Preventing Wrongful Termination Claims

Many small business owners dread the prospect of a wrongful termination claim. However, there are times when firing an employee is both justified and vital to protect your company’s reputation and financial health, so you can’t let fear of legal reprisals dictate your actions. So, how can you protect your company against wrongful termination claims? First, it’s essential to defend your financial assets with trustworthy Employment Practices Liability Insurance. There are also steps you can take to reduce the risk of an employee lawsuit and protect your company in court.

Why Is Employment Practices Liability Insurance Important?

Wrongful termination claims can have a severe impact on your business in several ways. First, your company may have to pay a significant amount of compensation, taking away from your capital and available assets. In addition to back-pay and medical insurance costs, the court may find you liable for hefty fines and penalties. Also, judges may impose remedial measures that force you to change how you operate.

The potential damage to your company also includes harm to your business reputation. If a case garners local media attention, especially if social media plays an important part in your marketing strategy, the damages to your business’s customer base can be significant. EPLI coverage can protect you against many of these damages and potentially help you afford a settlement instead of going to court.

What Is Covered Under EPLI?

The purpose of EPLI is to protect your company’s assets if the outcome of an employment-related claim is unfavorable or if you reach a settlement. EPLI covers damages, legal fees and litigation expenses. Does EPLI cover wrongful termination? Absolutely.

EPLI insurance also provides financial protection in the event of claims of sexual harassment, discriminatory conduct, breach of contract, failure to promote, emotional distress and FMLA violations. EPLI always provides coverage against wrongful termination lawsuits from past, current and potential employees. By choosing additional coverage, you can also protect your business against claims from independent contractors, seasonal employees or leased employees.

What Other Steps Can Business Owners Take to Prevent Wrongful Termination Claims?

Is it hard to prove wrongful termination? That depends on the working environment at your place of business. Always lay a good foundation for fighting wrongful termination lawsuits ahead of time. Here are several things you can do:

  • Word employment contracts carefully to avoid promissory statements
  • Have a detailed employee handbook with clear termination guidelines
  • Speak regularly and clearly with employees about their performance and your expectations
  • Document all employee interactions related to performance clearly
  • Consult with your HR manager or attorney before terminating employees
  • Give employees sufficient advance warning

Having clear employment guidelines in place can eliminate the legal basis claims. Handling dismissal in a restrained way (such as providing advance warning so employees can look for a new job) can reduce an employee’s desire to take legal action. Of course, for these measures to work, you and your management staff must follow company guidelines to the letter.

How Can Haughn & Associates Assist You With EPLI Coverage?

About Haughn & Associates Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2280.