You're Open for Business! Now Let's Talk About EPLI Coverage

EPLI stands for “Employment Practices Liability Insurance. This type of insurance protects business owners against claims by employees, stating that their legal rights as  employees of the company have been infringed upon. It provides coverage to employers against claims made by employees citing discrimination, harassment, wrongful termination and other employment-related issues, like failure to promote.

Larger companies will generally have substantial EPLI coverage in place, and have legal departments prepared to handle a majority of employee lawsuits. Small to mid-size companies, however, may not be as well equipped to handle these claims. The highest concentration of these claims occur in new, rapidly growing industries, much like the cannabis industry. This exposure becomes much greater when companies are needing to hire employees at a fast rate. Employees are brought on in large numbers, before any sort of employee guidelines or legal responsibilities can be established for the business. This makes businesses extremely vulnerable in their startup phases when cash is tied up in operating costs and overhead, leaving little leftover to deal with litigious issues.

However, there is a solution for these types of businesses. Certain carriers can offer this coverage as either an endorsement to a BOP (business owner’s policy), or they can offer it as a standalone policy. The cost of this coverage is dependent on such factors as the type of business, the size of the company, number of employees, business location, and claim history. Companies also like to see loss control measures in place, which can take a few different forms.

 

Below are examples of the different EPLI loss control procedures that companies typically like to have in place:

  • Review possible loss exposures with your insurance broker and obtain the right amount of employment practices liability insurance relating to those exposures.

  • Create an employee handbook that details your company's workplace policies and procedures. The employee handbook should also have an employment at-will statement and an equal employment opportunity statement.

  • Establish a job description for each position that clearly defines expectations of the employee.

  • Organize periodic performance reviews of employees and document the results in a file.

  • Have a method of screening employees to eliminate undesirable candidates prior to the in-person interview

  • Perform background checks on all prospective employees.

  • Mandate a zero tolerance policy regarding discrimination or any type of harassment.

  • Institute an “open-door” policy for your employees to report any grievances

  • Finally, make sure to have an employee file in order to keep track of these loss control procedures

This is becoming one of the bigger issues for cannabis businesses as they begin to grow. Here at Cannabis Insurance Associates, we provide a customizable EPLI policy that is specifically for the cannabis industry. We perform a thorough policy analysis that will identify exposures and keep your business protected.