What Do EPLI Claims Look Like?
Insurance coverage is specifically designed to protect businesses from employment-related lawsuits. Employment Practices Liability Insurance (EPLI) coverage is a type of insurance that protects businesses from claims made by current, former, and potential employees. Keep reading to discover what it is, why businesses need it, and noteworthy examples of common EPLI lawsuits.
What Is EPL Insurance?
Employment Practices Liability Insurance (EPLI) shields businesses from the cost of defending and settling claims brought by employees. Coverage can be purchased individually or as a block policy covering all employees of an entire company.
What Does EPLI Cover?
EPLI covers a variety of employment-related claims, including those related to discrimination, sexual harassment, invasion of privacy, mismanagement of employee benefits and wages, breach of contract, and workplace safety.
While most policies provide coverage for third-party claims as well, employers who choose not to purchase such coverage must ensure that all employment contracts contain an “employment at will” clause (as almost all do), which clearly states that either party can terminate the employment relationship at any time with or without cause. This gives employers more flexibility regarding terminations, provided they adhere to federal and state anti-discrimination laws.
EPLI coverage can also protect businesses from third-party claims by customers or suppliers alleging wrongdoing based on the company’s employment decisions. These lawsuits can arise from terminations associated with misconduct, such as fraud, theft, or wrongful termination related to an employee’s disability.
Examples of the Types of Claims Covered by EPLI
Discrimination: EPLI coverage can help cover claims brought against employers for discrimination based on race, gender, age, disability, national origin, or other protected classifications.
Wrongful termination: EPLI coverage can also address claims related to wrongful termination, such as those based on breach of contract or violation of public policy.
Harassment: EPLI coverage can protect against claims by employees alleging sexual harassment, hostile work environment, and more.
Wage and hour disputes: EPLI coverage can help cover the cost of claims related to wage and hour disputes, such as those brought for unpaid overtime or failure to pay minimum wage.
Negligent hiring, retention, and supervision: EPLI helps cover claims against employers for failing to properly vet or supervise their employees.
Wrongful discipline and deprivation of career opportunity: EPLI coverage can protect against claims by employees alleging wrongful discipline or deprived career opportunities, such as promotion or training opportunities.
Understanding how to find the right EPLI coverage you need for your organization can be tricky when you don’t have an insurance agent who understands your requirements. Southpoint Insurance has decades of experience working with businesses from every sector, from IT to healthcare.
Why Do Businesses Need EPLI Coverage?
A well-structured risk management plan can allow businesses to focus on other aspects of operation by covering:
Costs of Defending Against Claims
EPLI coverage is intended to help cover the cost of defending against a claim arising from an employment-related dispute. Coverage can include legal fees, court costs, and any settlements or judgments that may be issued to the employee if they are successful in their lawsuit. Businesses must understand that even if a claim is unsuccessful, handling it according to proper policy and procedure can still create substantial expenses.
Costs of Settlements and Judgments
EPLI protection goes beyond traditional staff—it provides coverage for any business employee, including contractors, temporary workers, and independent contractors. It also covers vendors who work on your company’s premises or other associated areas. Any judgments awarded in association with these claims may be covered under EPLI, including attorney’s fees and costs incurred in court.
Protection for Businesses and Their Leaders
A lot of anxiety and uncertainty can be associated with handling employment-related matters, particularly when they are costly. EPLI coverage protects businesses and their leaders from personal liability related to claims. If one is brought against them, the policies can help cover the cost of defending the associated individual.
Highly Publicized Employment Practice Examples
EPLI claims are very involved and sophisticated. It can take years to address and resolve a case. Here are a few publicized examples of employment-related claims where a solid policy would reduce liability risk and position the organization to curb substantial financial damages.
In 2020, Microsoft was sued for alleged gender discrimination toward female employees. The lawsuit claimed that Microsoft had a history of structuring compensation to give male employees more opportunities and higher pay than female employees. This was done by denying raises and depriving female employees of more prestigious jobs, resulting in their salaries being lower than their male counterparts.
McDonald’s was sued twice in 2017 for alleged sexual harassment by two female employees in two separate lawsuits. In both cases, the plaintiffs alleged that they were subjected to inappropriate comments and behavior from their male supervisors. The most recent suit alleged that McDonald’s fostered a culture of violence towards women by condoning a male-dominated environment where sexual harassment was rampant, tolerated, and swept under the rug.
Abercrombie & Fitch
In 2014, Abercrombie and Fitch were sued for allegedly refusing to hire a Muslim woman wearing a headscarf as part of her religious beliefs. Samantha Elauf claimed she was denied employment because of her religion, violating Title VII of the Civil Rights Act. The case was settled before trial, but Abercrombie continued to enforce its “Look Policy” for sales associates throughout its stores.
What You Can Do to Prevent EPLI Claims
While EPLI coverage can help protect from losses in the event of a lawsuit, these policies don’t directly prevent such claims from arising. It’s important to take steps to prevent them from occurring in the first place. This can be done by creating and enforcing effective policies compliant with federal and state labor laws, educating employees on proper workplace behavior and a zero-tolerance policy for inappropriateness, and ensuring all legal documents are in order.
Connect With Southpoint Insurance for EPLI Coverage
Whether you’re a small business or a large corporation, Southpoint Insurance can help you find the right EPLI policy for your organization. Our agents understand the importance of up-to-date, comprehensive coverage and work with you to customize a policy that meets your needs. With our expertise, you can rest assured that your business is protected from unexpected claims.
Ready to learn to build a successful EPLI strategy? Reach out today.