The United States Supreme Court ruled that a lawsuit against Wal-Mart cannot move forward as a class action suit.  The court ruled that the group of all femail employees was an entirely too large and vague to consider one class.  Regardless of the outcome, Wal-mart has already spent millions to defend themselves.  As a matter of fact, this only highlights the need for small business owners to consider their exposure to lawsuits of this nature.

As a business owner, what do you do if you’re ever suied for sexual harrassment or discrimination.  If suied, your business is responsible for defense and legal fees.    Even if you win, you could lose because of the costs associated with your legal defense.

Until recently, there was no insurance product available for this type of claim.  Employment Practices Liability Insurance (EPLI) has been developed to protect employers against claims made by current, past or potential employees.  The EPLI policy covers discrimiation for (age, race, sex, disability etc), wrongful termination, sexual harrassment, and other employment related allegations.

Without this valuable coverage, your company could be leaving itself open to major expenses in the case of a lawsuit for employment practices.  One of the most unfortunate result of the economic downturn  is the increase is frivolous lawsuits.  According to Chubb Insurance, 1 in 3 businesses with fewer than 250 employees were suied for employment practicies.  As for companies over 250 employees, 2 in 3 of these businesses were suied for employment practicies.

Since Wal-mart has deep pockets, they may not carry EPLI.  However, as a small business owner, you should know that the cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past.  Many companies can purchase EPLI as an endorsement to their standard business owners policy.

After purchasing Employment Practicies Liability Insurance, keeping the cost down is key.  In order to do so, many insurance companies have created loss mitigation or loss prevention for their clients in order to reduce the likelihood of being sued for employment practices.

For more information on EPLI or an other insurance type contact us at 214-717-4326.