Tag Archive for: employment practices liability insurance

A female employer is sitting across from a male employee, going over paperwork with him. She has a pen in her hands and he has his hands clasped together on the desk.

who does your employment practices liability insurance cover?

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what is and is not covered by EPLI?

Employment practices liability insurance, or EPLI, is an insurance policy that provides coverage to employers against claims made by their employees.

These claims include:

  • wrongful termination
  • sexual harassment
  • retaliation
  • unequal or unfair pay
  • discrimination (i.e. age, race, gender, sexual orientation)

 

EPLI covers the cost of lawsuits brought against your company by current, former, or prospective workers that believe that their legal rights have been violated or are displeased with your employment practices. Employers need EPLI to be financially protected from these claims.

However, EPLI doesn’t cover everything. The following are examples of what’s not covered: 

  • fraud or crime
  • contractual liability
  • on-the-job worker injuries
  • punitive damages
  • unemployment claims

 

Although some industries are more prone to these types of claims than others, the most common industries to have EPLI claims filed against them include construction, healthcare, professional services, and retail or food services.

how important is EPL insurance?

EPLI is important because all businesses with employees are susceptible to the threat of an employee submitting a claim against the company.

 

The policy protects business owners from these claims made by disgruntled employees and helps shield your business from potential financial ruin. Employee claims can be very expensive and even detrimental to small businesses.

 

EPLI helps cover the financial costs associated with legal action. Attorney fees and settlement costs are reimbursed by the policy, which means your business does not have the unexpected financial burden of paying off employee claim-related legal fees.

what’s the difference between EPLI and professional liability?

Professional liability insurance, also known as errors and omissions (E&O), covers legal action against your company from a client claiming inadequate work, negligence, services not delivered, and oversights.

 

This type of insurance is beneficial for businesses or professionals who give advice or provide a service for a fee in the healthcare, legal or financial industries, just to name a few. Examples of this would be doctors or lawyers.

 

It’s a good idea to have both EPLI and professional liability insurance as a business owner. The policies are not the same and cover different risks. While EPLI covers employee claims, E&O covers claims from clients. 

what’s the relationship between D&O coverage and EPLI?

Directors & Officers (D&O) Liability insurance protects directors or officers of a company from personal losses if they are sued for committing negligent acts or misleading statements.

 

With this insurance, the executive’s personal assets are safe from a lawsuit. D&O covers losses associated with the lawsuit, including legal defense fees. Exclusions in D&O policies are also similar to other professional liability policies, including property damage, bodily injury, and fraud or misrepresentation.

final thoughts

D&O insurance, E&O, and EPLI all protect employers and/or managers in different ways. It’s important for businesses to assess their risk when deciding whether to purchase these types of policies and how much coverage to buy.

This is dependent on factors like what type of industry you’re in or the size and makeup of your company. While it’s beneficial for your business to have EPLI and the various types of policies discussed above, it’s even more advantageous to prevent issues with employment practices that would pose these risks. Read on for three tips to avoid employment practices issues.

team working in a hybrid environment

the importance of EPLI in a hybrid workforce

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As we all know, COVID-19 has changed the way we live our lives—especially in the workplace. So, how has employment practices liability insurance (EPLI) changed as a result? What needs to be considered regarding EPLI and the hybrid workforce?

Let’s discuss, starting with a high-level overview of what employment practices liability insurance is.

what is EPLI?

Employment practices liability insurance, or EPLI, is insurance that “provides coverage to employers against claims made by employees.”

Policies typically extend coverage to the following:

  • Wrongful Termination
  • Sexual Harassment
  • Wage-Related Claims
  • Claims of Unequal or Unfair Pay
  • Discrimination Claims (i.e. age, race, gender, sexual orientation)
  • Third-Party Claims

Read on for three tips to avoid employment practice issues.

why is EPLI important?

Employment practices liability insurance is important to help protect your business from employee claims.

Picture this: Your business is sued for one of the following: sexual harrasment, discrimination, or wrongful termination. If the case winds up in court, your business may incur thousands or even hundreds of thousands of dollars in attorney fees and legal costs. For most companies, this is enough to cripple one’s business.

Here are five additional reasons to consider EPLI:

  1. Employee lawsuits are growing
  2. Settlements are getting more expensive
  3. All companies face risk (big or small)
  4. Even if your business is not at fault, you can still incur costs
  5. It’s unlikely that your current commercial liability policy includes EPLI coverageELPI in hybrid workforce infographic

the importance of EPLI in a hybrid workforce

During the pandemic, many employers faced EPLI claims due to employee filing for:

  • Wrongful termination
  • Discrimination over vaccine mandates
  • A business’s refusal to accommodate a disability
  • Harassment (i.e. a masked employee may file a harassment claim if their coworkers do not mask or vice versa)

Now, however, as employees return to the office, employers may face EPLI risks when designing hybrid workplace policies.

During the 2022 RISKWORLD™ conference, a session titled “Returning to Work? Check the Health of Your EPLI Coverage” took the floor. They noted that businesses moving from remote to hybrid models may open themselves up to EPLI risk if not done properly.

Here are some hypothetical situations that were discussed:

  • “If a remote employee is passed over for a promotion in favor of someone who works in-person at an office, they may allege unfair treatment, resulting in a wrongful deprivation of opportunity claim.
  • If return to office policies are implemented unevenly, employers could face discrimination claims.
  • COVID-19 testing could result in privacy claims if an employee feels any medical data wasshared intentionally or inadvertently with coworkers. 
  • An employee could file a harassment claim if they feel their coworker is dressing or acting inappropriately over Zoom.”

Read on to learn how EPLI can protect your business.

employee claim being discussed between two women

how EPLI can protect your business

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For many business owners, the prospect of a lawsuit by a disgruntled former employee looms like a shadow in the background. If there’s one thing you can use to prevent that, it’s this:

Employment Practices Liability Insurance (EPLI).

Well, of course, there are others but if you’re only going to do one thing– get EPLI coverage. Let’s chat about how EPLI can protect your business in the event of an employee lawsuit.

infographic for "how EPLI can protect your business"

what is EPLI?

Employment Practices Liability Insurance, or EPLI, is insurance that “provides coverage to employers against claims made by employees.”

Policies typically extend coverage to the following:

  • Wrongful Termination
  • Sexual Harassment
  • Wage-Related Claims
  • Claims of Unequal or Unfair Pay
  • Discrimination Claims (i.e. age, race, gender, sexual orientation)
  • Third-Party Claims

Read on for three tips to avoid employment practice issues.

who needs EPLI?

Although some industries are more prone to these types of claims than others, the most common industries to have EPLI claims filed against them include:

  • Construction
  • Healthcare
  • Professional services
  • Restaurant and food services
  • Retail, and
  • Manufacturing

how can EPLI protect your business?

EPLI helps protect your business from financial devastation.

Employee claims—whether the employee is currently or had been previously employed—can be very expensive; and even detrimental to small businesses.

EPLI helps cover the financial costs associated with legal action. Attorney fees and settlement costs are reimbursed by the policy, which means your business does not have the unexpected financial burden of paying off employee claim-related legal fees.

turn to benchmark commercial insurance

Don’t know whether you have EPLI coverage or the quality of it? Our team at benchmark commercial insurance can help.   

We’ll review your coverage and give you recommendations free of charge. No hard sell, just insights. 

For those who want to learn more, including if their business needs EPLI coverage, read our article “employment practices liability insurance — do you need it?”

epli helps protect lawsuit costs for employers

employment practices liability insurance — do you need it?

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There are various policies a business may decide to carry when reviewing their risk profile.  The type of coverage your business invests in, depends on a few different factors. Almost all businesses with employees will want some kind of Employment Practices Liability Insurance (EPLI). Peter Katkov, benchmark’s Commercial Lines Broker explains what EPLI is, and why it’s important for businesses in the video below.

what is EPLI?

EPLI is an insurance policy that covers the costs of wrong actions performed during a person’s employment period. 

These policies cover an array of wrong actions regarding:

  • Wrongful termination
  • Discrimination
  • Sexual Harassment
  • Hostile work environment
  • Deprivation of career opportunity  

Allegations can come from an ex-employee, a current employee, or a prospective employee that you didn’t hire. Typically, with an EPLI policy in place, legal costs and settlements are covered.

do you need EPLI?

All businesses with employees are vulnerable to the risk of an employee submitting a claim against your company. Small businesses, especially, are more susceptible to employment claims because they do not have the same legal support larger companies do. 

When considering if your business should invest in EPLI, ask yourself, “can I afford not having insurance if a lawsuit arises?”

reducing your risk of an employee claim

In addition to investing in EPLI coverage, businesses should have standard practices and educational opportunities for managers and employees in place to reduce the risk associated with employment practices. A few examples of educational materials to provide your staff include: 

  • Effective hiring and screening programs to avoid discriminatory hiring. 
  • Create handbooks and make corporate policies clear to everyone. 
  • Clearly explain acceptable and unacceptable workplace behavior. 
  • Have steps in place for employees to report unacceptable behavior. 
  • Ensure all communication and actions taken are documented

why use EPLI?

EPLI is beneficial for businesses to cover the financial costs associated with legal action. Attorney fees and settlement costs are reimbursed by the policy, which means your business does not have the unexpected financial burden of paying off legal fees that could arguably cause a business to close down.

how much does EPLI cost? 

The cost of EPLI depends on a few different factors:

  • Company size 
  • Type of business 
  • Number of employees
  • History of lawsuits 
  • Employee turnover percent 
  • What rules and regulations you have in place

This specific line of coverage has been experiencing increasing costs, tighter underwriting guidelines, and increasing deductible structures driven primarily by:

  • Class actions
  • Large class action suits
  • The fact that legal precedent and case law support an employee over an employer. 

In turn, this puts a lot of pressure on the policyholder that’s trying to manage their insurance costs.

EPLI isn’t the only coverage that is experiencing this pressure. In one of our most recent articles, we discuss what you should expect from your commercial insurance in the coming year, including where your premiums may increase and where they may remain stable.

Employment Practices Liability Insurance (EPLI) is a type of policy that covers the cost of any wrong actions during the employment process.