Employment Practices Liability Insurance (EPLI)

Employment Practices Liability Insurance

Another article in our “The Optional Coverages – are they really optional?” series.

No business owner would consider operating without general liability or property insurance, yet an employer is more likely to have an employment practices liability claim than a general liability or property claim.

Did you know?

  • In FY 2018, the EEOC fielded over 200,000 inquiries regarding potential discrimination claims.
  • The EEOC received more than 7,600 sexual harassment charges in FY 2018.
  • The average cost of settling out of court for an employment claim is $75,000.
  • The average jury award for an employment-related case is $217,000.
  • The average duration of an employment claim spans more than 300 days.

Employment Practices Liability insurance protects an employer against claims made by employees, former employees and even potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, harassment and other employment–related allegations. Coverage can also be extended to cover claims of discrimination and harassment made by third parties such as customers, vendors and job-seekers . The policy provides coverage for the costs associated with defending these types of claims and any settlements or judgments that result.

  • A private company is more likely to have an Employment Practices claim than a General Liability or property
  • 3 out of every 5 employers are sued by former employees
  • 65% of all companies that have ever fired an employee have been hit with an employment related lawsuit
  • Over 40% of all Employment Practices claims are brought against firms with less than 100 employees

Recent claim examples:

Age Discrimination

An insurance agency decided to lay off three employees with similar backgrounds and experience due to soft market conditions. The two employees were 58 and 34 years old. A month later the agency decided to re-hire the 34 year old. The 58 year old brought a suit for age discrimination.

Sexual Harassment

An employee of a pool manufacturer complained to the owner that her supervisor was making inappropriate comments about her appearance and pressuring her to date him. Her supervisor subsequently reduced her hours and made working at the company so unpleasant for her that she resigned. She charged for sexual harassment, hostile work environment and constructive discharge.

Fair Labor Standards Act (FLSA)

A retail clothing store manager was misclassified as exempt as he spent more than half of his time engaged in non-exempt, non-managerial activities. He brought a claim seeking compensation for unpaid overtime for the past two years.

Third Party Discrimination

A hotel manager routinely stated “no vacancy” or charged a higher rate to certain guests based on their race and nationality to discourage them from staying at his hotel. A family that was charged a higher rate than initially quoted and then denied a room engaged an attorney to bring suit and is seeking others who have experienced the same treatment at this hotel.

Why purchase EPL?

Employment Practices Liability Provides Protection against claims of:

  • Discrimination
  • Harassment
  • Retaliation
  • Wrongful termination
  • Employment-related misrepresentation
  • Negligent evaluation, training and supervision
  • Failure to enforce adequate policies
  • Wrongful discipline
  • Wrongful deprivation of career opportunity
  • Negligent violation of laws such as the Family Medical Leave
  • Act (FMLA) and the Uniformed Services Employment and
  • Re-employment Rights Act (USERRA)
  • Wage and hour claims

Free Employment Practices Risk Management Tools

If a Human Resource (HR) consulting firm offered you their time and expertise for FREE, would you lock their phone number and e-mail address in a drawer and never call? Of course not!

Do you have Questions such as:

  • What are the current federal employment laws that apply to my workplace? Are my state’s laws different?
  • What are “wage and hour” regulations? What does “exempt” versus ”non-exempt” mean? Who gets paid overtime? How much and when?
  • How should I handle terminating, suspending or disciplining an employee?
  • How should I properly document performance issues and disciplinary actions in an employee’s file?

In addition to employment practices liability coverage, you need FREE risk management tools to help you handle the day-to-day employment issues you face with your employees:

  • Unlimited toll-free hotline plus ability to e-mail questions online
  • HR news center highlighting employment law changes and cases in the headlines
  • Sample HR Manual and employment forms
  • Sample HR policies regarding discrimination, harassment, employment-at-will and electronic communications

As a business owner, you need to protect your company from the unexpected and financially crippling costs resulting from employment-related claims and lawsuits.

More Claim Examples

Discrimination/Wrongful Termination: A female Marketing Manager took leave subject to the Family Medical Leave Act (FMLA) upon the birth of her first child.  She was terminated one month after her return to work for poor work performance and the company eliminated her position.  There was no documentation of poor performance prior to her FMLA leave.

Third Party Liability: A blind customer entered a local grocery store with his guide dog.  The manager of the meat/ deli department asked the customer to take his dog outside because he thought the dog presented a health hazard.  The customer sued for violation of the Americans with Disabilities Act.

Internet/Email Liability: An employee who intended to email a pornographic joke to only a single recipient accidentally pressed the wrong button, sending the off-color joke to the company’s entire workforce. The employer made the employee send a follow-up email apologizing to the workforce. Two months later, during a company downsizing, an employee sued for a hostile work environment and used the email as evidence.

Spousal Liability: The president of a company was being threatened with a sexual harassment suit by one of his employees. The president decided to transfer most of his assets into his wife’s name in order to avoid being personally sued and subjecting his personal assets to any possible claim settlement against him. The employee later sued the president for sexual harassment. The suit named both the president and the president’s wife because of her ownership interest in the president’s assets. These assets were later subjected to the settlement provisions.

Retaliation: An African American employee of a barge repair and painting firm complained to management that some of his coworkers were using racial slurs and jokes.  His supervisor transferred him to an inside warehouse position at a reduced hourly rate stating that it would be better for him to work alone rather than be exposed to those workers. The employee later sued for discrimination and retaliation for reporting the discrimination.

Predicted Changes in Employment Practices Liability Claims in 2020

  • Biometric Identifiers – duty to protect
  • Cannabis Legalization – Federal vs. State, ADA, Detection
  • Sexual Harassment Issues in the Workplace – increased awareness
  • ADA and the Internet – 3rd Party Claims regarding ADA websites – is your website compliant or is it inaccessible for some potential employees?
  • Transgender employee discrimination
  • Gender pay gap
  • Gig economy employees unable to claim independent contractor status.

Please consider EPL insurance for liability coverage, as and HR resource and for an experienced defense team at your disposal.