Labor and employment-related litigation is on the rise. From small businesses to multinational corporations, every company faces the risk of legal action from dissatisfied employees and former employees. No employer is immune from employment-based claims.
Damages in employment claims can be catastrophic. Even nuisance claims can disrupt workflow, harm morale, and impact profitability. How can insurance mitigate against these risks?
What Are Employment Practices Liability Policies?
From the moment a company begins looking for employees, practically every aspect of the employer-employee relationship can expose it to litigation. Employers must navigate a labyrinth of legal landmines from the moment they advertise job openings to the way they communicate to and about former employees. And the rules differ from one jurisdiction to another. For example, in some states it is illegal to inquire about a candidate’s criminal background on an employment application, while it’s perfectly legal in others.
Employment Practices Liability Insurance (or “EPLI”) is a form of liability insurance designed to cover discrimination-based claims, along with a myriad of other wrongful employment practices such as retaliation, wrongful termination, failure to promote, harassment, defamation, mismanagement of employee benefits, negligent supervision of employees, wrongful demotion, and pregnancy and lactation accommodation. Claims of wage-and-hour violations historically were excluded from EPLI coverage, but due to consumer demand many insurers now offer limited coverage for these claims as well.
What Should Employers Look for in an Employment Practices Liability Insurance Policy?
EPLI policies provide coverage to fund an employer’s defense against covered claims and indemnify the employer against any judgment or settlement of the claim.
The amount of available coverage varies, depending on the employer’s needs. Policies offering $100,000 in coverage are just as common as those offering $25 million. Determining how much coverage a company needs is driven largely by the number of employees, but includes other factors as well, such as the strength of the company’s human resources protocols, the nature of work performed by the employees, and the jurisdictions where the company operates.
While EPLI policies cover a broad range of wrongful employment practices, they often exclude claims that employers may expect to be covered. For example, EPLI policies typically don’t cover illegal acts by a company, fines levied against the company by government agencies, unpaid wages, liability for intentional wrongdoing, claims related to unemployment benefits, and claims related to workers’ compensation.
Employment Practices Liability Policies: How We Can Help
Payne & Fears is well situated to assist employers navigate their EPLI coverage. Leveraging the experience of our firm’s Employment & Labor litigation attorneys, we help our clients evaluate which coverages to purchase to protect them from potential claims. When employment-related claims are made against our clients, we help them secure coverage. For many years Payne & Fears has successfully represented businesses in managing their EPLI claims and ensuring that insurers keep their promises to our clients.