What is Employment Practices Liability Insurance?
Employment practices liability insurance, commonly known as EPLI, provides coverage to an employer against allegations made by former, current or prospective employees of a wrongful employment act committed by the employer. Wrongful employment acts are allegations ranging from discrimination under Title 7 (sex, race, age, disability, HIV status, etc.), wrongful termination, various forms of harassment to EEOC investigations. The coverage also intends to provide coverage for other employment related issues which are discussed more in depth within the policy language.
Why Have Employment Practices Liability Insurance?
Employee discharge is a big risk for an employer. While an employer has the right to hire and fire and will, an employee can threaten to sue for wrongful termination. Even if the employer is innocent, the legal fees to prove it can add up quickly and settlement becomes the most cost effective option. Unfortunately, the employer ends up losing even if they are innocent. If any employment practices case is brought to court, the employee will win over 60% of the time. While some states have statutes or specific laws to follow to make a case, there is still a significant exposure for employers.
- The median compensatory award to employees is $325,000
- 40% of claims are brought against businesses with fewer than 100 employees
Employment Practices Liability Video: Are You Prepared?
Employment Practices Liability Claims Example
A hospitality group that owns and operates six luxury hotels was sued by a group of employees. It was alleged that employees of a certain national origin were not paid the same hourly overtime rates as white employees after they learned that a white employee performing the same job was earning quite a bit more than they were making. Despite management’s insistence that there weren’t any discriminatory practices in place, the employer was forced to pay a collective sum of $104,000 in back pay to the group.
Coverage May Include
Insurance for wrongful termination, sexual harassment, discrimination, invasion of privacy, false imprisonment, breach of contract, emotional distress, and wage and hour law violations.
- Broad definitions of “Employee” included independent contractors and volunteers available for most classes
- Workplace Violence sub-limits available
- IRCA investigation sub-limits available
- FLSA (Wage and Hour) sub-limits available ranging from $25K – $250K for some classes
- Defense outside the limit available
- First and Third party coverage available for most classes