I’ve spoken with several doctors over the past couple of months. All were dragged into litigation related to their role as an employer. They were being sued by ex-employees. The allegations varied – sexual harassment; improper termination; discrimination.
In 2011, the Equal Employment Opportunity commission (EEOC) received over 100,000 charges of employment discrimination. The numbers go up every year.
Real world examples:
- A former employee claims she was unfairly terminated due to religious discrimination and received $110,000 in back pay and compensatory damages.
- A current employee filed a lawsuit claiming she was denied a promotion due to her caregiving responsibilities as a mother of two. A settlement of $105,000 was made to close the case for alleged sexual discrimination.
Ouch.
Such cases generate expensive legal expenses, onerous settlements, and rotten publicity. Need I go on?
More troubling is that most general business liability policies do NOT cover the following:
- Wrongful dismissal, termination, or discharge;
- Failure or refusal to hire or promote
- Sexual or other workplace harassment
- Employment discrimination
- Invasion of privacy
- Employment related defamation
- Retaliation
It’s difficult to keep up with the laundry list of federal and state regulations that address employee management. Just hiring a lawyer to defend a winnable case is not cheap.
So, what to do?
Consider purchasing Employment Practices Liability Insurance (EPLI). Many companies that sell worker’s comp insurance sell these policies. One such company is Hartford. The cost is quite reasonable. You want to purchase it before you need it. As someone said of a gun and parachute – if you don’t have it when you need it, you’ll probably never need it again.
Glad to see this here. As someone who teaches on CME on asset protection and risk management to doctors nationally this is ALWAYS part of what we warn about in addition to a longer list of non-malpractice related business exposures.
We find that too many doctors are wearing the emperor’s new clothes (I have a corporation, malpractice insurance and an umbrella policy what could possibly happen?) and have no idea that they need an insurance “program” that includes up to six different kinds of relatively low cost specialty insurance. Your examples actually understate the risk, as sexual harassment verdicts average $500K, as just one example.
Ike Devji, J.D.
I had an employee I terminated sue me for unpaid overtime for the 6 years she had worked for me. Even though I had great payroll records for her entire employment and she never once asked for or complained about any overtime owed to her while she was employed, I was forced to settle the case for $75,000.00. The cost of litigating this case from beginning to end, to prove my innocence in court, would of been way more than my settlement.
There is a wealth of information in this thoughtful and relevant post. Didn’t know that EPLI was an entity. Many thanks. 🙂
We have been educating our physicians about this rapidly growing exposure as well as the increased risk of cyber/privacy liability claims being experienced by our physician and medical group practices. We have multiple A rated AM Best options for this coverage at http://www.dannagracey.com