Did you know that employers with fewer than 50 employees are more likely than a large business to face an employee lawsuit? More than half of all claims filed for employment-related liabilities are against small businesses. However, fewer than 2 percent of small businesses have Employment Practices Liability Insurance (EPLI) and this coverage can protect them from a financial disaster.
A Claim Can Cost a Business Thousands of Dollars
With a slow economy in a state with the most employee protection laws, employment liability cases are on the rise. There were 99,947 discrimination claims filed in 2011 in the United States. More than one-third of the claims were based on racial discrimination, one-third on gender, 24 percent on age and 23 percent on disabilities. Many small businesses cannot afford to pay legal fees associated with these cases and keep their company from going under.
- On average, an out of court settlement is $75,000 with a defense cost of $15,000.
- Lawyer fees for a case resulting in dismissal average $50,000 – $70,000.
- A jury trial averages over $125,000 for defense and awards for parties found guilty are about $217,000.
Why Should I Be Worried That My Business May Be Sued?
Small businesses have a higher risk of employment-related claims because:
- Small businesses do not have legal counsel or full human resources department to rely on
- Do not have the resources to keep proper records of employee performance
- More intimate working environments could cause conflicts during layoffs
An Affordable Solution
Because more insurers are now offering EPLI, it is becoming more affordable for small business to protect themselves. EPL insurance is becoming so important to the success of small businesses that it is being offered at more affordable prices and being tailored specifically to smaller companies.
Call ERM Insurance Brokers at (949) 222-0444 to learn if this risk transfer option is right for your business. Or learn more about Employment Practices Liability Insurance here.