Employment Practices Insurance

Employment Practices Liability Insurance (EPLI)

What is Employment Practices Liability Insurance?

Employment practices liability insurance (EPLI) is a type of commercial liability insurance that covers wrongful acts arising from the employment process. These wrongful acts are based on claims by employees that their legal rights, as employees of the company, have been violated. The most frequent types of claims covered under Employment Practices Liability Insurance are wrongful termination, discrimination and sexual harassment.

Employment practices liability insurance policies cover directors and officers, management personnel and employees of your business. Employment practices insurance will reimburse your company against the costs of defending an employment practices lawsuit in court and for judgments and settlements.

An employment practices policy typically covers legal costs, whether your company wins or loses the suit. However they typically do not pay for punitive damages or civil or criminal fines. The policies exclude bodily injury, property damage and intentional or dishonest acts against an employee.

What does Employment Practices Liability Insurance Cover?

Employment practices liability insurance protects a business when sued by an employee for violation of federal or state laws regarding employment practices. There are many federal and state laws that govern an employer’s liability to its employees. Federal law is enforced by the Equal Employment Opportunity Commission.

The Equal Employment Opportunity Commission recognizes eleven types of employment practices discrimination: age, disability, equal pay/compensation, genetic information, national origin, pregnancy, race/color, religion, retaliation, sex and sexual harassment.

There are many reasons that claims are made against a business by an employee including:
• Discrimination
• Sexual harassment
• Wrongful termination
• Breach of employment contract
• Negligent evaluation
• Failure to employ or promote
• Deprivation of career opportunity
• Wrongful discipline
• Workplace harassment
• Wrongful infliction of emotional distress
• Defamation
• Retaliation
• Invasion of privacy
• Mismanagement of employee benefit plans
• Wage and hour law violations

What Determines the Cost of Employment Practices Liability Insurance?

The cost of employment practices insurance depends on your type of business, the number of employees you have and various risk factors such as whether your company has ever been sued for employment practices. Now is the Best Time to acquire Employment Practices Liability Insurance! Employment practices insurance policies operate on a claims-made basis. This means that policyholders can only receive insurance benefits if they are covered both at the time of the incident that triggered the claim and at the time when the claim is filed.

Can Employment Practices Liability Insurance be Purchased Alone?

Although employment practices insurance is available as a stand-alone coverage, it is also frequently sold as part of a management liability package policy. The management liability package policy would often include Directors and Officers (D&O) insurance and Fiduciary Liability insurance. In some cases, a Business Owners Policy (BOP) can offer the option to cover employment practices liability.

Protect Your Business from Employee Lawsuits! Actively follow guidelines for establishing lawful employment practices and speak with an Alliance Commercial Insurance Specialist about coverage designed to protect your business from employee lawsuits.