Key Threat: Employment Practices Liability


Employment practices liability is one of the most significant exposures for nonprofits, especially smaller organizations.


“They know the coverage is out there, and they sue on the theory that even if it is a meritless claim the carrier will pay because it’s a cost-benefit decision.”


Wendy Mellk, Jackson Lewis


Economic conditions exacerbate employment practices liability claims. Smaller nonprofits are more vulnerable than larger ones because they have fewer resources to dedicate to human resources. Recognizing how difficult it is to get a new job in this economic climate, employees are more likely to pursue their rights. They are helped by eager plaintiffs’ lawyers, who increasingly ask about employment practices liability coverage during the discovery process. With coverage available, plaintiffs’ lawyers will pursue meritless claims on the premise that insurers will settle claims to avoid the potential for greater costs.


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