Picture this. You’re a small business owner running a plant shop. You have a couple of employees. While most are intricate parts of the business, there is one that has some behavior problems and has numerous write ups. After the 3rd write up, you let the employee go. A few months later, you’re emailed with a charge from the Equal Employment Opportunity Commission, also known as the EEOC, claiming age discrimination
While this may seem implausible, this happens ALL THE TIME. In the last 20 years, lawsuits from employees have risen up over 400% from years prior. The average settlement out of court is up to nearly $75,000, while the average amount typically awarded by a jury in court is around $217,000.
The EEOC is a step to make sure that the treatment of employees is fair and equal. The commission is responsible for investigating discrimination against an employee because of the person’s race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.
If an employee feels like they have a case, they can file a complaint with the EEOC. It’s important to recognize that a charge does not mean you’re guilty. The EEOC has a right to investigate any complaint in which there is a question of validity. When such an allegation is made the employer will be notified within 10 days.
During the investigation portion, an EEOC investigator will be assigned to the case. The charging party will then have their chance to submit their side of the story and any documents or proof of the charge. The employer will also have their chance to submit a “statement of position” through a portal that is included when they are notified of the charge. This is where they’ll also be able to include any documentation, policies and procedure that would collaborate their stance. Why an EEOC claim is so important because it will signify whether there is a case for the employee to sue the employer.
The good news in all of this is that there is insurance that can help you through this. While many people believe that workers compensation may help you, that is actually false. The only coverage that will help with this matter is employment practices liability insurance. You may see this advertised as EPLI or employment practices insurance—it’s all the same. EPLI will help you with EEOC claims and beyond if it makes it. As with any liability it is going to provide legal defense coverage and advice.
According to the law firm of Murphy Austin Adams Schoenfield LLP, here are average court costs and legal fees when:
- the case is settled out of court: $10,000 to $50,000
- the case is dismissed: $10,000 to $15,000
- the case goes to trial: $150,000 to $200,000
While employment practices liability can be an added expense, it can easily pay for itself.
With today’s litigious culture, this coverage is becoming more and more crucial. EPLI policies can be written on a policy all by itself, but It can also be included in your BOP aka business owner policy or a package policy that include multiple coverages like general liability, property, as well as employment practices liability. Premiums are often determined by gross revenue and how many employees you have. Obviously, the more employees, the high the chance of claims occurring.
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