Like most businesses, restaurant and food service companies of any size are vulnerable to claims brought by their employees, former employees or potential employees. In our increasingly litigious society, the threat of a lawsuit hangs over every business transaction, large or small. Even restaurants who adhere to the law at all times are likely be sued by an aggrieved employee or customer at some point.
While many suits are groundless, defending employment-related claims can be financially devastating. If you carry employment practices liability insurance (EPLI), your business has a measure of protection against lawsuits from current, prospective or former employees who allege “wrongful acts” such as discrimination, sexual harassment or wrongful termination.
But what happens if a patron sues you for discrimination or harassment? Are you protected?
Many employers do not realize that they have a gap in their insurance coverage that leaves them vulnerable to discrimination and harassment lawsuits from restaurant patrons, vendors and suppliers.
Third Party EPLI:
Standard EPLI policies only provide coverage for lawsuits brought about by employees or prospective employees, and most commercial general liability (CGL) policies specifically exclude coverage for harassment and discrimination. Third party EPLI fills the gap between these other coverages, providing protection against allegations of wrongful acts made against your restaurant and staff by a third party.
Similar to a standard EPLI policy, third party EPLI generally covers external claims of discrimination based on race, religion, sex, age, national origin, sexual orientation and disability. It also protects your restaurant from allegations of sexual advances and other verbal or physical actions that create a hostile or offensive environment.
While it is recommended for all types of businesses, third-party EPLI is especially vital for businesses that have a lot of interaction with the public, something that the restaurant and food service industry does on a daily basis.
As with all types of exposures, you must go beyond just purchasing coverage to protect your restaurant from third-party claims. Implementing policies and procedures that address discrimination and harassment issues, both from the standpoint of an employee’s actions and the actions of third parties are critical. In fact, insurers are increasingly requiring employers to implement these practices before they will issue any type of EPLI policy.
Speak to your insurance broker about EPLI coverage options for your restaurant and ask for a review of your current policies and procedures.