Why Do I Need Employment Practices Liability Insurance?

EPLI (Employment Practices Liability Insurance) covers settlements of claims against your company for wrongful termination or violations of employee rights. This insurance also covers your legal defense costs in lawsuits related to these issues. It is an essential part of a small-business insurance policy.

These types of claims may be more common for small and new businesses than those that are larger and have strong human resources practices and offices. Small businesses, such as a restaurant, doctor’s offices, or retail shops, could all be subject to costly employment liability claims.

Nationwide estimates that the cost of employment practices liability lawsuits can reach into the hundreds of thousands of dollar range. Insurance that covers employment practices liability can be used to financially shield a small business against these types of lawsuits.

What Is Employment Practices Liability Insurance?

Employer practices liability insurance (EPLI) protects your business against claims relating to employment.

False termination

Discrimination

Harassment

Employment-related lawsuits can have high legal costs. They’re also on the rise. Many employment-related lawsuits and issues can be faced by employers. Sometimes the business owner doesn’t have to be the one being sued.

It is crucial to have the right insurance in place to cover your business against defense costs and damages arising from employment-related claims. The Hartford offers a comprehensive, customizable EPLI. The Hartford makes it easy for business owners and managers to obtain the coverage they need.

Protects Businesses From Employee Litigation

EPLI (also known as employment liability insurance) is a policy that protects businesses when employees file a complaint with the Equal Employment Opportunity Commission. This happens under federal laws like Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in Employment Act.

This Policy Covers A Wide Range Of Employment-Related Claims.

Many EPLIs cover a wide range of employee workplace claims against businesses. These include racial discrimination and sexual harassment in the workplace, unlawful termination and age discrimination, unequal pay practices, and mismanagement of employee benefits.

Risques And Exposures

Compensation for victims of discrimination in employment can vary depending on the type of complaint, severity of discrimination, and the number of employees.

Why Do I Need Employment Practices Liability Insurance?

Employer’s Liability Insurance protects businesses against lawsuits arising from issues related to someone’s job, like discrimination and wrongful termination. This coverage is available in our Policy (BOP).

Our employment practices liability coverage, which is not offered by other insurance companies, can protect your company from claims of harassment and discrimination.

Customers

Vendors

Invitations to business

BOPs provided by other insurances may not protect you if an employee files a claim. Third-party EPLI is available for most businesses to help you get the protection that you need.1,2

Our BOP is not included in the Private Choice PremierSM policy. EPLI can also be purchased separately with The Hartford Employers Premier Choice.

Employer Practices Liability Insurance Is Essential If You Have Employees.

Our goal is to protect employers. We designed EPLI coverage to assist businesses with EPLI claims. This covers employee or vendor claims.

Discrimination

Age discrimination

Retaliation

Violations of the Family and Medical Leave Act

Wrongful discipline

Failing to promote is a wrong decision

False termination

Harassment

Sexual harassment

Wage and hour violations are the most common reason for employee complaints. This includes:

Calculation of the wage

Calculation of overtime

Different job classifications

Wage and hour lawsuits are filed by employees against employers who claim they misclassified their employment status or miscommunicated their eligibility for overtime. As part of our EPLI coverage, the BOP automatically provides “Wage and hour Defense Cost” coverage. This coverage is beneficial for businesses that are more likely to be exposed to these types of lawsuits and disputes.

What Does Employment Practices Liability Insurance Not Cover?

These are just a few examples of claims not covered by insurance for employment practices liability.

Intentional or untrue acts

Bodily injury claims

Property damage

Personal injury lawsuits against employees

Third-party slander and libel suits

Professional negligence

Prevention Is The Best Protection.

We offer more than insurance coverage. We are an experienced insurance company that understands the risks and challenges faced by businesses. We can assist employers in risk management, and we have the best tools to prevent lawsuits.

Take, for example:

Training on sensitive topics via the internet, such as sexual harassment and wrongful termination

Current articles about employment trends

Handbooks and models for employee management

Equal employment opportunity laws lawsuits can be emotionally and financially draining. We are here to help. We can help you with any questions or concerns about EPLI coverage.

Small Businesses Are Particularly Vulnerable.

Large and small businesses from a range of industries face employment practices claims. According to Chris Williams (Travelers’ employment practices liability product manager), these claims can affect employee morale and reputations and even cost companies money.

Binette from AmTrust believes that small businesses might be most in need of protection against employment practices liability insurance.

Binette states that small businesses need coverage because any claim could cause financial ruin. A small business could suffer severe financial consequences from any wrongful act, even if it is not based on merit. In some cases, defense costs for meritless claims can exceed $100,000.

Even a small business with a few employees may be subject to claims for unfair and unjust employment practices.

Binette explains that external claims refer to incidents in which a third party, client, or customer files a complaint about discrimination, harassment, and other incidents that fall within the scope of the EPLI policy.

EPLI coverage is recommended for any business, regardless of its industry, that has more than one employee and deals with the public. An employer can be held liable for wrongful acts, either internal or external. EPLI coverage can help protect the company’s financial position, Binette states.

What Is The Cost Of Employment Practices Liability Insurance?

According to Insureon, the median cost for employment practices liability insurance is $2185 per year.

The following factors will affect the EPLI cost of your business:

Employees

The percentage of employees who leave or are turned away from your company

The claims history of your company

You should establish employee rules and procedures.

Revenue

Termination and hiring

Industry

As an endorsement to a Business Owners Policy (BOP) or as a general liability policy, you can purchase employment practices liability insurance. There are also standalone policies. Nationwide, for example, offers a standalone policy it can sell in conjunction with a BOP.

A bundle of employment practices liability insurance and D&O insurance may be possible for small businesses. D&O insurance is another type that provides financial protection to directors and officers in the event of lawsuits by customers, employees, or vendors.

How To Get The Best Employment Practices Liability Insurance

Binette from AmTrust says that small businesses tend to overlook the premium costs of policies and choose the most expensive option. However, this could be a huge mistake.

They should first discuss their vulnerabilities with an agent or broker who is familiar with EPLI coverage. He says that after identifying potential wrongful acts that could affect their business, the company should ask the broker or agent to send their information out to different markets and collect quotes so they can compare and choose the best fit.

These actions can help lower the risk that your company will be sued for employment malpractice.

Create an employee handbook. Describe workplace policies and procedures. Policies on how to handle complaints and discipline should be included. A statement on equal employment opportunities should also be included in the handbook.

Create job descriptions. Describe the expectations for each position within the company.

Conduct performance reviews. Hold periodic reviews of employees. Keep a record of the results and save them in your employee’s file.

Do not hire unsuitable candidates. Create a hiring and screening program to eliminate these candidates before they are invited for an interview.

Create a strong employment application. Include an equal employment opportunity statement. A statement that the employment is “at-will” should also be included in the application.

At-will employment is when the employment can be ended at any time without notice and for any reason. Check that the employment application does not contain any age indicators, such as college graduation dates or high school graduation dates. Your company is at greater risk of age discrimination claims due to age indicators.

Background checks. Make sure you check the backgrounds of all job applicants.

Adopt a zero-tolerance policy. Make it a policy to prohibit harassment, discrimination, and substance abuse. Employees can report violations with no fear and keep the door open.

Maintain good records. Create a system for keeping track of employee issues and the actions taken by the company to resolve them.