By Amye Anderson
UCBJ Managing Editor

COOKEVILLE – A social media movement that began in fall 2017 opened the dialogue for sexual harassment, especially in the workplace. 

An online survey conducted by a nonprofit named Stop Street Harassment earlier this year found that 81 percent of women and 43 percent of men had experienced some form of sexual harassment. Combined with heightened consumer awareness of sexual harassment, wrongful termination and discrimination is the need for adequate insurance coverage to protect an employer’s assets. 

Kelly Swallows, Swallows Insurance Agency’s Vice President of Operations, says those who most need this coverage are the ones who are usually most reluctant to add EPLI (employment practices liability insurance) to their company’s insurance program.

“Even if a company isn’t held liable, the expense of legal defense for a sizable lawsuit can possibly force it to close its doors,” Swallows said.

EPLI remains an ancillary, or secondary, coverage and despite the nominal cost of thesupplemental coverage, it is often overlooked. In fact, it’s estimated that 70 percent of businesses don’t have EPLI coverage.

There are several factors that increase a company’s chances of becoming entangled in a situation where EPLI is needed or would be beneficial to protecting assets:

• No written and signed acceptance of company sexual harassment policy
• Risks with multiple locations and no consistency in policy from one to the other
• A risk that makes frequent acquisitions that result in layoffs, demotion, and job transfers
• Low percentage of women or minorities on the company’s management team
• No human resources training in place for the handling of EPLI complaints or claims
• No employee manual distributed and signed by the employees stating that they have read it and understand it
• Violations by company management of the employment manual procedures in isolated situations, therefore, discriminating against other employees

The exact cost of EPLI coverage depends on the type of business being insured, the number of employees on staff, and various risk factors; for example, whether the company has been sued over employment practices in the past. On average, the cost of an EPLI policy lands somewhere between $800 and $3,000 annually. Deductibles can be as high as $25,000 and $50,000 for small businesses.

These policies will reimburse a company against the costs of defending a lawsuit in court and for judgments and settlements. The policy covers legal costs, regardless if the company wins or loses the suit. 

However, policies typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies such as workers compensation are excluded from EPLI policies.

To prevent employee lawsuits, experts suggest educating managers and employees of workplace policies and standards in order to minimize problems in the first place:

  • Create effective hiring and screening programs to avoid discrimination in hiring
  • Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone
  • Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor and ensure supervisors know where the company stands on what behaviors are not permissible
  • Document everything that occurs and the steps your company is taking to prevent and solve employee disputes

The most common types of claims include pregnancy discrimination, illegal background checks, unpaid interns, and genetic discrimination.

Employee lawsuits, while inconvenient, can also be expensive – the cost of settling out of court averages $75,000 and the average jury award averages around $217,000 if a company goes to court and loses. Employee lawsuits are also distractive for the company’s management team, and can distract from productivity and employee morale; often taking between 18 and 24 months to resolve.

In an era when it seems individuals are more likely to file a lawsuit first and ask questions later, it’s estimated employee lawsuits have risen nearly 400 percent in the last 20 years. Wrongful termination suits reportedly increased more than 260 percent. According to those statistics, a business is more likely to be sued by an employee than have a fire at their facility.

Swallows Insurance partners with many A+ A.M. best-rated carriers who insure businesses are protected with employment practices liability insurance (EPLI). Licensed in Tennessee, Alabama and Kentucky, Swallows Insurance Agency can assist with finding the right coverage for auto, business, health, home, liability and life insurance needs.

For more information, visit or call (931) 526-4025.

Amye Anderson is the managing editor of the Upper Cumberland Business Journal and can be reached via email. Send an email.

This site uses Akismet to reduce spam. Learn how your comment data is processed.