Buy Employment Practices Liability Insurance

Employment Practices Liability Insurance (EPLI) is a type of insurance that provides coverage for employers against claims made by employees, former employees, or applicants for employment. These claims may include allegations of discrimination, harassment, wrongful termination, retaliation, and other employment-related issues.

EPLI policies typically cover legal fees and damages awarded in a lawsuit, and may also provide coverage for settlements and judgments.

This type of insurance is designed to protect employers from the financial consequences of employment-related claims, which can be costly and time-consuming to defend against.

The average price of a standard $1,000,000 Employment Practices Liability Insurance policy for small businesses ranges from $67 to $109 per month based on location, industry, payroll, number of employees and experience.

As is the case with nearly any other insurance policy other than workers compensation, you are not required by law to purchase employment practices liability insurance for your business. However, doing so is the only way to ensure you are covered, and are not going to pay out of pocket, in the event you are found liable of wrongful termination, or other claims an employee or former employee claims you are found guilty of.

With your employment practices liability insurance policy you are basically covered in the event an employee or a former employee attempts to sue your business. Issues may stem from:

• Claims of sexual or other harassment claims.
• Termination where an employee claims they were unfairly terminated.
• Lawsuits stemming from on the job injuries or different worker comp claims.
• Wrongful termination and retaliation claims are also covered under your policy.
• Suits which may stem from an injury on the job (even if you are not at fault as the employer) where an employee claims you are at fault.

Employment practices liability insurance provides broad insurance protection from employment-related practices claims and lawsuits that are brought against your company, managers and directors and officers. It covers such things as age and gender discrimination, sexual harassment, wrongful discipline and termination and negligent decisions involving hiring, promotion, and compensation. It also applies to breach of employment contract, employment-related emotional distress, and mental anguish, invasion of privacy, libel, and slander.

EPLI exclusions must be examined carefully because many of them have conditions, exceptions, limitations or restrictions not shown below. Coverage does not apply to:

Criminal, Fraudulent Or Malicious Acts - An insured's liability as a result of criminal, fraudulent or malicious acts or omissions by that insured is excluded. The insurance company's defense duty remains until legally determining the existence criminal, fraudulent or malicious act or omission.

Contractual Liability - Any wrongful act for which the insured is obligated to pay damages because of assuming liability solely via a contract or agreement is not covered.

Workers Compensation And Similar Laws - Any obligations of the insured imposed by any workers compensation, disability benefits, unemployment compensation or similar law are excluded.

Violation Of Laws Applicable To Employers - Coverage does not apply to the named insured's violation of its responsibilities or duties required by any federal, state or local statute, rule or regulation, and any related rules and regulations developed to apply to them, other than the following:

• Title VII of the Civil Rights Act of 1964
• The Americans with Disabilities Act (ADA)
• The Age Discrimination in Employment Act
• The Equal Pay Act
• The Pregnancy Discrimination Act of 1978
• The Immigration Reform and Control Act of 1986
• The Family and Medical Leave Act of 1993
• The Genetic Information Nondiscrimination Act of 2008
• Any other similar state or local statute, rule or regulation that prescribes responsibilities or duties involving the same acts or omissions.
• Amendments to the above
• A wrongful act that is the result of the named insured's failure to comply with required accommodations for the disabled and any expenses incurred resulting from required accommodations for the disabled due to ADA or any amendments to the act continue to be excluded.

The employment practices liability exposure begins when an entrepreneur hires his or her first employee. A new employer must first identify the job responsibilities of the employees she seeks. She must clearly define the job requirements and expectations, the training needed and the training the employer will provide, as well as the output expected of each type of employee. If employer expectations differ from employee perception of the job duties and compensation, EPLI claims may follow.

The employer must develop excellent recruitment and hiring practices. Its procedures should be carefully evaluated and published in a manual that every supervisor is expected to read and understand. The procedures must be monitored to make sure all are followed in every circumstance. Discrimination among employees can only be practiced when there are clear and unarguable reasons such as setting a minimum employee age to comply with child labor laws or prohibiting certain employees from certain jobs due to known health hazards associated by gender or age.

There are always possible lawsuits lingering around you as a business owner. For this very reason you have to know how to shield yourself from liability with the EPLI policy. This namely is the case when dealing with former employees or an employee who thinks they were unfairly treated for any reason.

Allegations are made by employees who claim to have suffered various types of financial loss or emotional injury because of their employers' acts (or failure to act). The list of allegations involves wrongful termination, demoting an employee without justification, failure to hire or promote a worthy employee, unwarranted discipline or abuse (particularly sexual harassment). Many of these offenses are said to be the result of illegal discrimination on the basis of age, gender, religion, race, nationality, or sexual orientation.

Other offenses are claimed to be a violation of the individual's civil rights, or the failure to accommodate a mental or physical limitation or disability. Sexual harassment by the employer's management or supervisory staff, or by fellow employees, has grown to include allegations of same-sex harassment. In addition to injuries involving sexual abuse, physical, mental or emotional abuses are also being claimed with more frequency.

Employers must take great care to have firm, written policies and procedures in place to prevent such abuses and injuries. Various laws and government agencies hold employers responsible for the training and implementation of programs to protect their employees from supervisors and fellow employees. Modern trends toward "downsizing," business failures, relocations, outsourcing, and companies phasing out or selling-off products or services increase the level of employee claims.

Of course each employment practices liability insurance policy is going to differ based on the insurer you choose, as well as the level of coverage you choose to purchase. So as a business owner, you do have to understand EPLI policy terms, and level of coverage, in order to ensure you find the best price as well as the best coverage to fully protect your business and assets from the potential lawsuits from disgruntled current or former employees.

• Businesses often have management and supervisory personnel who are older and have different work ethics and disciplinary methods than the newer, younger employees. Supervisors may not have the training or communication skills to manage their younger staff members.
• Career-long employment is now rare, affecting the level of employee loyalty and causing higher turnover.
• Certain laws encourage employers to hire untrained employees with little or no experience and few work skills in order to gain tax-incentives.
• Contractors seeking federal business face higher scrutiny due to the demand to comply with all local, state, and federal employment laws.
• Employers often must provide very basic interpersonal skills in the workplace training, adding a burden of having to provide such training consistently to every employee.
• Increasingly, employers must compete nationally or even internationally, dramatically changing the scope of many businesses.
• Many businesses utilize internship programs and college recruiting practices to hire younger professionals as managers, human resource representatives and for talent acquisition. These younger managers and supervisors may lack the ability to effectively communicate with their older and more tenured staff.
• Privatization results in jobs previously managed by governments being converted to the private sector. Possible changes in employee support systems may mean that employees may seek new remedies for perceived injustices.
• Prolonged economic downturns create downsizings, deferred salary increases, higher business expenses, and other issues that strain employer/employee relationships.
• The American workforce is increasingly diverse, bringing together more people with vastly different backgrounds, race, religion, economic levels, social standings, and cultures.
• The emphasis on technology and cost-cutting practices place greater demands on remaining workers.
• The quantity of federal, state, and local legislation and regulatory edicts provide employees with additional ways to allege mistreatment by their employers.

Not Adding Third-Party Liability Coverage To Employment Practices Liability Policies

Employment Practices Liability Insurance policies were initially designed to cover claims by employees against their employers in conjunction with the employment process.

Third-party liability coverage endorsements to Employment Practices Liability policies broaden the scope of these policies to cover claims by a firm's customers or other nonemployees (third parties) based on the actions of the firm's employees.

Without third-party coverage, a business might end up with uncovered claims that could have been covered.

No Defense Coverage For Wage & Hour Claims In An EPLI Policy

Employment Practices Liability insurers routinely exclude coverage for wage and hour claims. Exclusions typically apply both to judgments/settlements and to defense costs.

Some insurers will provide defense coverage for such claims, by endorsement only, subject to a separate sublimit. This will close a huge gap in coverage.

The majority of wage and hour claims center around whether an employer wrongly failed to pay overtime because the employer mistakenly classified an employee as "exempt" and thus considered the employee ineligible to receive overtime pay under the FLSA.

However, wage and hour claims may also arise from causes other than failure to pay overtime due to the misclassification of a worker. Here are some examples:

• Misclassifying employees as independent contractors and not paying them overtime as independent contractors are ineligible for overtime pay.
• Not properly paying employees for overtime. For example - not paying compensation for hours worked in excess of 8 hours in a given day or more than 40 hours in a week.
• Miscalculating the amount of wages owed.
• Allowing employees to work "off the clock".
• Not allowing employees to take meal or rest breaks.
• Not paying employees on a timely basis.
• Not paying all wages due and owing at the time of termination.
• Docking exempt employees' salaries for absences.

Litigating wage and hour claims can be extremely expensive. Often, the prevailing plaintiffs (both current and former employees) can recover double the actual damages, plus attorneys' fees. Multiplied damages, in part, account for many astronomical wage and hour awards and settlements.

Employment Practices Liability Insurance (EPLI) is a type of insurance coverage that protects businesses against claims made by employees for various employment-related issues, such as discrimination, harassment, wrongful termination, and more. Here are some examples of EPLI claims and how this insurance can help pay for the lawsuit:

Sexual harassment: An employee may claim that they have been subjected to sexual harassment by a co-worker or a supervisor. EPLI can help pay for the legal costs associated with defending the company against the claim, as well as any damages awarded to the employee if the company is found liable.

Discrimination: An employee may claim that they have been discriminated against on the basis of their age, gender, race, or other protected characteristic. EPLI can help pay for the legal costs associated with defending the company against the claim, as well as any damages awarded to the employee if the company is found liable.

Wrongful termination: An employee may claim that they have been wrongfully terminated from their job, such as due to their age, gender, race, or other protected characteristic, or in retaliation for whistleblowing or reporting illegal activity. EPLI can help pay for the legal costs associated with defending the company against the claim, as well as any damages awarded to the employee if the company is found liable.

Wage and hour violations: An employee may claim that they have not been paid properly for their work, such as not receiving overtime pay or being paid less than minimum wage. EPLI can help pay for the legal costs associated with defending the company against the claim, as well as any damages awarded to the employee if the company is found liable.

Breach of contract: An employee may claim that the company has breached their employment contract, such as by failing to provide promised benefits or by terminating the employee without cause. EPLI can help pay for the legal costs associated with defending the company against the claim, as well as any damages awarded to the employee if the company is found liable.

In summary, Employment Practices Liability Insurance can help protect businesses from costly lawsuits and damages resulting from claims made by employees for a variety of employment-related issues.