Employment Practices Liability Insurance

Does your business need employment practices liability insurance?

An organization is not required to hold an employment practices liability insurance policy. However, the potential costs associated with harassment and discrimination lawsuits can quickly stack up. A small business could quickly become overloaded with legal expenses, even if the claim is proven to be baseless.

If your business has employees, it is a good idea to consider purchasing employment practices liability insurance policy.

How can employment practices liability risk be reduced?

While there is always a chance of an EPLI claim, there are steps a business can take to mitigate risk. Some of these include:

• Running a risk assessment with your licensed insurance agent.
• Winooski Insurance offers our clients a free risk assessment when they purchase a policy through our agency. Learn more about risk assessments.
• Having a human resources professional develop an employee handbook to outline your business’s workplace guidelines, policies, and procedures.
• Maintain job descriptions that outline essential job functions and provide a clear-cut performance requirement.
• Conduct performance reviews and unbiasedly record each employee’s accomplishments.
• Conduct background checks on applicants.
• Maintain human resource files to record all employee-related issues.
• Create zero-tolerance discrimination, substance abuse, and harassment policies.

Can an applicant file an employment practices claim?

Your company becomes at risk for an employment practices lawsuit the second you start the interview process. An applicant can file an EPLI claim if they feel they have been wrongfully overlooked for a position or other similar concerns during the hiring process.

What does employment practices liability insurance cover?

An employment practices liability insurance policy can help cover your business when a candidate, employee, or ex-employee sues over employment issues. These can include wrongful termination, discrimination, workplace harassment, libel or slander, breach of privacy, breach of contract, retaliation, and more.

Wrongful termination

A wrongful termination or wrongful demotion complaint can occur when an employee feels mistreated.

A scenario of wrongful termination: A manager provides a negative evaluation in which an employee’s performance is unfairly reported, which results in their termination of employment or demotion. This ex-employee could bring a lawsuit against the company which would be covered by an EPLI policy.

Discrimination

There are multiple employment laws in place to protect employees against discrimination on the basis of race, color, creed, religion, age, national origin, sex, sexual orientation, physical or mental disability, veteran status, gender identity, genetic disposition, or any other protected category under state or federal law.

If an employee feels their employer has violated one of these laws, a lawsuit may be brought against the company. An example: An older employee is suddenly fired, and the position is filled by a younger replacement with a significantly lower salary yet similar responsibilities. The ex-employee may sue for age-based discrimination.

Workplace harassment or sexual harassment

If an employee or manager of your business behaves inappropriately towards another co-worker your business could be held liable in the event of a lawsuit.

Libel or slander

If someone who is part of your organization makes accusations against another employee or contractor without evidence and it turns out to be false, this is considered libel or slander. The accused employee or contractor could bring a costly defamation lawsuit against your business.

Breach of privacy

Most businesses collect sensitive information from employees upon hiring them. If this information is shared inappropriately, the employee could sue. Other breaches of privacy can include overuse of video cameras, recording devices, and private personnel requests.

Breach of contract or agreement

When an employee is hired, both parties typically agree to an employment contract that outlines duties and responsibilities. If an employee feels their employer has not lived up to their end of the contract, they can sue the company.

Retaliation

If an organization or manager uses a negative consequence in response to an employee-protected action, it is considered retaliation. An example: If an employee is fired for taking their federally-mandated maternity or paternity leave, the employer could be held legally liable.

What does employment practices liability insurance NOT cover?

Employment liability insurance only covers employment-related issues that fall within the policy details. Some scenarios where EPLI will not cover expenses are:

• Penalties or fines from breaking laws
• Employee injuries
• Errors and omissions
• Third-party slander
• Property damage

Most of these either require their own insurance policy or an endorsement added onto an employment practices liability insurance policy.

Penalties, fines, or unpaid wages

In the case where a company breaks the law and is required by the state or federal government to pay penalties or fines, EPLI will not cover those expenses. Some EPLI policies will offer coverage for legal expenses against unpaid wage lawsuits, however, the wages are not covered if the trial is lost.

Employee injury expenses and lawsuits

A workers’ compensation insurance policy is required for coverage of work-related employee injuries and lawsuits. This policy can help cover medical expenses, legal fees, retraining, and lost wages due to work-related injuries.

Errors and omissions

In case your business is accused of professional negligence, such as incomplete or inadequate work, you will require a professional liability insurance policy for coverage.

Third-party slander

When a third-party accuses your business of slander or libel, the expenses of a defamation lawsuit would require a general liability insurance policy for coverage.

Property damage

Property damage is not covered under employment practices liability insurance. Property damage that occurs to business-owned property is covered under commercial property insurance and third-party property damage is covered under general liability insurance.

How much does employment practices liability insurance cost?

The exact price of an employment practice liability insurance policy can be hard to estimate without knowing your business’s exact situation. Many of the coverage’s variables depend on certain factors such as:

• Number of employees
• Location of your business
• Past claims history
• Employee turnover rate
• Risk mitigation practices

If a company falls within certain small business insurance guidelines, EPLI can be offered as an endorsement to the business owner’s policy (BOP) instead of a new standalone policy, but both options are available.

Speak with one of our licensed insurance agents to get an accurate employment practices liability insurance quote >

How do I make an employment practices liability insurance claim?

Most carriers have online claim reporting capabilities, or you can call their toll-free claims reporting phone number. At Winooski Insurance Agency, we are available to provide information about the claim reporting process. Our clients can rest easy knowing our experienced agents are ready to help when needed.

View a list of our partner carriers and instructions on where to file a claim with each.

Why should I get an employment practices liability insurance policy through an independent agency?

Winooski Insurance has been an independent insurance agency for almost 40-years. During this time, we have created long-term relationships with a multitude of insurance partners which allows us to present you with a broad range of coverage options at competitive rates. We’re committed to helping you address your unique requirements.