What is Employment Practices Liability Insurance (EPLI)?

Did you know that Businesses are 3 times more likely to be sued by an employee than experience a fire? Therefore, Employment Practices Liability Insurance (EPLI) is important, not just for your large corporations but also for your smaller companies who are not exempt from needing this type of protection. Small or new businesses are often the most vulnerable to employment claims because they may lack a legal department or an employee handbook detailing the policies and procedures that guide hiring, disciplining, or terminating employees.

EPLI provides your business protection against several types of employee lawsuits, including allegations of:

  • Discrimination

  • Wrongful Termination

  • Sexual Harassment

  • Workplace Bullying

  • 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 plants

EPLI covers businesses against these types of claims by workers who feel as if their legal rights as employees of the company have been violated.

Some insurers provide EPLI coverage as an endorsement to their Businessowners Policy or General Liability Policy which will change the terms and conditions of the policy. Other companies also offer EPLI as stand-alone coverage in conjunction with a BOP.

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 percentage of employee turnover, and whether your company has established rules and practices in place.

EPLI 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 or criminal fines. 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:

  • Review potential loss exposures with your insurance agent and purchase adequate employment practices liability insurance.

  • Develop an employee handbook, detailing your company’s workplace policies and procedures, including attendance, discipline, and complaints. The employee handbook should also contain an employment at-will statement and an equal employment opportunity statement.

  • Create a job description for each position that clearly defines expectations of skills and performance.

  • Conduct periodic performance reviews of employees and carefully note the results in the employee’s file.

  • Develop a screening and hiring program to weed out unsuitable candidates on paper before calling them to interview in person.

  • Use an employment application that contains an equal employment opportunity statement along with a statement, that if hired, employment will be “at-will.” This means their employment can be terminated at any time, for any reason or for no reason at all, with or without notice. Also ensure that your employment application does not contain any age indicators, such as date graduated high school, as this could increase your risk for age discrimination claims.

  • Conduct background checks on all possible candidates.

  • Institute a zero-tolerance policy regarding discrimination, substance abuse and any form of harassment. Make sure you have an “open door” policy in which employees can report infractions without fear of retribution.

  • Create an effective record-keeping system to document employee issues as they arise, and what the company did to resolve those issues.

Need Employment Practices Liability Insurance for your Business? We Can Help!

You can submit your information for an EPLI quote via our website or you can speak to one of our licensed Insurance Agents @ 901-465-0011 to learn how to protect your business. We look forward to working with you!