Employee Benefits Liability

Its all fun and games till your HR Manager forgets to explain the employee benefit program…

According to IRMI.com, Employee Benefits Liability (EBL) is defined as:

“Liability of an employer for an error or omission in the administration of an employee benefit program, such as failure to advise employees of benefit programs.”

What Is An Employee Benefit?

Donald Malecki wrote a fantastic article on EBL for Rough Notes in which he listed the types of programs that could be considered “At Risk” with EBL:

• Group life and health,
• Profit-sharing and pension plans,
• Employee stock subscription plans,
• Workers compensation,
• Unemployment insurance,
• Social security,
• Disability benefits

Does your organization carry any of these programs? Sure it does.  Does your organization carry all these programs? There’s a very good chance.  Does your organization have Employee Benefits Liability? You Have No Idea!

Why Do I Need Employee Benefits Liability?

Let’s say you just hired a new employee and it’s their first day.  First you walk them around the office introducing them to each employee and point out the “strategic” bathrooms.  Then you sit them down and talk about how happy you are they’re joining the team and what your expectations are for their first few months of work.  After the pep-talk your “Boss” obligations are over so you take the new employee to see the HR Manager who’s job it is to go through the nuts and bolts of working for your company.

What you don’t realize walking away from the HR Manager’s office is that he had been up till 300am the night before with a sick child and wanted nothing more than to zip through the New Hire presentation and get back to vegetating in front of his computer screen for the remainder of the day.  So the HR Manager begins to skip through sections telling himself that he’ll explain Benefits to the new employee tomorrow.  All that was necessary to explain was the building key-card and computer passwords.  The HR Manager is a good employee, but today he just wanted the new employee out of his office.  As fate would have it the next day was very busy with payroll issues and the HR Manager forgot to go talk to the new employee.  And the new employee was so excited about her new job that she completely forgot that she did not sign up for the Benefit program.

Two months later the new employee is involved in a very severe car accident on the way to work.  What do you think her reaction was when she woke up to hear she did not have Health Coverage?!

Can you say LAWSUIT!

The Rub

The good news is, if you have General Liability or a Business Owners Policy (BOP) for your business there is a decent chance you already have Employee Benefits Liability (Its not guaranteed that you do so DON’T ASSUME!). So in the example above your EBL coverage would have kicked in to pay the lawsuit.  The bad news is, you didn’t know that till the end of the post.  If you have an employee, or if you have ever thought of having an employee, call your insurance professional and find out if your business is covered with Employee Benefits Liability.

If you would like a review of your Business Insurance program including Employee Benefit Liability please call me at (518) 456-6688 or Contact Me Here.

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I WANT to be your Insurance Professional. If you are looking to form a relationship with your insurance professional and would like to receive a proposal from myself and The Murray Group for your Business Insurance Program (including but not limited to General Liability, Property, Workers Comp, Professional Liability, Business Auto, Health Insurance) then please use the following form to contact me.

Contact Form: Ryan Hanley – The Murray Group

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Disclaimer:

This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions take or not taken by the readers based upon such information.

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