Employment Practices Liability
Employment practices liability insurance, or EPLI insurance, 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 coverage helps a business respond to employee-related lawsuits such as:
EPLI insurance claims can cost employers thousands of dollars in legal fees just to defend against the claims. 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 Insurance?
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. The most common laws an EPLI policy will protect a business from include:
EPLI Insurance Help Protect from Federal Labor Laws:
✓ FMLA- Family Medical Leave Act
✓ EEOC- Equal Employment Opportunity Commission
✓ Title VII Laws
✓ Civil Rights Act
✓ DOL- Wage and Hour Laws
EPLI and Employee Lawsuits
Interestingly, the rate of EPLI insurance claims tend 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 might suggest that not all claims are completely legitimate, or that employees will tolerate some discrimination in the workplace until the livelihood is threatened. This data would suggest that businesses that may be downsizing, or laying employees off, may be at a higher risk of an employment practices liability insurance claim.
EPLI insurance 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 include: a) discrimination based on sex or race, b) charges of retaliation, c) sexual harassment, and d) 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 Insurance?
Policy language within an EPLI contract can vary significantly between insurance companies. Some polices 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 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 Insurance 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 from 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 he claim if the facilitator was not also employed, or a director/office of the company. Many of today’s EPLI polices will respond to claims caused by a third party.
Get and EPLI Quote
The best, and possible 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 insurance generally runs between $250 – $2,500 annually, depending on your state, business type, hiring practices, and number of employees.
General Liability Shop.com offers EPLI insurance 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 industries for EPLI include law firms, doctors offices, home health care, beauty salons, day care centers, gold 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.