Many business owners and managers use being a “good manager” to judge whether or not they have a potential law suit against them from their employees.  “Nah, I’m a good manager and I treat my employee’s right, they would never make an employment practices claim against me."  That’s how most managers feel, but if there are more than two employees in your firm and one of them is not your spouse, you are at risk.  

I’ve seen it too many times.  At best you only have partial control of what people do at work, never mind what is going on in your employees’ personal lives that can suddenly impact their productivity.  All is right with the world when things are going good and rolling along toward the corporate mission, but the second you have to reprimand an employee, cut their compensation or admonish them, they feel the need to retaliate – it’s human nature.  As a manager, you cannot predict when that could happen.   As with any insurance, Employment Practice Liability Insurance (EPLI) is available to protect you from those unforeseen or unpredictable events.

The major challenge with EPLI claims is not if they have merit and you would be forced to pay a

large settlement, usually measured in the hundreds of thousands of dollars.  The real issue is that even a meritless claim cost tens of thousands of dollars to defend.  Furthermore, the reputational damage can be devastating.  When a claim is made it must be dealt with quickly by experts in the field; hence, the tens of thousands of dollars to defend these cases. 

Media splashes of firms like Hewlett Packard, U.S. Steel, and Walmart that have made headlines in recent years for employment practices claims has created a recipe for disaster.  The big firms are not the only ones at risk.  These types of situations tend to trickle down to smaller businesses as employees come to believe that may have a case to sue because of some perceived injustice done to them by you. If you’re 100% sure that your employees will never bring an employment claim against you, I know a lot of people who would like to be part of your world.  In the world that I see more often, employees are fine until they feel they feel slighted by their employer, i.e. so and so got a raise and I didn’t, my hours were cut, I was wrongfully terminated, my superior used his position to take advantage of me.  Don’t get me wrong, I think most employees are great and want to do a good job, but it only takes one situation to create a world of hurt for you and your company.  

Is being a good manager important?  Yes!  Is it good enough to keep your company from being sued? No necessarily. That’s why no matter how solid you believe your human resources skills; any company with employees should have EPLI protection.