Employment Practices Liability

Employment practices liability insurance, or EPLI, protects a business from claims by employees, candidates and former employees involving various violations of their legal rights. This type of insurance is a safeguard for employers in today’s litigious society. It provides legal protection for the business, owners, officers, directors and other employees.

EPLI claims can cost employers thousands of dollars in legal fees just to defend. If an employee wins a judgment or settlement, the total cost to a business could be many times higher. Most insurance companies offering EPLI coverage will generally pay or reimburse the business for any costs for defending the lawsuit. They will also pay for any settlements, or awards to the employee, up to the policy limit. Policy limits and deductibles will vary depending on the coverage options selected.

What is EPLI?

Employment practices liability insurance is a growing product in the United States insurance industry. It is a form of professional liability insurance designed to specifically address the unique risks associated with hiring, employing and terminating employees. Over the past 50 years, the U.S. has added countless laws to address unfair practices within the workplace.

EPLI Helps Protect from Federal Labor Laws Such as:

✓ Age Discrimination in Employment Act (ADEA)
✓ Family Medical Leave Act (FMLA)
✓ Equal Employment Opportunity Commission (EEOC)
✓ Title VII Laws
✓ Civil Rights Act
✓ Wage and Hour Laws (Department of Labor)

EPLI and Employee Lawsuits

Interestingly, the rate of EPLI claims tends to correspond with state and federal unemployment rates. As the rate of unemployment rises, so does the number of EPLI claims filed against business owners. These statistics suggest that not all claims are completely legitimate, or that employees will tolerate some discrimination in the workplace until their livelihood is threatened. This data also possibly suggests that businesses that may be downsizing, or laying employees off, may be at a higher risk of an employment practices liability insurance claim.

EPLI covers businesses against claims by workers who believe their legal rights as employees have been violated.

The most common type of EPLI suits filed over the past few years includes discrimination based on sex or race, charges of retaliation, sexual harassment and wrongful termination. Often times, employees are able to file lawsuits for alleged misconduct without having to pay for the cost of legal representation. Various civil rights groups and government agencies will work on behalf of current and former employees if they believe a case has merit.

What is Not Covered Under EPLI?

Policy language within an EPLI contract can vary significantly between insurance companies. Some policies will include specific policy exclusions or limitations on coverage during certain events such as a merger, an acquisition, a major restructuring or a reduction in workforce. Many insurance companies also utilize a common clause within an EPLI policy known as a Hammer Clause. This clause gives the insurance company the right to tell the insured that it wants to settle a claim for a set amount of money. The business must either accept the advice of the insurance company and settle the claim or it runs the risk of having to pay the claim if the court rules in favor of the employee.

EPLI  and Third-Party Coverage

More often than not, employment practices liability insurance coverage now includes some form of third-party coverage, as well as coverage for direct employees of a business. This additional business liability coverage is important because it adds more layers of protection from allegations or wrongful acts stemming from a companies customers, vendors, suppliers, visitors, patients, volunteers, and non-employees.

Most EPLI policies now include additional coverage when vendors, customers and non-employees are the cause of the EPLI claim.

If a business has an employee that is being harassed by a customer or vendor, the business has a duty to address the situation. If the employer fails to address the issue appropriately or quickly, they may be held liable for an EPLI claim. Traditional coverage would not respond to the claim if the facilitator was not also employed, or a director/office of the company. Many of today’s EPLI policies will respond to claims caused by a third-party.

Get an EPLI Quote

The best, and possibly only, opportunity a business has to get an EPLI quote is before your business has a claim or lawsuit. Most EPLI applications specifically ask if you’ve had any prior claims or know of any pending allegations. For obvious reasons, insurance companies are less likely to quote, or favorably rate, EPLI coverage when this is the case. EPLI generally runs between $250 and $2,500 annually, depending on your state, business type, hiring practices and number of employees.

General Liability Shop.com offers EPLI quotes for almost every type of business. We work with over a dozen insurance companies offering quotes and coverage for employment practices liability insurance. Some of our top selling businesses for EPLI include law firms, doctor’s offices, home healthcare agencies, beauty salons, daycare centers, golf courses and tech firms.

Get a free, no-obligation, EPLI quote for your business today. Call our business liability Specialists at 800-900-8657, or start your quote online.