Employment Practices Liability Insurance (EPLI) Coverage
Protecting Your Business from Employee Lawsuits
What is EPLI?
Employment Practices Liability Insurance (EPLI) protects businesses from claims made by employees regarding violations of their legal rights as employees. This type of insurance has become increasingly crucial as the number of employee lawsuits against employers continues to rise.
Why Do You Need EPLI?
While large corporations are often the targets of such lawsuits, no business is entirely immune. Recognizing the growing need for protection among smaller companies, many insurers now offer EPLI either as an endorsement to their Businessowners Policy (BOP) or as a standalone policy.
What Does EPLI Cover?
EPLI offers coverage against a wide range of employee lawsuits, including but not limited to:
Sexual harassment
Discrimination
Wrongful termination
Breach of employment contract
Negligent evaluation
Failure to employ or promote
Wrongful discipline
Deprivation of career opportunity
Wrongful infliction of emotional distress
Mismanagement of employee benefit plans
Costs and Coverage
The cost of EPLI depends on several factors, including the nature of your business, the number of employees, and the company's history of employment practices lawsuits. EPLI policies reimburse your company for the costs of defending a lawsuit in court, as well as for judgments and settlements, regardless of whether the case is won or lost. However, these policies typically do not cover punitive damages or civil/criminal fines and exclude liabilities covered by other insurance policies, such as workers' compensation.
Preventing Employee Lawsuits
To minimize the risk of employee lawsuits, it is essential to proactively educate your managers and employees. Here are some strategies:
Implement Effective Hiring and Screening Programs: Ensure your hiring practices are free from discrimination to avoid potential claims.
Clearly Communicate Corporate Policies: Display corporate policies throughout the workplace and include them in employee handbooks to ensure everyone understands company standards.
Provide Clear Reporting Procedures: Inform employees about the steps they should take if they experience sexual harassment or discrimination, and ensure supervisors are aware of unacceptable behaviors.
Document Everything: Keep thorough records of incidents and the steps your company takes to prevent and resolve disputes. Documentation can be crucial in defending against lawsuits.
By understanding and implementing EPLI, businesses can safeguard themselves against the financial and reputational damage that can arise from employee lawsuits. Taking proactive steps to educate and protect your workforce will not only help prevent lawsuits but also foster a positive and compliant workplace environment.