Twenty years ago, business owners wouldn’t have given it a second thought but in today’s world where we’ve been taught to stand up for our rights it’s a whole new world and that has lead to a relatively new type of business risk. If you run a company which employs any number of people - from 1 to 10,000 - you need to know the ins-and-outs of today’s employment practices

PHOTO CREDIT - OurHometown.ca

Ottawa - July 16, 2012 - Twenty years ago, business owners wouldn’t have given it a second thought but in today’s world where we’ve been taught to stand up for our “rights” it’s a whole new world and that has lead to a relatively new type of business risk. If you run a company which employs any number of people - from 1 to 10,000 - you need to know the ins-and-outs of today’s employment practices; everything from hiring to firing and conduct in the workplace. Whether you are bringing in someone new or exiting a current employee, there are certain rules in place (mandated by law) to make sure that everything is fair and on the up-and-up. And these rules don’t apply only to management; even if one of your employees steps out-of-bounds, you could be held accountable and your business could at risk.

As governments have introduced stricter employment practices in recent years, many businesses have followed along and developed their own “respect in the workplace” policies to ensure no employment laws are broken. But the parameters of what’s allowed and what isn’t are pretty wide and can apply to some degree even to those people who are not your employees. For example, an action could be brought against you by someone who felt they were treated unfairly when you decided to not hire them. This rather vast mine field ranges from hurt feelings to outright workplace bullying and no business is immune from these issues. However, many bosses have yet to catch on that this is a serious problem and a recent survey by one insurance company showed that 33 per cent of the businesses asked had experienced an employment practices charge or lawsuit in the past five years.

Part of the challenge is that your typical Commercial General Liability insurance policy won’t cover you or your company against these kinds of employment practices claims. The good news is that a separate and relatively inexpensive coverage is available called Employment Practices Liability (EPL). Each EPL policy is different but some of the things they can cover include the cost of defending various employment related claims, defamation, wrongful demotion or discipline, and damages for claims of mental distress or emotional anguish.

In that same survey of Canadian companies, the average cost to deal with an EPL charge or lawsuit was almost $60,000. When you consider the potential level of expense when dealing with just one incident, purchasing an EPL policy seems like a bargain and this is where a knowledgeable insurance broker can find the right product for you business. While it may not be as obvious as property or liability coverage which we’ve all become familiar with, Employment Practices Liability insurance is becoming more common in the overall family of business insurance products…for a very good reason.