Protecting Franchise Businesses with EPLI

Employers have seen a steady increase in the charges filed against them in recent years, and these lawsuits can be costly. More specifically, franchise businesses are a target because there is an assumption that franchise operators will settle lawsuits at any cost to avoid bad press and to protect their brand image.

Here are some examples of lawsuits filed against franchises:

  • Accused of paying female employees lower wages than their male counterparts, a burger franchisee spent $100,000 to settle a gender pay equity/discrimination lawsuit.
  • A North Carolina fried chicken franchisee paid $40,000 to settle a religious discrimination lawsuit after firing a Pentecostal employee for refusing to wear pants to work.
  • An auto repair franchisee paid $185,000,000 in punitive damages for pregnancy discrimination and retaliation.

In addition to the settlement or judgment, litigation defense fees and expenses are added and can exceed $100,000 per claim.

It is important that franchise businesses protect themselves by understanding employment law and by implementing HR policies. This can minimize the risk of employment-related lawsuits.

Employment Practices Liability Insurance (EPLI) protects employers against claims from current employees, former employees, applicants and third-party customers or vendors.

Potential coverage can include:

  • Discrimination based on race, age, gender, disability, religion and other protected classes
  • Third Party Discriminations and Harassment, including ADA access claims
  • Harassment – both sexual and non-sexual, including electronic and workplace bullying
  • Wrongful termination or demotion
  • Retaliation claims for protected classes and activities

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