Go to Starbucks often? If you do, you might want to have a backup plan for your daily coffee run on Tuesday, May 29!

Starbucks will be closing more than 8,000 stores nationwide on May 29 to host an anti-bias training due to a recent racial profiling case in which two African-American men were arrested at a Starbucks store in Philadelphia because of their race.

A Starbucks employee did not allow these two men to use the restroom and proceeded to call the police, saying that these two men were “trespassing” as these two men did not purchase anything and refused to leave the Starbucks.

This entire process was witnessed and recorded by various consumers, ensuing outrage among the public. The video went viral and reached more than ten million views on Twitter. Since then, Starbucks revenue has been declining as many have been protesting against Starbucks for racial discrimination.

Chief Executive Kevin Johnson personally apologized for this incident and announced that he will be closing more than 8,000 stores nationwide on May 29 to host an anti-bias training for its 175,000 employees. This stop in business is expected to bring an estimated loss of $16.7 million.

Running a Business Is Difficult! Sued by Both Employees and Customers?

If you don’t run a business right, then there’s a higher chance that you would deal with more lawsuits. According to Lex Machina, a litigation research company that develops legal analytics, the three main reasons employees sue the companies they work for are because of discrimination (which accounts for 87%, and includes discrimination on sex, race, disability, religion, pregnancy, etc.), retaliation/wrongful termination (which accounts for 66%), and harassment (which accounts for 35%, and includes sexual harassment). These statistics add up to more than 100% because many employment lawsuits deal with discrimination, retaliation and harassment combined all together.

The companies with the most employment lawsuits in the United States:
  • AT&T
  • Bank Of America
  • Boeing
  • CVS Pharmacy
  • FedEx
  • Home Depot U.S.A.
  • JPMorgan Chase Bank
  • Life Insurance Company Of North America
  • Sears, Roebuck And Co
  • Target Corporation
  • United Airlines
  • United Parcel Service
  • Walmart Stores
  • Walgreen Co.
  • Wells Fargo Bank

These large companies tend to set aside 5%-10% of their earnings for lawsuits and lawyers. For small and mid-sized businesses, this large sum of money is a big hit to the company, causing the company to suffer a huge loss. For this reason, Employment Practices Liability Insurance is a must-have.

What Do You Do If Your Business Is Sued by Employees?

Employment Practices Liability Insurance (EPLI) protects your business against employment-related claims and provides funds to handle and settle lawsuits. When companies are dealing with claims such as wrongful termination, discrimination, sexual harassment, and retaliation, EPLI can provide the necessary lawyers and funding to handle these cases. Whether your company wins or loses the case, legal costs will be covered by EPLI.  This usually does not cover fines or punitive damages for civil and criminal cases.

What Do You Do If Your Business Is Sued by Customers?

Many believe that purchasing EPLI is only to prevent employee lawsuits. However, EPLI can actually be accompanied with Third-Party EPLI, since Commercial General Liability (CGL) policies do not cover claims made by nonemployees. CGL policies exclude coverage for harassment and discrimination, which are the two most common claims made by third parties. Many industries that directly serve the public such as restaurants, hotels, department stores, etc., often purchase Third-Party EPLI.

Expert Advice from KCAL

KCAL Insurance Agency has thousands of business lines in Southern California. In recent years, EPLI has attracted a lot of attention. Commercial insurance experts at KCAL would like to remind you that when you are purchasing EPLI, make sure you are dealing with professional and experienced insurance agents. Remember to confirm what types of claims are protected and whether the lawyers will be chosen by the insurance company or your business. Furthermore, understand whether EPLI covers cases that occur before the insurance becomes effective and whether there is a date to file the claims by. Some of the cheaper and more general policies require your business to report to the insurance company within 30 days of receiving the lawyer’s letter.

If you would like more information regarding EPLI or commercial insurance, please feel free to contact us and our commercial insurance experts will be more than happy to assist you!