An ounce of prevention is worth tens of thousands in legal bills
By Neal McConnico, Clay & Land Insurance
At the behest of BrandSource member Mark Pardini, principal of Pardini Appliance, YSN is reposting the following column from Clay & Land Insurance. It recounts an actual case involving a small furniture and appliance dealer who was sued by an employee, and the crippling impact of that litigation. Pardini invests in Employment Practices Liability Insurance (EPLI) to protect his business from potential discrimination, wrongful termination, lack of advancement, or other work-related lawsuit, and urges members to consider securing EPLI coverage as well.
The store in question had a bookkeeper that had worked there for 25 years. The only other employees were the two owners, a salesperson, and a delivery guy (all males).
As times got tougher, small business owners have had to make tough decisions on where to cut expenses. And as you know, a lot of bookkeeping services can be outsourced today for less than paying a full-time bookkeeper.
Since the bookkeeper had worked for them for a long time, the decision was made to cut her back to part-time hours. The owners thought this would be better for the employee than terminating her. This occurred in a “right to work state,” so they could have terminated her with no consequences for the business.
Nevertheless, she filed an age and gender discrimination suit against the storeowners because, she claimed, they singled her out and she was the only female. The lawsuit dragged on for two years and cost the owners $100,000 and a lot of time and energy to defend. They eventually won the lawsuit, but it hurt the store and they ultimately went out of business.
Unfortunately, they did not have Employment Practice Liability Insurance. EPLI would have protected them by providing legal counsel to defend them, which can be very costly, and by paying any monetary damages the bookkeeper was awarded. After paying a deductible, the rest would have been covered by insurance.
Related: AVB’s complimentary Employee Handbook-in-a-Box can help protect businesses from potential liability.
It would have only cost the owners $200 a year to cover their business, based on the number of full- and part-time employees, the limit of insurance wanted, the deductible amount, and past EPLI claim experience.
By the way, we were not their agent at the time!
Neal McConnico is a Certified Professional Insurance Agent (CPIA) with Clay & Land Insurance in Memphis, Tenn. For more information on EPLI coverage, contact call 1-800-237-0472 or BuyingGroup@clayandland.com.
