Does Your General Commercial Insurance Include Employment Practices Liability Coverage?

Every business owner and employer’s single greatest risk of lawsuits is from employees.
Unfortunately, while every business has some basic form of general commercial liability insurance for protection against injuries and slander, many do not have specific coverage for allegations of employment practices violations – such as age, sex, race or disability discrimination, sexual harassment and wrongful terminations – by current, prospective or former employees, vendors and suppliers. Fighting even a frivolous claim can cost an employer tens of thousands of dollars in attorney fees.

If there is a gap in your commercial insurance leaving you vulnerable to lawsuits, a carefully crafted Employment Practices Liability Insurance (EPLI) policy can give your business some measure of protection from workplace disputes.

Employment Practice Liability Insurance

According to the Equal Employment Opportunity Commission (EEOC), almost 75% of all lawsuits against corporations involves employment disputes. Claims against employers have risen to nearly 100,000 annually, leading to more than $450 million in settlements and charges. And it seems businesses are more likely to subjected to an employment practices dispute than a property or general liability claim.

Employment Practices Liability Insurance (EPLI) provides a business with protection against allegations made by employees, former employees, or potential employees for:

  • discrimination (based on age, gender, sexual orientation, race, nationality, religion, military status, disability, pregnancy, etc.)
  • general harassment (verbal or physical actions that create a hostile or offensive work environment)
  • sexual harassment, including “same-sex” sexual harassment
  • wrongful termination of employment, including breach of an implied contract
  • wrongful discipline or suspension
  • wrongful demotion
  • employment-related misrepresentation(s)
  • employment-related libel, slander, humiliation, defamation or invasion of privacy
  • false arrest or false imprisonment
  • wrongful failure to employ or promote
  • failure to grant tenure

The EPLI Policy

  • Most EPLI cover businesses and individuals against wrongful employment practice claims, including legal fees and assistance with settlement payments
  • Affordable coverage may be purchased as a stand-alone policy or added to a general commercial liability (GCL) policy, business owners package (BOP) or bond.
  • Some policies include “third-party” employment practices coverage for claims made by non-employees, usually customers, who allege that an employee engaged in wrongful conduct (see below)

If you cannot afford to cover a large financial loss triggered by a lawsuit, then your business needs comprehensive Employment Practices Liability Insurance (EPLI).

What About Third-Party Employment Practices Insurance?

Businesses which are heavily customer oriented – such as restaurants or retail operations – are at a greater risk of encountering third-party employment practice liability claims for alleged discrimination or harassment of a customer by an employee. Business which do not have a lot of customer interaction, such as manufacturers or suppliers, are not usually exposed to these kinds of claims.

Third-party liability coverage is generally available for an additional premium and should be seriously considered by companies which face these exposures.

Protect Your Business From Employment Practice Lawsuits

Considering the high risk and costs associated with employment-related violation charges and litigation, businesses need to take a proactive approach to legal and financial protection.

Once you’ve purchased a EPLI policy, take these 3 steps to adequately mitigate the risk of triggering an employee practices-related dispute or third-party allegation:

  1. Review your company’s internal management policies, hiring and human resource policies, and disciplinary procedures
  2. Clearly define and enforce your business’ policies on sexual harassment, equal opportunity, termination, employment at will, discrimination, employee discipline and performance evaluations
  3. Display or make easily accessible all employee manuals, labor laws and government bulletins

Provisions of a EPLI policy will differ from carrier to carrier – To learn more about Employment Practices Liability Insurance (EPLI), speak with your trusted Atlas Plus Insurance agent to discuss the details of your policy and overall risk management plan so you can close any gaps in your commercial insurance coverage.

By | 2017-05-31T21:31:26+00:00 September 26th, 2013|Prevention|