It’s well known and a fact of life, these days: People who are in senior management positions or who have seats on boards of directors are common targets for lawsuits.

There are two reasons for this: The first is that corporate officer and directors have to make tough decisions.  The nature of corporate leadership means that officers must constantly balance their obligations to clients and customer against employee interests, government regulators and ultimately to their fiduciary duty to shareholders themselves.

The second reason is that plaintiffs’ attorneys perceive them to have deep pockets.

Since the U.S. Supreme Court issued two rulings in June of 1998 that expanded what is termed sexual harassment,  and did away with harassed employees having to prove that their company holds some responsibility or that their career suffered from lack of promotion, more recourse is bringing about legal actions against employers.

Any employer that’s ever been involved in a sexual harassment suit can attest that the cost to settle or defend a sexual harassment lawsuit can be jaw dropping. The average award for damages in these types of lawsuits is around $650,000 and that isn’t even including the secondary cost from workplace disruption, bad publicity and those involved in the suit being absent from work.

Businesses can protect themselves financially with employment practices liability insurance (EPLI).  While policies vary, EPLI generally doesn’t cover criminal or civil penalties and punitive damages.  EPLI does generally cover settlements, judgments and incurred legal costs arising from an array of incidences such as, wrongful termination, employment contract breaches, employment and promotion failures, wrongful disciplinary actions, wrongful emotional distress infliction, negligent employee evaluations, employee benefit plan mismanagement, discrimination and of course sexual harassment.