EPLI Policy – Essential for Business Owners

EPLI – Employment Practices Liability Insurance covers businesses against claims by workers that their legal rights as employees of the company have been violated.  This type of insurance protects against many kinds of employee lawsuits, including claims of:

  • Sexual harassment
  • Discrimination
  • Wrongful infliction of emotional distress
  • Workplace bullying
  • Wrongful termination
  • Wrongful discipline
  • Defamation of character
  • Deprivation of career opportunity
  • Failure to employ or promote
  • Breach of employment contract
  • Mismanagement of employee benefit plans

Any business that employs is not immune to EPLI related lawsuits.  It would be wise to make sure your business has the proper coverage. Some insurers offer EPLI as a stand-alone coverage while other insurers provide EPLI coverage as an endorsement to their Businessowners Policy (BOP). Please note: An endorsement can change the terms and conditions of the policy so, read the fine print.

Depending on your type of business, the cost of EPLI insurance will vary.  Some factors that will affect premium are: the number of employees, as well as various risk factors (like number of EPLI claims in previous years). EPLI coverage will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements.  Regardless of whether your company wins or loses the suit, EPLI will cover your legal costs. However, many EPLI policies do not pay for punitive damages or civil or criminal fines. These other liabilities are typically covered under a Workers Compensation policy.

As a business owner with employees, here are steps to take to minimize your company’s exposure to EPLI risks:

  1. Make sure supervisors know where the company stands on what behaviors are not tolerated.  Develop and implement preventative measures.
  2. Create effective hiring and screening programs to avoid discrimination during the hiring process.  Be sure to properly train your Human Resources department and Managers.
  3. Corporate policies should be outlined in employee handbooks so everyone understands what to during such events.  There should be clear protocols to follow.
  4. Document, document, document!  Document everything that occurs and the steps your company has taken to prevent and solve employee disputes.  Follow up on incidents.
All it takes is one comment or action—however unintentional—for an employee to file a complaint or lawsuit, claiming his or her legal rights have been violated so, make sure your business is protected.  Contact your agent for information on an EPLI policy.