Employer Practices Liability Insurance, or EPLI, protects business owners from claims filed by employees who feel that their employers have violated their rights. The general thinking is that employees only file such claims against large companies. The reality, however, is a large number of employees are filing such claims in much smaller companies. Insurance companies recognizing this trend now have started providing such coverage as part of their Business Owners Policy (BOP). Other companies offer EPLI as a standalone coverage.
A typical EPLI offers protection against sexual harassment, deprivation of career opportunity, wrongful termination, wrongful infliction of emotional distress, mismanagement of employee benefit plan, privacy-based claims and reputation claims (defamation), among others.
What differentiates EPLI from other insurance policies is that coverage is offered for intentional injury in some cases. Intentional injury here is taken to mean injuries caused by employees without the company’s knowledge or consent. EPLI, however, does not offer coverage if there’s a violation of the law. No coverage is offered if there’s a violation as a result of company policy as well.
Cost of EPLI
How much you have to pay for EPLI depends on the nature of your business, number of workers and whether claims have been made against your company in the past. EPLI will reimburse the costs your company incurs for defending lawsuits and for judgments and settlements. Legal costs are covered no matter whether your company wins or loses. Please note, however, that, a typical EPLI policy does not reimburse punitive damages or fines whether civil or criminal. Also, EPLI does not cover protection already offered by other insurance policies in regard to workers or employees.
Generally an EPLI policy will exclude coverage, among others, for violations of:
· Occupational Safety and Health Act (OSHA)
· Fair Labor Standards Act
· State Employment Law
· Employee Retirement Income Security Act
The first step to preventing lawsuits by employees is to educate your managers on situations that could give rise to legal claims by employees. As a start, they should be trained to avoid discrimination when hiring workers.
Company policies should be made known to every employee. They should be displayed prominently around the workplace or placed in employee handbooks.
Make it clear to employees that the company does not tolerate sexual harassment or discrimination and is prepared to help the victim. Show them the steps to take when such a situation occurs. Make the company’s stance on such matters clear to superior officers. The main aim of such a move is to make clear to employees that the company is serious about solving any violation of employee rights in the workplace.
Before taking up EPLI coverage, do consult an insurance professional who understands the nature of your business.