When nonprofit directors hear the words “employment practice liability insurance” they usually think that doesn’t apply to me, we don’t have employees.This decision or brush over can cost a Nonprofit thousands of dollars and plenty of stress for the director. Employment Practices liability insurance, also referred to as EPLI is insurance protection that protects businesses, including nonprofit organizations, against claims made by either employees or volunteers that the nonprofit is violating their ratings through discrimination, breaches, wrongful termination, or by supporting a hostile work environment. In recent years the number of lawsuits filed against businesses, including not for profits, has been on the rise considerably and no business- small or large, for profit or not for profit, should consider themselves immune from the possibility. With the increase, more insurance companies have recognized the need for this coverage and are adding it to the business policies they offer, or they are adding specific policies just for this risk. The individual policy offers protection for the following:
1. Discrimination for age, sex, race, religion, etc.
2. Employment contract breaches
4.Wrongful discipline or wrongful termination
5. Wrongful emotional distress
6.Employee benefits mismanagement
7. Career opportunity deprivations
8. Negligent Evaluation
The cost of employment practices liability insurance is not the same for all organization nor is the risk of not carrying the insurance. Typically to offer a quote, insurance agencies need the number of employees, type of business, and history of the business. Those that have more employees or previous lawsuits are more likely to pay a higher premium than a not for profit that has fewer employees or a clean record.
Employment practices liability reimburses organizations for defense costs, judgment amounts, and court fees. Legal expenses are covered whether the company wins or loses the suit.For nonprofits to prevent lawsuits, a plan should be set in place with the management team and staff members.All organizations should implement a harassment and discrimination policy and training video for the employees and volunteers to watch and test on.This helps to set the expectations for all team members on what is expected from them.