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What is Employment Practices Liability Insurance?


What is Employment Practices Liability InsuranceWhat is Employment Practices Liability Insurance?

According to the Equal Employment Opportunity Commission (EEOC), almost 75% of all litigation against corporations involves employment disputes. That’s right, you’re more likely to have a claim against your business involving an employee than a General Liability or Property claim. What’s more, companies are finding that they are vulnerable from the pre-hiring process through the exit interview, even if the employee was never hired, or only employed by the company for a few days.

Employee claims typically involve suits alleging: wrongful termination, which is the discharge of an employee for invalid reasons; discrimination, which is the denial of equal treatment of workers who are members of a protected class (race, gender, age, disability, and pregnancy); and sexual harassment, which involves a worker being subjected to unwelcome sexual advances, obscene or offensive remarks, or the failure to stop such behavior. Retaliation claims are also common, especially in the last several years. Retaliation claims allege that an employer subjected an employee to adverse treatment because the employee exercised his or her rights to complain about some unlawful act.

To protect your firm against these and other types of employee suits, Employment Practices Liability Insurance (EPLI) is available. This policy is designed to cover legal fees, settlements and damage awards that result from employee claims of misconduct against your company’s employees and managers. Coverage is available to provide protection that involves employee suits for:

  • Discrimination based on gender, race, national origin, religion, disability or sexual orientation
  • Sexual harassment or other unlawful harassment in the workplace
  • Wrongful termination
  • Failure to employ or promote
  • Retaliation
  • Employment related misrepresentation
  • Failure to adopt adequate workplace or employment policies and procedures
  • Employment related defamation or invasion of privacy
  • Negligent evaluation of an employee
  • Wrongful discipline of an employee
  • Employment related infliction of emotional distress

Additionally, some insurers will even cover the costs of investigations and legal fees associated with regulatory actions.

It’s especially important to keep in mind that a commercial general liability policy and directors and officers insurance do not cover claims of employment practices wrongdoing – which is why it’s so important to carry EPLI insurance.

There are also measures you can take to minimize the risk of employee complaint, including:

  • keeping written records on hiring, firing and promotions
  • documenting compensation and hours worked and make sure the law on those is followed
  • disseminating and enforcing written policies on workplace ethics and behavior

Excellent documentation combined with top-quality insurance is indispensable in the event a business is faced with an allegation of employment practices misconduct. Axis Insurance Services, LLC can provide your firm with EPLI insurance. Give us a call today at (877) 787-5258 to speak to one of our specialists.

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Blogged on: February 6, 2013 by Mike Smith
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