What is employment practices liability
insurance (EPLI)?
EPLI covers businesses against claims by workers that their legal
rights as employees of the company have been violated.
The number of lawsuits filed by employees against their employers
has been rising. While most suits are filed against large corporations,
no company is immune to such lawsuits. Recognizing that smaller
companies now need this kind of protection, some insurers provide
this coverage as an endorsement to their Businessowners Policy (BOP).
An endorsement changes the terms and conditions of the policy. Other
companies offer EPLI as a stand-alone coverage.
EPLI provides protection against many kinds of employee lawsuits,
including claims of:
- 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
The cost of EPLI coverage depends on your type of business, the number
of employees you have and various risk factors such as whether your
company has been sued over employment practices in the past. The policies
will reimburse your company against the costs of defending a lawsuit
in court and for judgments and settlements. The policy covers legal
costs, whether your company wins or loses the suit. Policies also
typically do not pay for punitive damages or civil and criminal penalties.
Liabilities covered by other insurance policies such as workers compensation
are excluded from EPLI policies.
To prevent employee lawsuits, educate your managers and employees
so that you minimize problems in the first place:
- Create effective hiring and screening programs to avoid discrimination
in hiring.
- Post corporate policies throughout the workplace and place them
in employee handbooks so policies are clear to everyone.
- Show employees what steps to take if they are the object of
sexual harassment or discrimination by a supervisor. Make sure
supervisors know where the company stands on what behaviors are
not permissible.
- Document everything that occurs and the steps your company is
taking to prevent and solve employee disputes.
To locate an insurance company that specializes in EPLI, go to http://www.roughnotes.com/ With Permission © Insurance
Information Institute, Inc. - ALL RIGHTS RESERVED -
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