Generally, workers’ compensation insurance covers physical illnesses and injuries while EPLI protects your business if an employee or prospective employee alleges that their rights are violated. EPLI covers legal defense costs and judgments up to specified policy limits.
If your company doesn’t have an employee handbook, create one. What it contains depends on your company’s size, unionization status, industry, and professional versus service composition, among other factors. Some key things to include are:
If a claim arises, an employee handbook can provide evidence that your company has made a good-faith effort to follow policies that promote fairness and equity among employees. After you’ve created your handbook, be sure to do the following:
Supervisors and managers should periodically receive instruction on workplace issues such as:
Clearly communicate all zero-tolerance policies with your employees that involve:
Sound policies promote fairness among employees and may serve as a defense in a lawsuit.
EPLI is an essential policy that will protect your business against employee lawsuits. Despite the high probability of a suit occurring, many carwash businesses choose not to purchase EPLI because they believe their workplace exposures to employee suits are covered under other policies they have. They’re not. EPLI provides:
Valuable protection against claims for allegedly wrongful employment practices
Expert support for legal and claims representation
Deductibles, differences in coverage provisions, and exclusions can greatly affect the cost of coverage and need to be tailored to an individual company’s needs
Discrimination (based on gender, race, age, or disability, for example)
Harassment
Retaliation
Wrongful discipline
Failure to promote
Wrongful termination
Unfair hiring practices
Defamation among other wrongful employment-related issues
No organization is immune when it comes to employment practices liability. Here are real-life examples of just how costly they can be.
Seventeen carwash employees filed lawsuits against a Chicago carwash operator. The workers claimed they were paid below the minimum wage rate for tipped employees and were never paid overtime wages despite regularly working more than 40 hours each week. The employees quickly reached early settlements, costing the owner $725,000.
As a part of the biggest per-worker recovery in the carwash industry, 18 immigrant carwash employees in New York and New Jersey received more than $91,000 each. The agreement awarded the final part of a $1.65 million settlement to 18 workers who were earning less than $20,000 a year at four carwashes.
Sources: Chicago Tribune, TIME