The social media age brings new public relations challenges for businesses. As the #MeToo movement illustrates, hashtags can quickly spread stories about discrimination, harassment, sexual assault, or other inappropriate and illegal workplace behavior.
Your business clients must be ready to address unacceptable actions in the workplace as soon as they come to light. If they don’t, they risk losing business, losing their reputation—and losing substantial sums of money in legal fees and judgments.
Protect Your Clients from Financial Disaster
Employment Practices Liability insurance—EPLI or EPL insurance for short; the terms are interchangeable—is designed to mitigate businesses’ exposure to lawsuits arising from the alleged or actual mistreatment of employees.
The Equal Employment Opportunity Commission (EEOC) is an independent federal agency enforcing federal laws that make it illegal to discriminate against job applicants and employees. In Fiscal Year 2020, the EEOC obtained $595.9 million in benefits for individuals who filed discrimination complaints. That figure includes $177.7 million in EPLI settlements with benefits.
Obviously, the EEOC is prepared to investigate allegations of discrimination. For this reason, among others, businesses of all sizes—including your clients—must have EPL coverage.
At ProWriters, we do all we can to equip brokers to give their clients the knowledge and coverage they need to do business with confidence. Few scenarios could prove more nerve-rattling than facing an employment practices liability lawsuit without the proper insurance policies in place.
Here’s a brief guide to what your clients must know about EPLI coverage, and what you need to know to secure the best coverage for them.
What is EPL Insurance?
Employment Practices Liability insurance covers businesses when employees make claims regarding violations of their civil rights.
Large corporations typically carry substantial EPL coverage. They’re ready to deal with almost any type of employment lawsuit. Small and medium-sized businesses (SMBs) are often more vulnerable to such claims (for example, wrongful termination lawsuits). SMBs may lack a legal department or an employee handbook detailing policies and procedures around hiring, disciplining, and terminating employees.
Common EPLI claims examples include lawsuits alleging discrimination on the basis of:
- National origin
Some EPLI insurance carriers also offer policies including third-party coverage. These policies would cover a business for claims from third parties such as customers, clients, or vendors related to discrimination, harrassment, failure to hire, and so on.
No Business is Perfect—EPL Coverage Protects Them
In our litigious society, many circumstances warrant adequate, up-to-date EPL insurance.
Employment-related liability starts the moment an applicant walks in the door or visits the “Career” page on your website.
An EPLI Claims Examples
Job interview questions about age, sex, religion, national origin, or disability are inappropriate because making hiring decisions based on these categories is illegal. Some states also prohibit questions about arrests or convictions. If candidates aren’t hired after having been asked such questions, they could use those questions to justify bringing a lawsuit.
And during employment, supervisors’ behavior can cause problems. If someone makes an inappropriate comment within a worker’s hearing, for instance, the company is usually liable. Most EPLI insurance policies cover such incidents.
Even if former employees sign a waiver or accept a severance package, the law doesn’t require them to waive discrimination complaints.
We imagine few businesses actually intend to violate applicants’ or employees’ rights. But whenever people are dealing with people, mistakes can and will occur. Even honest mistakes can lead to legal and financial consequences.
Do the people who are your business clients do any of the following to, with, or for their employees?
- Hire and fire
- Manage benefits
- Offer raises
- Promote or demote
Most businesses do—so most businesses need EPL insurance!
What Does EPLI Insurance Cover—And What Does It Not?
Employee lawsuits are on the rise. Costs can be staggering, even for employers in the right. Most EPLI policies only provide benefits if the policyholder was covered both at the time the incident in question occurred and the time the claim was filed.
EPLI insurance covers employers against claims of alleged discrimination, wrongful termination, harassment, and other employment-related matters.
Businesses sometimes ask about EPLI insurance vs workers’ comp. EPL insurance protects employers if a worker has a job-related injury workers’ compensation doesn’t cover. Sometimes, liability insurance can be packaged with workers’ compensation as an added protection.
But what does EPLI not cover? Exclusions include:
- Criminal acts
- Illegal profit
- Claims associated with downsizing, layoffs, and restructurings
Which EPLI Insurance Carriers Offer the Best Coverage?
Businesses can wonder, and perhaps worry, about what employment practices liability insurance costs. As with most insurance, the higher the limits, the higher the premium.
But the greater cost is not carrying EPLI insurance.
The average cost of employment lawsuits resulting in a defense and settlement payment is $160,000. Without EPLI coverage, according to Hiscox Insurance, companies would be an extra $110,00 out of pocket.
To find the best EPL insurance policies for your clients, schedule a call with one of our ProWriters insurance experts. We’ll tell you about the carriers we work with, and help you determine which policies suit your clients’ needs.
ProWriters can also help you find other essential business insurance for your clients, including Cyber Insurance. To find out more, download our free eBook, How to Sell Cyber: Big Claims in Ransomware & Social Engineering.