VIRGINIA BEACH, Va. — We live in a litigious society. As business owners and business managers of drycleaning operations, you are now, more than ever, at risk for legal action.
Employee lawsuits can be so much more than just an annoyance. They can take away from productivity, team morale, and can distract your management team from functioning optimally — and can cost you a lot of money.
Did you know that in the last 20 years, employee discrimination lawsuits have risen by approximately 400%?
Employment practices liability insurance (EPLI) protects businesses and owners/managers from this intangible threat.
There are some recurring trends among business owners when it comes to EPLI coverage. These are the top two excuses that we hear from clients regarding this exposure in their business:
Excuse #1: My Employees Would Never Sue Me — Most small-business owners mistakenly think that, with a small staff, they will have little to no exposure. I can’t tell you how many business owners have told me, “My employees are like family. They would never sue me.” Unfortunately, several of these business owners have since faced lawsuits from their employees that cost them a lot of money.
Excuse #2: This is Covered on my General Liability Policy — Sorry, it’s not. Employment practices liability insurance is not covered by any other policy. Unless you have an EPLI policy in place, you and your business are at risk for this exposure.
So what are some of the most common claims and how might these play a role in your drycleaning business? These are the top three employment claims that are filed against business owners:
Claim #1: Wrongful Termination — Yet another reason that your business needs to have an employee handbook that is signed by the employee and outlines documented, progressive discipline. If there is no structure to your employee practices that are standardized across the board, it becomes your word against the employee’s.
Claim #2: Discrimination — Here is why all practices should be outlined in your employee manual, and all practices should be standardized for all employees. Discrimination can be associated with age, religion, sex, disability or any other number of things.
While discrimination is often perceived relative to the individual, one way that business owners can protect themselves from this accusation is to have established standards and practices and maintain them equally for all employees.
Claim #3: Harassment — Whether this takes the form of sexual harassment, verbal harassment or physical harassment, again, having established guidelines that are standardized across all employees helps mitigate the exposure for business owners.
So how can you protect yourself and your drycleaning business?
My best advice is to ask your insurance professional about EPLI coverage and get a full business review every year to ensure you are not paying for overlapping coverages with multiple companies or missing out on an important coverage that leaves you exposed to a lawsuit or loss.
You work too hard to grow your business to not protect it properly.
To read Part 1, go HERE.