"See you in court!"
These four words, "see you in court," can ruin the day of any employer, no matter how tough they are. If you are a business owner with employees, let me talk with you for a few minutes. I'm an employer too, and I understand what you face every day.
Every single day, you make decisions that affect your employees. These decisions can be as minor as adding a new product line, or as major as promoting or terminating an employee. You sometimes feel like everyone is watching, so you always want to get it right. Always.
But you don't always get it right- or at least your employees don't think you do.
When an employee thinks you messed up, they can sue. And they often do. That's when you need Employment Practices Liability Insurance.
What is Employment Practices Liability Insurance?
- retaliatory actions
- wrongful termination
- slander & defamation
- invasion of privacy
- wage and hour claims
- other employment related offenses.
Do you really need this coverage?
A lot of small employers take the position that they'll never need protection against an employee lawsuit, because they do "everything by the book." Hey- that's great. But what about stupid and frivolous lawsuits? According to INC Magazine, 75% of all employee-generated claims are groundless. But even those ridiculous claims can run up lawyer fees over $10,000, and take up to a year or more to resolve. Don't forget- "anyone can sue anyone over anything."
Huge financial damages.
Over 60% of all lawsuits against an employer that go to court end up with the jury deciding in favor of the plaintiff. The jury picks the side of the employee more than half the time. And damages are typically awarded into the hundreds of thousands of dollars. It's not unusual for a judge or jury to award over a million dollars to an employee. Am I trying to scare you with these numbers? Maybe I am. It's a fact- your business could go under with one roll of the dice.
Personal financial exposure.
If you are a sole proprietor or a partnership, you already know that any lawsuit against your business can also target you personally. But did you realize that even if you're an LLC, an S-Corp or a C-Corp, you can still be held personally liable? Courts can do whatever they want when it comes to employer liability, including breaking the"corporate wall" and making the individual owner liable as well. Regardless of how you are structured as a business, you could be facing personal financial ruin if an employee wins their lawsuit.
This could happen to you:
Unfortunately, one of Bob's employees "missed the memo" that said the customer is always right. His longtime employee, Arnold, started receiving many complaints from customers about his surly temperament. Basically, Arnold was becoming a real sarcastic plumber, and customers didn't like it.
Maybe it was time for Arnold to find a job he liked better than cleaning clogged toilets. But instead of finding a new job, he just got more "mouthy" in the presence of customers.
This wasn't good for Bob's business.
So after months of conversations with Arnold, and trying to save his valuable employee, Bob was left with no choice but to let Arnold go. Problem solved, right? Nope. Read on...
Arnold sued for wrongful termination, based on age discrimination. Arnold was 54 years old, and he alleged that he was fired only because of his age. He alleged that other younger plumbers called him "Old Man" in the break room. He alleged that Bob must have heard this, and approved of the harassment because Bob wanted to replace him with a younger and cheaper employee. The "proof" of this allegation was that Arnold was indeed later replaced by a 28 year old plumber with little experience- and paid far less than Arnold.
The legal stuff between the attorneys lasted six months. When the dust settled, Bob settled out of court for $80,000, and Bob's lawyers got $17,000 for their time. Bob's lawyers told him he was lucky. Bob didn't feel so lucky.
Is this a true story? Of course not. But this type of story happens to small business owners in California every day. Could it happen to you? Are you going to be the next "Bob" who gets hit with an employee lawsuit?
Call me today. Let's talk about protecting this gap in coverage. I insure small business owners in
Rancho Santa Margarita and all over California. I've got years of experience. Let me help.
Jerry Farcone, (888) 327-2663.