If you are a New Jersey business owner and you do not have Employment Practices Liability Insurance you need to read this article. The cost of this insurance protection is very inexpensive and the protection it gives you is worth its weight in gold.
Don’t fool yourself in thinking that a lawsuit from one of your employees couldn’t happen to you. Some people fall in to the “It can’t happen to me” way of thinking, which is deadly. Consider the following real world situations that we have seen business owners deal with:
Long time employee of 20 + years was let go due to the recession’s impact on the company. Employee sues for Age Discrimination. (50 employee firm, the business owner said “I’m so shocked by this, we treat all employees like they are family.”)
Male employees sexually harass a company’s sole female employee for over a year and the owner was unaware of this happening until after she quit. (20 employee firm)
Long time employee becomes pregnant and subsequently goes out on disability. She looks to return to work 6 weeks after her child is born to find that her job responsibilities were given to others in the company. She was told her position was no longer needed and no offer for another position was provided. She sues due to a violation of Federal Labor Laws. (320 employee firm)
An employee in the bookkeeping department goes to the IRS to report his employers’ practices and tax fraud. The Employer terminates him saying his services are no longer necessary. He sues for retaliation. (10 employee firm)
The cost of insurance protection is so minor compared to the cost of having to defend your company from a lawsuit. Say your lawyer charges you $250 an hour and spends 5 hours to offer a quick settlement. His fees alone total $1,250.
Employment lawsuits are not rational decisions, they are emotion based and generally take a long time to settle. We have seen businesses face legal fees from $15,000 to $75,000 because the lawsuit dragged on for well over 2 years.
The Cost of an Insurance policy
So let’s look at the cost of an Employment Practices Liability Insurance policy.
We engaged one of our insurance companies to get a general idea of what the premiums would cost for a variety of different businesses. But first here are the assumptions:
The characteristics of the business:
- Is a For-Profit Company with all their employees working in New Jersey.
- Never had a lawsuit or employment practices claim.
- Never had Employment Practices Liability Insurance before.
- Has an anti-discrimination and harassment policy in place.
The amount of liability coverage we are using is $1,000,000 and the retention is $2,500 per claim. Here is how the premiums look:
- Accounting Firm with 10 full time employees: $2,079.00
- Electrical Contractor with 25 full time employees: $4,730.00
- Retail Store with 23 full time and 53 part time employees: $7,162.00
- Manufacturer with 11 full time and 20 part-time employees: $4,730.00
So do the math and ask yourself why you don’t have this important insurance coverage.
If you want to get an indication for your business right now we have an online quick indication that can help you understand the cost of coverage.
Better yet, give us a call at 800-272-4783 or contact us here and we will call you back and do the math for you.
A disclaimer (sorry we have to do this) There are other variables which affect the cost and availability of coverage for any given business (too much to explain in this blurb but trust us they exist.) We can’t name the insurance company we illustrated above due to state laws which restrict us from doing so. And rates insurance companies charge are subject to change, so if you just so happen to be a NJ based electrical contractor with 25 full time employees the price may no longer be $3,140 by the time you read this. When was the last time you saw an insurance company advertisement that said they are increasing their rates? I think you get our point. Also our legal counsel reminded us to remind you that the premiums above are just illustrations and not an offer of insurance were you call our office and say “Hey I’ll take it!”
