BROKER RISK MANAGEMENT

BROKER ALERT

The Value of Employment Practices Liability Insurance

During recent consultations with real estate brokers, Broker Risk Management has learned that very few brokers purchase employment practices liability (“EPL”) insurance.  That insurance can add significant value to real estate brokerages.  BRM recommends that brokers consider purchasing it.

EPL insurance covers employment actions filed by employees against an employer, such as: wrongful termination; discrimination; harassment; improprieties with paychecks; and other employment-related claims.  In California, employment litigation can be extraordinarily expensive to defend.  The laws are pro-employee.  BRM has observed that the courts also tend to be more tolerant of employee claims than any other type of claims.  In addition, labor laws can include penalties as part of damages, as well as attorney’s fees.  A significant employment claim could force a broker out of business.  Under some circumstances, the broker can also be sued personally.

To limit this risk, BRM recommends that its clients consider purchasing EPL insurance.  If you need assistance or have questions, please feel free to contact us.