If a business is sued by an employee over wrongful termination or another violation of employee rights, employment practices liability insurance (EPLI) can pay for legal costs.
Why do you need Employment Practices Liability Insurance?
Employment practices liability insurance, or “EPLI,” is a type of management liability insurance. If you hire employees or independent contractors, you take the risk that a dispute will develop between you and them.
What is Employment Practices Liability Insurance?
EPLI policies protect the company and its management by paying the costs of defending against certain suits from employees or investigations from government agencies. Common claims include allegations of:
- Wrongful Termination
If you (as a manager) or the company itself is named in such a claim, the insurance company would defend you and pay the judgment or settlement against you. Keep in mind how easy it is for an employee to start an action that requires you to mount a legal defense. Even if an allegation is baseless, you still have to pay to defend yourself and have the suit dismissed. Your EPLI carrier will take this job off your plate.
Carriers are unique in what they want their policies to cover. Certain carriers are willing to offer protections that others might not but the right EPLI policy can be tailored to your specific needs. For instance, wage and hour claims (e.g. unpaid overtime) are one of the most common types of employment disputes…they are also one of the matters most commonly excluded from coverage in EPLI policies. Same goes with investigations related to immigration status, suits from non-employees that allege harassment and the loss or theft of employees’ personally identifiable information.
The key is having a partner on your side who can work with you to identify potential exposures and find the underwriter who can offer a policy that meets your specific needs.
What EPLI Covers
Unfavorable treatment of an employee, such as failure to promote, based upon sex, race, age, or disability.
Occurs when an employee’s termination breachers one or more terms of a contract of breaks a rule of employment law.
Sexual misconduct and harassment
Involving unwanted sexual advances or obscene remarks to an employee.
Invasion of privacy
Allegations that an employer unreasonably searches their private space , or conducts surveillance in areas where employees expect privacy, such as a dressing room or bathroom.
Defamation of character
False statements written or spoken about an employee with the intention of harming their reputation.
What EPLI Doesn’t Cover
Regulatory violations including employment law
Typically covered by general liability
Contractual liability and breach of employment contract
Typically covered by Errors & Omissions Insurance
Criminal or violent acts
Including any local, state or federal violations