In Iowa, a dental assistant was fired for being too attractive. So, she sued for wrongful termination.
If you’re a practice owner, you’ve probably thought about the what ifs of discrimination, wrongful termination, sexual harassment, and any other workplace behavior that could become a problem for you if left untempered.
But you’ve probably never thought of firing someone for being too attractive. This dentist says he feared that he would pursue an affair with her. Interestingly, the court ruled in the dentist’s favor. Let’s take a look at what Employment Practices Liability insurance is and how it works.
In insurance, discrimination, wrongful termination, sexual harassment, wage violations, breach of contract, and other civil rights violations (like privacy) are grouped together and called Employment Practices Liability (EPL). When these actions cause problems that can’t be resolved, they lead to lawsuits.
EPL insurance covers some or all of the defense costs. Typically, EPL is included in business owner’s policies.
But along with litigation, the potential costs to a practice owner also include a settlement or judgment. Some EPL policies do not include the settlement or judgment. If you do want that to be included your policy, add Indemnity to your EPL coverage (EPLI). The extra I means that the insurance company is going to pay, typically after a deductible, any settlement or judgment amount up to the limit you choose. So if you have added $25,000 of indemnity to your EPL insurance, and the judge awards damages of $20,000, you will likely pay a deductible, and the insurance company will pay the rest. Indemnity limits can range from as low as $25,000 to $1,000,000 or more. Indemnity can add to the cost of your insurance significantly– from $200-700 per year, depending on what limit you choose.
If you have professional liability insurance packaged with your business owner’s policy, some carriers may offer you the option to share limits. That means you may be able to add Indemnity to your EPL without adding much cost because the Indemnity limit is shared with your professional liability limit.
But what about the nuances? Like medical leave issues especially in regard to an employee who is currently on leave and may have a change in job status. It’s best to talk to an attorney about this. The best insurance carriers offer a legal team (that specializes in Employment Practices Liability) who you can call for free to ask these types of questions.
Remember, you may not think you’ll commit offenses like sexual harassment or racial discrimination, but privacy, breach of contract, and wage violations can easily be accidents that go unnoticed for many years. Check with your insurance agent to see what type of coverage you have.