As the new year progresses, many firms use this time to assess their internal policies and practices. One risk that is often ignored by real estate firms is employment practice liability. This is due to the fact that most real estate agents are independent contractors, human resource duties are often handled by a PEO firm and the employed office staff is usually minimal. Because of this, firms view employment practices liability insurance (EPLI) as unnecessary. However, there are three dynamics that must be assessed by each firm.
- For large real estate practices that do employ a number of individuals, EPL Insurance is a purchase they should consider. Thinking a your firm is immune from EPL claims simply because it is a real estate firm is short-sighted. The peril needs to be assessed on the basis of the firm itself – not the industry it is in.
- For small and mid-sized firms who may only have family or close friends as employed staff might not have a great need for EPL insurance. A forthright discussion with a knowledgeable insurance agent should take place to see if the benefits outweigh the expense, or if this risk is better to remain self-insured.
- For all firms, it is important to note that EPL insurance covers some perils and situations that a firm will encounter even with independent contractors. One such example is discrimination. The wronged contractor may still sue as an independent contractor and an EPL policy can be structured to provide defense for a firm in this situation.
As 2013 continues, consider whether employment practices insurance is right for your real estate firm. Contact a broker to discuss additional ways to protect your firm against wrongful employment claims.