EPLI is one of the fastest growing coverages purchased in today's insurance industry.
It provides coverage for defense costs and damages pertaining to employment-related claims including allegations of Wrongful Termination, Discrimination, Workplace Harassment and Retaliation and many more workplace situations.
What Does EPLI Cover?
Generally speaking, employment practices liability policies will cover the costs of defending your company against lawsuits, settlements, and judgments due to poor employment practices. As long as the act that was committed is not illegal, the legal costs will be covered regardless of whether the case is won or lost.
Employment Practice Liability risk is high for new hires.
Let’s face it: new hires are a risk to your business. While the rewards often outweigh these risks, it’s important for business owners to be aware of what they’re getting themselves into. Both new and existing employees must be trained on employee workplace guidelines. Employment practice lawsuits can devastate both your reputation and finances. Small to medium-sized businesses can pay an average of $160,000 to settle this type of lawsuit. EPLI coverage protects you from paying these high out-of-pocket costs. It can cover any legal defense costs, including a settlement or judgment if an employee presents a valid claim.
Some of the risks include employment claims when:
A new hire alleges some sort of discrimination
Claims wrongful termination
Feels they’ve suffered some work-related grievance
In some instances, E&O claims aren’t even related to money. A claim can be made for less tangible issues, such as loss of reputation or emotional distress.
Types of Employment Practices Liability Insurance Claims
In a retaliation claim, the employee alleges that they are being harassed or discriminated against as punishment for speaking out about issues occurring to others in the workplace. Retaliation claims are often related to pay cuts or demotions that had nothing to do with the employee’s overall performance. Employees often claim retaliation when they have uncovered or shed light on some type of workplace situation that the employer did not want to be known.
Failure to promote:
While there are certainly many different types of claims related to a failure to promote, recent trends show that many of these types of claims are tied to disability discrimination. Employees often believe that they are being passed over for promotions because of disabilities such as deafness, blindness, or even a medical condition such as diabetes. Failure to hire claims are similar and also very common.
While there are many types of harassment claims that employees can file against your company, the most prevalent type of workplace harassment is of a sexual nature. Sexual harassment entails unwanted sexual advances both physical and verbal in nature. It could also include management or other coworkers requesting sexual favors or services in exchange for promotions. Workplace harassment claims have been steadily rising over the last few years. In 2022, the Equal Employment Opportunity Commission (EEOC) reported a total of 11,283 sexual harassment complaints.
In defamation claims, employers are accused of making false statements that damage the employee’s reputation at work in some way.
Mismanagement of employee benefits:
Employees can also sue if mistakes were made in the management of benefits such as retirement and healthcare plans. It’s good to have a fiduciary liability policy for these types of cases as well since it protects any of your employees in charge of benefits who might have made a mistake that led to the claim.
Negligent supervision of employees:
Negligent supervision means that the employer has allowed dangerous or harmful conduct to occur in the workplace. Negligent supervision claims can be related to many issues, some of them being loss of profits and destruction of property.
In a negligent evaluation claim, the employee believes that their performance was unfairly evaluated and that the negative evaluation does not reflect the quality of the employee’s actual performance.
Invasion of privacy:
In an invasion of privacy claim at work, employees believe that their rights are being violated through various surveillance tools within the office such as computer programs that monitor employee actions and security cameras throughout the office. These types of claims are also on the rise and are becoming very common.
There are many types of discrimination that can occur at work; discrimination based on race, religion, sex, disability, age, equal pay, national origin, genetic information, pregnancy, and more. Age discrimination claims have been rising steadily as America’s workforce has been getting older.
Wrongful demotion or disciplining of an employee:
Wrongful demotion can be very similar to negligent evaluation. Often, wrongful demotion claims are related to discrimination as well, when employees believe that they are being demoted for unlawful reasons that have nothing to do with their performance at work.
Infliction of mental or emotional distress:
Intentional infliction of emotional distress occurs when the employer purposely causes emotional distress to employees by way of some type of conduct that is not fit for the workplace. Again, these types of claims can be intrinsically tied to claims of harassment, discrimination, and other types of inappropriate workplace conduct.
Wrongful termination of an employee:
In a wrongful termination claim, employees believe that they were fired unlawfully, meaning that they lost their job for reasons that have nothing to do with their performance. When terminating employees, employers must make sure that a breach of the employment contract has occurred. Wrongful termination claims are rarely won by employees, but they can be long and expensive regardless of the outcome.
Illegal Background Check:
Based on the Fair Credit Report Act (FRCA), there are standards that need to be respected by employers or HR personnel who perform employee screening procedures. If your company was not given written consent to check a would-be employee’s credit report or criminal background, you can be sued.
Pregnancy and Lactation Accommodation:
According to the Pregnancy Discrimination Act, pregnant employees must be accommodated and allowed to work as long as they are able to perform their duties. If a pregnant employee is fired, there were surely be a lawsuit coming. Also, the Fair Labor Standards Act (FLSA) requires companies to provide breaks for nursing mothers who need to breastfeed during the workday. The company must also provide a private and clean area of the office for this, which cannot be the bathroom.
Deprivation of Career Opportunity:
This occurs when an employee claims they weren’t promoted to a position for which they were qualified. Claims may also arise when an employer fails to provide resources that will advance an employee’s career. For example, they we’re allowed to take on additional training.