Why EPL Insurance Is Important To Businesses Within The Cannabis Industry

Employment Practices Liability Insurance, also referred to as EPL or EPLI is becoming more of a necessity for cannabis businesses rather than simply a nice coverage to have. A standard EPL policy protects business owners from claims by employees for discrimination, harassment, wrongful termination, failure to promote and other employment related issues. 
The cost of defending employment-related claims can be more expensive that the cost to settle in many cases. Employers face numerous employment practices liability exposures in their day-to-day business and interactions with staff. The Equal Employment Opportunity Commission (EEOC) is taking a much more aggressive stance in investigating EPL claims and filing lawsuits for potential violations. 

There are nearly 90,000 EPL claims reported to the EEOC annually. The average verdict in EPL cases now exceeds $450,000. Employment issues now make up 30% of all civil litigations in the U.S.

It is becoming apparent that employers are more likely to have an employment claim than a property or general liability claim.
67% of all employment cases that litigate result in judgment for the plaintiff.
41% of all EPLI claims are brought against small employers with 15 to 100 employees.
The average amount paid for out of court settlement is $40,000. 
There’s no question that EPL claims can have a serious financial impact on small to midsized companies. As an employer, you do everything you can to treat your employees fairly. Even if you do everything right and comply with all federal, state and local regulations, you can still be held liable for the actions of your employees, vendors or customers. You could also be the subject of a discrimination suit if someone you interview but fail to hire feels that he or she was treated unfairly.

Employment practices liability insurance (EPLI) can protect your company against claims made by potential hires, employees currently on your payroll and terminated employees. With EPLI coverage, your company is protected against claims of:

  • Wrongful termination
  • Employment-related emotional distress and invasion of privacy
  • Defamation
  • Retaliatory/constructive discharge
  • Sexual harassment and discrimination
  • Workplace torts such as slander

Employment Practices Liability Insurance (EPLI) coverage generally includes the cost to defend against the charges plus any damages you are ordered to pay. However, not all insurance policies are built the same. EPL is still considered a somewhat new insurance coverage and many carriers offer their own policy forms, coverages and exclusions. This makes navigating EPL very difficult, especially for companies within the cannabis industry who run multiple operations. There are a couple of major coverages to consider that are often not included on an Employment Practices Liability policy:

Hour and wage defense is typically excluded on most policies. Claims by employees for lack of overtime pay, lack of breaks, and minimum wage violations are examples of why this type of coverage is important. Policies that offer this coverage usually only do so as a sub-limit. Hour and wage employment issues are criminal offences, therefore carriers cannot offer settlements or damages.  

Third party harassment is also a big consideration for restaurants to consider. Title VII of the Civil Rights Act of 1964, requires an employer to prevent known sexual harassment created by other employees or customers, regardless of the status of the harasser. 
Immigration related defense. Immigration employment violations carry serious penalties and fines, and the cost to defend these cases can be high as well. 

This coverage is becoming a much needed element in fully protecting businesses in the cannabis industry. If you feel you might be interested in this coverage, or want to know more about it, please don’t hesitate to contact us.