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Business Protection Bulletin


By Business Protection Bulletin

One of the most stressful situations employers have to face is dealing with employee terminations. Even when employees leave of their own free will, there are repercussions in the workplace that affect the departing employee, the employer, and the employee’s co-workers. And when employees leave due to being fired or layoffs, it can be even more disruptive.

When you are faced with employee terminations, it’s important to make sure you minimize any negative effects on your business and your remaining employees. If you manage the situation carefully, you can reduce the impact and the risk of encountering legal issues.

A proactive strategy can help. As you consider a comprehensive employee termination strategy, it can be helpful to note that terminations usually fall into one of three categories:

  • Employer ending the employment relationship for cause due to poor performance or behavior.
  • Employee ends the employment relationship voluntarily.
  • Employer ends the employment relationship for economic reasons unrelated to employee performance.

In some instances, specific termination types call for certain responses. There are also general guidelines that make sense for all types of terminations. Here are some tips that might help:

Employer ends employment relationship for cause

  • Protect yourself and your employees: Sometimes, the wisest course of action is immediate termination — for example, if an employee steals or is a danger to your business and/or other employees. In this case, immediate termination might be justified. However, make sure you understand the law and your responsibilities fully.
  • Counsel employees and document your efforts: Some poor performers deserve a second chance. Ensure that employees understand what is required of them, and make sure you document warnings and counseling so that your business is protected if you do ultimately have to terminate the relationship.

Employee ends employment relationship voluntarily

  • Make sure you understand why employees are leaving: If you don’t already have an exit interview policy, consider implementing one. It’s a great way to find out how your business stacks up against competitors on the benefits and compensation front. It can also be a good way to nip management problems in the bud.
  • Take advantage of counter-offer opportunities: If a valued employee is leaving, you might be able to keep them on board if you take the time to discuss the reasons for the departure. Turnover is expensive, and a pay raise might be far less costly than recruiting and training a new employee.

Economic-related terminations

  • Let employees know they are valued: Layoffs are difficult, but letting employees know they are appreciated and treating them with respect can make the transition less challenging. If you can provide a good severance package and help in securing another job, this will also help.
  • Keep employees informed: Reductions in your workforce affect everyone — your management team, employees who are being let go and employees who will remain with you. Keeping the lines of communication open can help reduce anxiety.

All types of terminations

  • Have a process in place: Follow a set procedure so you treat all employees equally. A checklist of termination steps can be helpful.
  • Communicate effectively: It’s important for all employees to understand what’s expected of them so that you avoid misunderstandings.
  • Talk to a lawyer: The employer-employee relationship is highly regulated. If you suspect there might be guidelines you’re unsure of, consult an attorney.

The last word

If you’re an employer, chances are you’ll have to deal with employee terminations at some point. They are rarely pleasant, but you can manage the fallout by planning ahead and making sure you have appropriate procedures in place. By taking a proactive approach, you can minimize the effect on your workforce and protect your business.


By Business Protection Bulletin

Most employers know that sexual harassment is a form of discrimination that violates Title VII of the Civil Rights Act of 1964. The legal definition of sexual harassment is “unwelcome verbal, visual, or physical conduct of a sexual nature that is severe or pervasive and affects working conditions or creates a hostile work environment.”

Although this definition might seem clear cut, the issues surrounding what constitutes sexual harassment are not. One of the most difficult aspects of examining a sexual harassment charge is deciding whether or not the conduct in question was truly harassment, and not just an innocent exchange between consenting adults.

There are two scenarios, that when they exist, are a definitive sign of sexual harassment:

  1. Hostile environment – This is the most prevalent type. A work environment becomes a hostile environment when an employee is made so uncomfortable by a pattern of repeated, unwanted behavior that they cannot perform their job.
  2. Quid pro quo – This Latin phrase literally means “this for that.” Quid pro quo occurs when a supervisor, or other person acting with authority, withholds, demands, or promises a benefit if the employee submits to unwelcome sexual conduct.

Keep in mind when trying to determine if an employee’s/supervisor’s actions constitute harassment; you have to view the conduct in question from the victim’s perspective. The victim determines whether the conduct is severe and pervasive enough to create a hostile environment. The harasser’s intentions do not play a role in the matter.

If there are recurring incidences of employees making sexual harassment charges in your organization, it is probably not a question of supervisors being unaware of inappropriate behavior. Rather it’s a matter of supervisors not taking action when they see inappropriate behavior. Failure to act is far more common than you might think. It is usually the result of a supervisor feeling unsure as to whether the behavior was really unacceptable, or not knowing the proper way to confront the parties involved.

The best way to remove these hindrances is to:

  • Establish a sexual harassment policy that sets forth what actions are acceptable, what actions are considered sexually threatening, and what steps will be taken if anyone is found to be in violation of company policy. Once you have clearly defined your policy, document it and provide a copy to each employee. All employees should sign a disclosure that says that not only have they read the policy and understood it, but they also understand the consequences for failing to uphold it.
  • Provide training. Supervisors should be given appropriate training in the correct manner of investigating a charge of sexual harassment including the types of questions to ask, how to file a written report, and to whom the report should be given.

It is also a good idea to be proactive in avoiding formal confrontations by periodically walking around and talking with employees. Many times an informal conversation can tip you off to a potential powder keg.


By Business Protection Bulletin

It seems as though virtually anything created can be patented, copyrighted, trademarked or otherwise protected. Oddly enough, even with patent protection there is danger. It is easy to believe that if you hold a patent, copyright or trademark you cannot possibly infringe on someone else’s intellectual property — but that’s not true. George Harrison certainly had a copyright on his song “My Sweet Lord” but that didn’t prevent highly publicized and successful litigation against him due to its similarity to the old Shirelle’s hit “He’s So Fine” in the 1970s.

With an average cost of $1.2 million to litigate, patent infringement trials weigh in as one of the most expensive types of litigation in the US today. What was once the realm of the individual like Ben Franklin or Thomas Edison, or the very nearly individual (think Wright Brothers), has now become big business. IBM, which annually tops the list of companies applying for and receiving patents, has received more than 22,000 patents from 1993 to 2002, with patents accounting for about $10 billion in royalties during that 10-year period according to the company’s Web site. Complicating matters is the relatively recent innovation in its own right of the “Business Method Patent.” Examples of these controversial patents are Amazon’s Internet shopping cart, or the “reverse auction” process that Priceline created and patented.

Contrary to popular belief, however, intellectual property is not the patent or copyright that one applies for, but rather the idea behind it. The registration process, be it copyright, patent, or other method, is merely a form of evidence or proof of the origin of the idea, and its timeline. The piece of paper that one might receive acknowledging a copyright is merely a statement that the Office of Copyrights has not received anything else prior to the submission of the material that resembles it enough to call into question the authenticity of the work. Conceivably, one may apply for and receive a copyright or patent for a piece of work and yet be sued. But where’s the coverage you say? Good question. The answer is, it depends.

Take the Recording Industry Association of America’s litigation against numerous individuals in the summer of 2003. Would your Homeowners policy apply if you were sued for negligent supervision of your teenager leading to the illegal uploading of music to the Internet? The answer is probably “no” because there is no bodily injury or property damage (theft of intellectual property is unlikely to be perceived as a form of property damage), and the policy is not designed to respond to pure financial loss claims. So in a personal sense, you are probably out of luck.

For businesses the news is not as grim. In a business scenario, the CGL has often been called upon for coverage in patent, copyright and trademark infringement cases. If there is coverage to be found, it is the Advertising Injury portion of the policy but the catch is that the offense must then occur in the course of advertising one’s product, and not, for example, in the delivery of the product. So although a computer-consulting firm might infringe on another firm’s copyright or patent (source code is patentable), it is probably not covered under the CGL because the offense did not occur while advertising the firm’s services.

The good news is that there are an increasing number of products that are available for intellectual property coverage in the course of business operations. Patent Infringement Liability insurance is available from a select few niche insurance markets, though premiums are usually high, and coinsurance and retentions can be steep too. Professional Liability for technology consultants and other companies with an intellectual property exposure can often be endorsed to cover copyright or trademark infringement, though usually not patents. Advertising agencies or media businesses might find Intellectual Property coverage available for their operations as well.

If you’re concerned about your intellectual property exposure, talk to us to see what coverages are available. Another good idea would be to speak to a lawyer who is well-versed in intellectual property law to learn what steps you should be taking to protect your intellectual property and minimize the risk of infringement.


By Business Protection Bulletin

“Managing Diversity” is a critical human resources function for organizations large and small. All too often, executives and managers lose sight of what diversity means from a legal and moral perspective, and the message then gets lost in the translation when it comes to the rank and file employee.

In 1997 the Department of the Interior identified diversity for its workforce as a crucial issue and provided the following definition of diversity for its own management purposes:

“The term ‘diversity’ is used broadly to refer to many demographic variables, including, but not limited to, racial, religious, color, gender, national origin, disability, sexual orientation, age, education, geographic origin, and skill characteristics … Managing diversity is a comprehensive process for developing a workplace environment that is productive for all employees… The term ‘diversity’ is also used narrowly in employment recruiting and retention efforts to refer to race/national origin, gender, or disability … ”

The EEOC (US Equal Employment Opportunity Commission) is the federal watchdog that oversees compliance for legislation such as Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color, religion, sex and national origin. Discrimination complaints filed with the EEOC have been on the upswing during the past several years, going from 77,444 in 1999 up to 84,442 complaints in 2002. Small businesses with as few as 15 employees are subject to Title VII, but determining who qualifies as an employee for the purposes of Title VII and other federal legislation is a tricky proposition and should be determined through consultation with an attorney or by researching the legislation directly.

Title VII is not the only federal law that applies to employment discrimination cases. For example, the Immigration Reform and Control Act of 1986, the law that created the I-9 requirements for employers, also furnishes protection against discrimination because of national origin or U.S. citizenship. It applies to any employer with at least four (4) employees. The Civil Rights Act of 1866 (42 U.S.C. 1981) forbids employment discrimination because of race or color and applies to any employer, even if there is only one employee.

State laws such as the Texas Commission on Human Rights Act of 1983 (Texas Labor Code, Chapter 21) also apply to employment matters, so it is important to be aware of the complex patchwork of laws that may or may not apply to any employment situation.

The national jury-award median for employment-practice liability cases, which includes discrimination and retaliation claims, rose 44% in one year — from $151,000 in 1999 to $218,000 in 2000 — according to Jury Verdict Research’s ® report, Employment Practice Liability: Jury Award Trends and Statistics, 2001 Edition.

Though these facts and statistics point to the growing need for employers of all sizes to carry Employment Practices Liability Insurance (EPLI), the news is not entirely negative. According to Risk and Insurance (online at there are more than 70 insurers providing EPLI coverage and companies with fewer than 50 employees can expect to pay as little as $5,000 to $10,000 annually for the coverage. Also, many EPLI policies come with pre-arranged legal services such as hot lines for attorneys versed in employment practices law, often at no additional charge. Contact us to explore your EPLI options and to find out more about managing diversity in your workplace.


By Business Protection Bulletin

Employing a rigorous and consistent workplace safety program will bring many benefits to your company. Among these is the potential to reduce your company’s experience modifier and, in the process, substantially lowering Workers Compensation premiums. An experience modification (E Mod) rating is a comparative analysis of your company’s claims and loss reserves for Workers Compensation to other businesses within the same class code as your business.

E Mod is like making par in golf. The more birdies and eagles you make, the lower your score. But unlike your golf game, an E Mod rating requires a team effort. Everyone needs to be conscious of workplace safety. And you need to ensure the factors for figuring your E Mod number are accurate and computed correctly.

Developed by the National Council on Compensation Insurance (NCCI), an E Mod gives employers some power over controlling the cost of their Workers Compensation programs. Each year, NCCI, or a separate rating bureau in some states, evaluates your company’s payroll and claims experience for the past three years and calculates your E Mod. The average factor is expressed as 1.00. A firm with a factor below 1.00 will pay lower premiums while a firm with a factor greater than 1.00 will pay more.

Experience modification is not optional. It is applied to all qualified firms, whether privately insured or by companies covered through state insurance pools. Understanding what the E Mod rating is and how it is calculated can be confusing, but mastering the procedure can deliver big premium savings for your company.

Usually, a company warrants an E Mod rating when it has paid at least $5,000 of Workers Compensation premiums in each of the last several years or has paid $10,000 or more in premiums in a single recent year. Typically, payroll and loss data going back four years is used to figure the rating in the first year. The most recent completed policy year is excluded from the computation. For example, an E Mod effective August 1, 2003, would use policy data from the policies in 1999, 2000 and 2001.


Once your company receives its E Mod rating, you may question whether it was figured correctly, and what can be done to make it lower? Rating bureaus, including the NCCI, base their calculations for your rating on data that was reported to them by your insurer. If incorrect or incomplete data was reported, your rating will be inaccurate, and might end up costing you more. If possible, you should have the rating bureau explain how it determined your rating to ensure it was done in an accurate manner. If you discover an error, you must convince your insurer to resubmit its data to the rating bureau to correct the problem. In some states, errors can be corrected over multiple-policy years, and if the error generates a premium credit, your revised rating can bring big savings.

An area that is often overlooked by employers that can negatively affect their E Mod rating is open claim reserves. Loss claim reserves are treated the same as paid claims when an E Mod is calculated. A loss reserve that does not realistically reflect the potential claim can create an overcharge to the employer and raise your rating. Correcting this improbable loss reserve is difficult once the insurance company has reported it to the rating bureau. The best advice is to closely monitor each reserve for a Workers Compensation claim. Can appropriate reductions in reserves be negotiated? Can the case be closed? This review of loss reserves is especially imperative toward the end of the policy year.

Although making par for most golfers is an achievement more dreamed of than realized, implementing sound safety programs and closely monitoring the reporting and calculation process used to determine this factor can help obtain a lower E Mod rating. Need help determining your E Mod? Give our office a call; we can help!


By Business Protection Bulletin

Many of the same problems that plague the U.S. health care system are spilling over into Workers Compensation, including rising costs, an increased incidence of potential injuries brought on by an aging workforce and the obesity epidemic, and regulatory uncertainties. In a speech at the 62nd Workers Compensation Educational Conference, Robert Hartwig, president of the Insurance Information Institute (I.I.I.), outlined these and other challenges facing the Workers Compensation system over the next 10 to 20 years.

Hartwig first applauded businesses’ efforts that have radically reduced the frequency of workplace injuries in America. Successes on this front have:

  • Helped companies remain productive, by lowering the number of future lost workdays that result from permanently disabling injuries or fatalities.
  • Increased and preserved worker incomes — Seriously injured workers have lower lifetime earnings, a higher incidence of bankruptcy, and increased dependency on public assistance.
  • Maintained and improved the quality of workers’ home life — Seriously injured workers experience a higher incidence of divorce, substance abuse and depression.
    Hartwig then turned his remarks to problems facing the Workers Compensation system:
  • The never-ending cycle of reform, fraud, and abuse, which will be an endless driver of costs in the future.
  • The shift in balance between medical benefits and wage replacement — In 20 years, he predicted, 80%-85% of Workers Compensation benefits will be medical, and only about 15% will be for wage replacement. As a result, the Workers Compensation system will face the same problems as the health care system, but even more so, because the Workers Compensation system doesn’t have the same tools to control costs, such as deductibles and copayments.
  • The aging workforce — Fatality rates for workers ages 65 and older are triple that of workers ages 35–44. The workplace of the future will require a complete redesign to accommodate the surge in the number of older workers.
  • The obesity epidemic — In 2006, the most obese workers filed twice as many Workers Compensation claims and had 13 times more lost workdays than healthy-weight workers.
  • Regulatory issues — Health care reform will be a major theme in the 2008 elections, as it was in 1992, when proposals surfaced that Workers Compensation be rolled into the general health care system. This could happen again.

Though this information is sobering, Hartwig urged businesses to use it to their competitive advantage and work to head off problems before they occur, and not wait until injury patterns emerge to take action.


By Business Protection Bulletin

You are scheduled for a Workers Compensation audit, and the dreaded time is drawing near. No fear. A little common sense and preparation will save you a lot of time, money, and frustration.

First and foremost, make sure you have scheduled the audit at a time that is convenient for you and allows you to devote a few hours to the audit. You should stay with the auditor the entire time. If you feel you have been pressured into meeting at an inconvenient time, call and reschedule. You will need to devote your full attention to the auditor, and to the auditing process.

Before the meeting, gather and organize your payroll reports, classification divisions, certificates of insurance, and overtime payroll records. You can summarize each of these beforehand and have the summaries ready for the review. This can help to streamline the audit process somewhat and assist you in more effectively communicating your business’ important information. Furthermore, if your calculations are well organized and can be reconciled to payroll stubs, W2s and other payroll records, the auditor will feel comfortable relying on your data.

Be prepared for the auditor to question you about the job duties and classifications of various employees. This is to be expected and should not alarm you.

If you have a question about proper classification, call your agent beforehand. Make sure you understand the different employee job classifications and have all of your employees properly classified. For instance, if an employee works 90% of the time in the office and 10% of the time outside of the office, the auditor can charge 100 % of the payroll for that employee to the outside sales classification, a higher-rated class.

Again, being prepared and working beforehand to have a good understanding of the different classifications is key to ensuring your audit goes smoothly.

Next, make sure you adjust payrolls, deducting bonus pay from any overtime pay. Also, be sure to apply the minimum and maximum payrolls to your calculations, if applicable. These maximums and minimums vary slightly depending on the career and on the state. The minimums and maximums also vary greatly for executive officers, sole proprietors, and even partners. Do your homework here and apply maximums and minimums where needed.

If you have issued any payments to subcontractors that do not have certificates of Workers Compensation, these payments may be charged against your Workers Compensation. If you did not get a copy of a subcontractor’s Workers Compensation certificate, you can get it before the audit as long as the certificate is current and shows the subcontractor was covered while working for you.

Once you’ve taken the time to gather the necessary information, organize it, summarize it, and relax. Auditors are not there to do you harm. Work with them; giving direct and honest answers to their questions backed by applicable paperwork whenever possible. When the audit is complete, request the audit worksheet from the auditor.

The good news is that you have the right to request a corrected audit in the event you feel any errors were made. You also have the right to recover any overpayments made during the three preceding audit periods.

Lastly, if an independent agent or broker represents you, ask the agent to review the final audit for accuracy. The audit should be checked against the current policy and against the general liability audit, making note of any discrepancies in payroll estimates and classifications.


By Business Protection Bulletin

So, you’ve decided to launch your own business. Good! This can be an exciting time for you and your family, but don’t forget about the risks. Protecting yourself from financial disaster is a must and will preserve your long hours of hard work and determination, not to mention your future.

There are three types of small business insurance you need, including one that is mandatory. Although most employers must provide Workers Compensation insurance for injuries and illnesses that are job-related, other coverage for business property and liability, though not required by law, is strongly recommended. This optional coverage protects your business’ property, equipment, and inventory as well as providing protection against potential liabilities.

Property Insurance

Property insurance can be purchased on the basis of the property’s actual value (replacement cost minus depreciation), its replacement value (cost of replacing an item without deducting for depreciation), or an agreed-upon amount (commonly used for art objects and other unique items). Basic Property insurance will generally cover losses in the event of fire or lightning strike and will pay the cost of removing property to protect it from further loss. Also, a standard Small Business policy will usually cover further losses from windstorm, hail, explosion, riot and civil commotion, and damage caused by aircraft, automobiles, or vandalism. Optional coverage can insure against earthquakes, floods, building collapse, and glass breakage. You can even insure your property by categories or by events such as fire, theft, or vandalism.

You should take a complete inventory of all your business property, determine its value, and decide what is worth insuring. Make sure the items you want to cover are provided for in the basic policy; if not, buy more coverage. For example, you’ll want to make sure your building is covered and your inventory, furniture, equipment, and supplies.

Liability Insurance

Liability insurance will protect your business assets in the event you are sued. These days, with lawsuits at an all-time high, you will want to maintain a proper amount of Liability insurance to protect yourself and the business you have worked hard to build. Liability insurance will not only pay the cost of the damages but will also pay the legal fees and other costs associated with your defense in a lawsuit. The expenses of defending yourself against such claims in court can be enormous, regardless of whether the lawsuit has merit.

Liability insurance will not protect you against claims arising from nonperformance of work, sexual harassment, wrongful termination of employees, or gender and race lawsuits. Therefore, it might be in your best interest to take out a Surety Bond as performance insurance. Employment Practices Liability insurance (EPLI) protects your business against employment-related claims such as sexual harassment and is a good idea to have.

Business Owners Policies

Many insurance companies have bundled property and liability coverage into a Business Owner Policy, or BOP. This policy provides broad coverage with affordable premiums. Even if you have a BOP, it is advisable to consider adding coverage that might otherwise not be included. Since no two businesses are alike, Property insurance can be tailored to fit your individual needs. Because businesses face different amounts of liability (accounting offices vs. contractors), it is advisable to obtain Liability insurance above and beyond a BOP when needed. We can help direct you according to your business’ specifics.


By Business Protection Bulletin

Attributing a company’s Workers Compensation costs to an individual department encourages managers and group supervisors to pay increased attention to safety and training programs, and to monitor closely the return to work of injured employees. In some companies, as a further incentive to cut Workers Compensation costs, reimbursements from claims are deducted from departmental budgets, rather than a general fund.

By initiating simple internal processes that place responsibility for Workers Compensation expenses on individual departments, employers can take greater control of implementing preventive measures and injury management procedures, thus decreasing the frequency and severity of injuries. As a result of implementing these procedures, a company could reap substantial savings in reduced claims and Workers Compensation premiums.

Employers can meet safety goals by communicating directly with those employees who are potential Workers Compensation beneficiaries. First, a simple analysis should be performed to identify high-risk groups based on a history of injuries and claims. Bringing together employees on a departmental level to discuss the injury management process will improve communication between all parties in the working environment. Having those employees at risk discuss how a job can be performed more safely will reduce injuries. Or conversely, having employees explain how injuries can occur because of faulty equipment or incomplete work procedures will also assist the employer in modifying its safety procedures and work environment.

Too often, workplace injuries are not reported promptly. Supervisors often fail to acknowledge accidents hoping they will disappear without resulting in medical or lost-time expenses. Evidence shows that this practice can result in increased expenses because the initial injury was not reported and treated immediately.

A study of more than 53,000 permanent partial disability and temporary total disability claims indicated the following when compared with claims reported within a week of occurrence:

  • 1-2 weeks after occurrence – 18% more expensive
  • 3-4 weeks after occurrence – 30% more expensive
  • More than a month after occurrence – 45% more expensive

Sharing these sobering facts with managers and supervisors should result in timely reporting of injuries, thus reducing their department’s Workers Compensation costs, and the company’s.

When stressing safety on the job during training programs and reviewing work patterns periodically, the company will help reduce injuries within each department. Once an employee is injured, the goal of the employer and employee should be returning that employee to work as quickly as possible. Both parties should share a common desire for the most effective care, a timely recovery and a quick, safe return to the workplace.

With each department being responsible for its own Workers Compensation costs, departmental managers can be more involved in helping injured employees return to work. Rather than having the injured employee contacted by a third party — usually a claims adjuster or an attorney in some cases, which can develop into an adversarial stance — the employer’s concern and response is conveyed directly to the out-of-work employee.

Although there are a few workers who purposely defraud the system, they are very much the exception rather than the rule. Analyzing Workers Compensation costs on a departmental level makes it more difficult for malingerers to file fraudulent claims.

Although eliminating all injuries or claims is not possible, accidents do happen. It is feasible, however, that the severity and frequency of injuries can be reduced significantly by placing responsibility for maintaining a safe working environment at the departmental level and, in the long run, rewarding the department for reducing claims.


By Business Protection Bulletin

Directors and Officers Liability insurance, or D&O, covers corporate activities. Because a corporation is legally a person, as are the directors and officers who direct it, D&O serves to protect each from liability associated with various actions and inactions.

But what happens when corporate interests differ from those of these individuals? In short, the coverage is not the same.

An indemnity policy protects the corporation, while a D&O policy covers the individual acts of directors and officers. The two types of policies can work hand-in-hand to provide complementary coverage. They can also work apart.


D&O policies do not cover criminal acts and are primarily for civil remedies, mainly damages. First and foremost, D&O policies represent the interests of the shareholders, as a group, and other corporate constituencies in directing the business and affairs of the corporation within the law.

D&O policies offer individual directors and officers the protection they need from personal liability and financial loss stemming from wrongful acts committed while acting as a corporate officer or director. Most policies also cover the liability of the corporate entity itself when the liability is from a claim involving the company’s purchase or sale of securities.


Keep in mind, all companies — those that employ one or more individuals, work with customers, clients, or even competitors — are at risk. Any perceived violation leaves both the directors and officers of the company, as well as the corporate entity itself, at risk for lawsuit and in need of applicable coverage to adequately protect the business as well as the directors and officers involved.

Employment Practices Liability (EPL) can provide additional coverage, acting like an Excess policy in an employment situation, and can also involve claims by and against management. Enhanced coverage on a standard D&O might cover EPL, but should be verified with your insurance agent.

Actions including wrongful termination or demotion, breach of contract or agreement, negligent evaluation of an employee’s performance, refusal to hire or promote someone, workplace harassment, failure to follow the company’s personnel manual and more, can fall under EPL.

Insurance experts advise protecting yourself and your business with indemnity or D&O coverage and suggest you understand exactly what your policy covers. Remember, if your D&O policy does not cover EPL, you should consider purchasing EPL coverage, or have it written into your D&O policy.