EMPLOYMENT PRACTICES LIABILITY INSURANCE: WHAT IS EPLI AND WHY YOUR BUSINESS NEEDS IT
Employment Practices Liability Insurance– otherwise known as EPLI – is one of those vague insurance terms that immediately turns HR managers heads and has become a necessity in today’s world of ever-growing risks. ALL businesses - regardless of size or nature of the business - face Employment Practice Liability exposures and the risks keep growing thanks to the expansion of social media, mobile electronic devices, mandated accommodations, and medical marijuana.
Employment Practices Liability coverage protects your business against lawsuits or claims of wrongdoing brought against you by your employees, job applicants, volunteers, independent contractors, and customers (when 3rd Party coverage is included). Even defending a groundless claim or lawsuit can create a significant expense for your business.
In fact, the Equal Employment Opportunity Commission (EEOC) resolved over 90,000 charges of employee discrimination in 2018, securing $505,000,000 for victims. The 1st round of an EEOC Hearing can cost your business between $15,000-$20,000 and the average cost for settling an employment claim out of court is $75,000. Even costlier- the average jury award for an employment-related case is $217,000. These claims are not just against large businesses either- OVER 40% of employment-related lawsuits are filed against private companies with fewer than 100 employees.
Employment Practices Liability Insurance coverage includes protection for liability damages and defense costs against claims arising from:
- Wrongful Termination
- Harassment including Sexual Harassment
- Discrimination arising from Age, Disability, Gender, Race, Religion, or Sexual Orientation
- Libel, Slander, Defamation, Invasion of Privacy
- Wrongful Discipline
- Wrongful Failure to Promote
- Wrongful Refusal to Hire an Employee
- Humiliation or Bullying
- Violation of Family Medical Leave Act (FMLA)
It’s important to note that Employment Practices Liability Insurance is NOT automatically included within your standard Business Owners Policy or Commercial Business Package- however EPLI coverage can be purchased as an endorsement on these policies or be purchased as a stand-alone EPLI policy. EPL coverage limits range from as low as $10,000 to upwards of $10,000,000 if purchased as a stand-alone policy. EPLI coverages can be for 1st Party damages only which protect your business against claims from employees or can add 3rd Party damages protecting your business against claims from customers or vendors. Some EPLI policies cover the costs of defense (attorney’s fees) within the overall liability limit, but you can pay extra to cover Cost of Defense outside the overall limit which helps protect your actual liability limit needed for claim settlement from being eaten away by defense costs.
Purchasing Employment Practices Liability Insurance also provides your business access to preventive tools & resources such as 24/7 Employment Law Hotline, online training courses, useful forms, workplace posters, and tools for building an employee handbook.