Employment Practices Liability Insurance
(EPLI)
What is employment practices liability insurance?
Employment practices liability insurance, also known as EPLI, provides coverage for claims made by employees alleging wrongdoing in the workplace.
This could include allegations such as:
Improper hiring practices
Improper firing practices
Discrimination based on sex, age, race, disability, etc.
Claims can be based on sexual harassment, wrongful termination, or even failure to hiring or promoting someone.
Do I need it?
If you hire and fire employees, promote or demote employees, or offer raises to employees, then you need EPLI coverage.
What does it cover?
EPLI policies will typically cover costs for:
Legal fees associated with defending your company
Judgments or settlements if found liable
Can I get a claims example?
You decide to let go an older employee who has been slacking off and not meeting his sales quotas. A few months later, you get served legal papers for wrongful termination based on age discrimination. Even though his claims are completely unfounded, there is not enough documentation proving he was a poor performer, and you end up settling for $630,000.
An employee refuses to serve a Chinese woman and shouts racial epithets at her. This is not how you trained your staff. There are several witnesses. The victim sues your restaurant for racial discrimination based on the actions of one individual employee. A settlement of $48,000 is reached.
A claim is brought by a former employee for gender discrimination–she alleges that her male colleagues all received raises, whereas she was passed over for a promotion due to her sex. Defense costs alone amount to over $100,000.
Things can happen even if all the necessary controls are in place.
Things to note
EPLI can be costly. In some cases, the premium is the same or even more expensive than your Business Owners Insurance policy. We will try working with your budget to find the right fit.
When ready to apply for EPLI, prepare a copy of your financials and your employment handbook in advance (many EPLI carriers require this at the time of application).
This coverage is occasionally available as an add-on coverage on your Business Owners Insurance policy, depending on your carrier; however, keep in mind that it’s typically limited to first-party EPLI claims. Stand alone EPLI policies, on the other hand, are often able to offer both first- and third-party coverage.
