Do you need insurance against employee lawsuits?

Got your list of things to think about handy? Here's an item to add: Employment practices liability insurance, or EPLI, coverage that management attorney Gary Wincek says is intended to protect against the “catastrophic risks” an employer faces in an employment law suit.

There's a second item as well, particularly interesting as health benefit issues continue to swirl: How you and your health insurance salesperson relate, which attorney Larry Grudzien says is “starting to change” as insurance providers cut sales commissions.

EPLI first. Whether a small business really needs employment liability coverage depends on the business and its risk factors, but, Wincek notes, “We have a number of five-employee clients looking at EPLI.”

Blame the recession. Terminated employees, “angry and upset and unable to find another job,” increasingly look for someone to blame, Wincek says. Often that someone is their former employer.

Wincek is a partner at Laner Muchin Dombrow Becker Levin and Tominberg, Ltd., a Chicago law firm that represents management in employment issues. As you might expect from a Loop law firm, clients range in size up toward 40,000 employees. As you might not expect, however, there is a reasonable smattering of smaller businesses as well.

“Smaller employers are seeing more (employment) suits from laid-off employees or disgruntled former workers who see an opportunity to file a charge with the EEOC,” Wincek says. Yet, the attorney isn't married to an EPLI solution.

In a letter to clients, Laner Muchin notes that smaller businesses may be better off spending EPLI premium dollars on prevention. Damages, the letter says, “are frequently capped based on employer size, and larger, multi-location employers are more frequent class-action targets for plaintiffs' attorneys.”

Wincek does recommend a review of company employment policies and practices; record-keeping; past claims, a possible precursor to future claims; sensitivity training; and a demographic comparison of the business' work force to the makeup of the local community.

Because most smaller companies don't have the in-house expertise to analyze their own employment practices, Wincek generally suggests outside help with the review.

As for the relationship between you and your health insurance guru, the rhetoric, questions and confusion about health benefit plans mean a more consultative relationship may help. That's certainly what's coming, says Grudzien, an Oak Park sole practitioner who represents “a lot” of insurance brokers.

With employers trying to balance the parameters of health-care reform with a desire to reduce costs, Grudzien says a fee-for-service relationship makes sense.

Health insurance brokers, he says, today are more likely to spend time helping business owners “factor wellness programs into their benefit plans, take advantage of spousal carve-out programs, or find COBRA and other vendors. The days when a salesman would simply close a deal and collect a commission are over.”

Ÿ Contact Jim Kendall at JKendall@121Marketing Resources.com.

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