Employment Practices Liability Insurance (EPLI)

Do You Need EPLI Insurance? Here Are Some Facts.....

• Employee lawsuits have risen approximately 400% over the last 20 years
• Wrongful termination suits have risen more than 260%
• 41.5% of these lawsuits were brought against private employers with fewer than 100 employees
• When employee lawsuits go to trial, the employee wins more than 63% of the time
• The average cost to settle an employee lawsuit out of court is $75,000
• The average amount awarded to employees in jury trials is $217,000
• Average court costs and legal fees when settled out of court: $15,000
• Average court costs and legal fees when the case is dismissed: $50,000 to $75,000
• Average court costs and legal fees when the case goes to trial: $125,000

What You Need to Know about EPLI Insurance.

A type of liability insurance covering wrongful acts arising from the employment process. The most frequent types of claims covered under such policies include: wrongful termination, discrimination, sexual harassment, and retaliation. In addition, the policies cover claims from a variety of other types of inappropriate workplace conduct, including (but not limited to) employment-related: defamation, invasion of privacy, failure to promote, deprivation of a career opportunity, and negligent evaluation. The policies cover directors and officers, management personnel, and employees as insureds. The most common exclusions are for bodily injury (BI), property damage (PD), and intentional/dishonest acts. EPLI policies are written on a claims-made basis. The forms contain "shrinking limits" provisions, meaning that insurer payment of defense costs—which are often a substantial part of a claim—reduce the policy's limits.

What Does EPLI Insurance Cover?

EPLI insurance will provide compensation for losses caused by employee lawsuits, including all incurred court costs and legal fees. While frivolous lawsuits commonly happen, many petitioners do have legitimate claims. Even if your company does not intentionally violate employment laws, you still can be held liable. For this reason, it is particularly important to have a well-written employee handbook and policies and procedures manual available, and to ensure that employees adhere to the established guidelines.

Some examples of reasons that a lawsuit may be filed against your company include the following:

• Wrongful termination: This is the most common claim brought against employers in lawsuits. The EEOC states that is it illegal to fire an employee on the basis of their age, race, national origin, sex, or because of a disability. It is also illegal to terminate employment because an employee did any of the following:
  • Took a leave of absence under the Family Medical and Leave Act (FMLA).
  • Reported wrongdoings to authorities, as dictated by the Whistleblower Protection Act.
    
• Harassment: These lawsuits most frequently involve sexual harassment, but can also include cases of workplace violence or bullying. The harassment may come from senior administrators, supervisors or co-workers. If the employee can prove that the company was aware of the problem and did nothing or made inadequate attempts to remedy it, the company may face fines and penalties if the case is brought to trial.
• Discrimination: These cases involve situations where an employee is turned down for promotions or advancement opportunities on the basis of age, sex, race, national origin or disability. Employees typically win these cases when they are able to show a trend toward discrimination within the company.
• Breach of contract: If your company has a contract with an employee and you violate the terms of that contract, the employee may file a claim against you. An employee who can prove that damages resulted from this breach is likely to win.
• Emotional distress: Employees who feel that your company fosters a hostile work environment or who feel subjected to overly stressful situations in the workplace may file a lawsuit against your company. These cases are more difficult to prove in a court of law, but the resulting legal fees may still prove burdensome.
• Other violations: Some other potential employee lawsuits that EPLI insurance can protect you from include wrongful denials of workman's compensation, statute violations, wage and hour violations, loss of consortium, drug-testing false-positives, libel and slander.

  Contact Delaney Insurance Agency, Inc. today to discuss protecting you and your business.

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