The Importance of Third-Party Employment Practices Liability Insurance For Your Business

In our increasingly litigious society, the threat of a lawsuit hangs over every business transaction, large or small. Like most businesses, pest control companies of any size are vulnerable to claims brought by either their employees, former employees, or potential employees. Even companies who adhere to the law at all times are likely be sued by an aggrieved employee or customer at some point.

The Society for Human Resource Management (SHRM) reports that 41 percent of all EPL claims are brought against employers with 15 to 100 employees. Companies that fall into this size category will be subject to an expanded array of federal, state and local employment laws, such as the Americans with Disabilities Act, the Civil Rights Act, the Age Discrimination in Employment Act and Title VII of the Civil Rights Act—just to name a few. The Equal Employment Opportunity Commission (EEOC) is now taking a more aggressive stance in investigating EPL claims and filing lawsuits for sexual harassment, discrimination, wrongful termination, retaliatory treatment and unfair hiring practices. States, particularly New York and California, are enacting even tougher protections.

Due to these new protective statutes, employers are now more likely to experience an employment-related claim than a property or general liability claim, making it more important than ever for an organization to financially protect itself against claims of harassment, discrimination and wrongful termination. While many suits are groundless, defending employment-related claims can be financially devastating. If you carry employment practices liability insurance (EPLI), your business has a measure of protection against lawsuits from current, prospective or former employees who allege “wrongful acts” such as those noted above. But what happens if a customer sues you for discrimination or harassment? Are you protected?

Many employers do not realize that they have a gap in their insurance coverage that leaves them vulnerable to discrimination and harassment lawsuits from customers, vendors and suppliers.

Third Party EPLI: Standard EPLI policies only provide coverage for lawsuits brought about by employees or prospective employees, and most commercial general liability (CGL) policies specifically exclude coverage for harassment and discrimination. Third party EPLI fills the gap between these other coverages, providing protection against allegations of wrongful acts made against your company and staff by a third party.

Similar to a standard EPLI policy, third party EPLI generally covers external claims of discrimination based on race, religion, sex, age, national origin, sexual orientation and disability. It also protects your business from allegations of sexual harassment and other verbal or physical actions that create a hostile or offensive environment. Third-party EPLI is especially vital for businesses that interact with the public on a daily basis.

As with all types of exposures, you must go beyond just purchasing coverage to protect your company from third-party claims. Implementing policies and procedures that address discrimination and harassment issues, both from the standpoint of an employee’s actions and the actions of third parties, are critical. In fact, insurers are increasingly requiring employers to implement these practices before they will issue any type of EPLI policy.

Speak to your insurance broker about EPLI coverage options for your business and ask for a review of your current policies and procedures.

By Gary Shapiro, Senior Vice President of Weisburger Insurance Brokerage

Weisburger Insurance Brokerage, a Division of Program Brokerage Corporation, is the nationally endorsed insurance broker of the National Pest Management Association (NPMA). With over 80 years of experience, our experts are able to review your current coverage and identify ways to best protect your pest control business during the dips and peaks of the industry. For more information, please contact Weisburger at 800-431-2794, info@weisburger.com, or visit our site at www.weisburger.com.

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