your options that insurance law attorneys can help answer. Whatever direction you choose, employment practices insurance can help protect you and your business.