Businesses today are more likely to be sued by an employee than any other person or entity. (An Advertising Supplement to the Los Angeles Business Journal).

The nature of the relationship between employer and employee is changing. In simpler times, a handshake and goodwill seemed sufficient to ensure that the relationship was sound and stable. However, in a new era of increased regulation and exploding litigation, the relationship has become more adversarial and complex.

What is employment practices liability?

EPL is insurance protection specifically designed to cover three main areas:

Wrongful Termination -- including violation of an employees rights during termination and failure to exercise duty and care during termination.

Sexual Harassment -- both as a condition of employment and as a basis of employment decisions.

Discrimination -- termination, demotion or failure/refusal to hire or promote for any reason which violates law.

Why has EPL become such a popular topic?

There has been a surge of consciousness regarding laws that target employment practices. In addition, employees are aware of the many publicized verdicts in favor of them. As a result, insurance claim frequency and severity have hit all time highs.

On the plus side, employers are being held to higher standards in employment practices.

The need for managers to review and implement appropriate hiring and termination procedures is paramount.

Why buy EPL Insurance?

The EDD receives nearly 50,000 sexual harassment complaints annually. The average settlement costs are in the hundreds of thousands. Jury verdicts reach into the millions with some class actions exceeding $100 million dollars.

Employers of all sizes are highly vulnerable to exorbitant costs in order to defend themselves, and NO other insurance policy will address these types of claims.

What's paid with an EPLI policy?

Unlike many other insurance policies, there is no such thing as a standard EPLI policy. Coverage varies by insurance company. The trigger for coverage in most instances is the "allegation" itself.

With more and more insurance companies entering this market, premiums have come down tremendously. Minimum premiums have dropped from the $20,000 range in 1991 to $2,500 for the average policy.

Marc J. Bishara, partner at Venbrook, Risk Management and Insurance Services located in Woodland Hills, is a Certified Insurance Counselor specializing in risk management and consulting to business clients ranging from start-up companies to large multi-national companies.