What Does Employment Practices Liability Insurance Cover?Posted on Feb 28, 2018
Whether your business has one employee or 100,000 employees, you need Employment Practices Liability Insurance (EPLI) coverage to protect your interests. In today’s business climate, when employees feel they have been mistreated, abused, marginalized, or wrongfully dismissed; the first reaction is to sue. Whether there is any merit to the case or not, lawsuits can be expensive. EPLI coverage helps to protect your business from the prohibitive costs of defending or settling in matters like these.
What Types of Protection Does EPLI Provide?
Employees sue businesses for a wide variety of reasons. Sometimes, the lawsuits are in retaliation for the hurt of being overlooked for promotions or being fired. At other times, though, there is real merit to the legal action and your business could be on the hook for a lot of money. Some of the protection EPLI provides are for the following types of claims:
- Breach of Employment Contract
- Deprivation of Career Opportunities
- Discrimination (based on numerous factors such as age, race, gender, religion, sexual orientation – in some states, etc.)
- Failure to Employ
- Failure to Promote
- Family and Medical Leave Act Violations
- Inflicting Emotional Distress
- Mismanaging Employee Benefit Plans
- Negligent Evaluations
- Privacy Violations
- Sexual Harassment
- Wrongful Discipline
- Wrongful Termination
As you can see, there is a lot of ground that can be covered by this type of insurance protection, which is a must for business owners today.
What is Excluded from EPLI Protection?
Your business is not protected against intentional or dishonest acts. Nor is it protected, under an employment practices liability insurance policy, for employee claims related to bodily injuries or property damage. Additionally, the Insurance Information Institute reports that EPLI coverage does not protect violations of the following acts and laws:
- Claims falling under Workers Compensation Protections
- Employee Retirement Income Security Act
- National Labor Relations Act
- Occupational Safety and Health Act
- Worker Adjustment and Retraining Notification Act
In most instances, privacy violations resulting from data breaches are also excluded from EPLI protection as that requires a different kind of insurance protection.
How Much Coverage Do You Need?
According to HR Morning, it costs $125,000, on average, to settle claims involving disability or discrimination claims levied against businesses. For businesses that choose to go to court and present a defense against these claims, the average judgment is around $200,000 plus defense fees. But here’s the kicker, 25 percent of the judgments awarded in these cases exceed the $500,000 mark. Again, that is before court costs.
How much EPLI coverage does your business need?
Probably more than you expect to need. This is why it’s critical to work with a trustworthy insurance agency to help you get the right protection to meet the needs of your business.
How Can You Reduce Your Liability Risks?
When it comes to employment practices liability coverage, it is always wise to seek new ways to reduce your risks. This includes things like creating hiring standards designed to avoid discriminatory hiring practices, making all policies clear to all employees by posting them in the workplace and documenting them in employee handbooks, and documenting all actions promotional and disciplinary for employees – as well as actions taken to resolve employee disputes.
As long as you’re working with people, there will be cause for concerns related to employment practices liability. Changing policies to create a more inclusive workplace is a great start in the right direction. Having adequate EPLI protection, though, remains critical for the protection of your business when claims are made against your business.