EPL Insurance

Employment practices liability insurance (EPLI) protects businesses if employees believe the company has breached their rights. A wide range of employee claims, including sexual harassment, wrongful termination and breach of contract, are included in this category. EPLI is a critical component of financial security for small businesses that hire, manage or terminate employees. It pays for legal fees incurred in the event of an employee lawsuit.

What is EPLI?

Employment practices liability insurance (EPLI) protects companies against claims made by employees that their legal rights have been breached.

What Does EPLI Cover?

Your company may provide employee benefits such as health or vision insurance. You need an attractive benefits package to attract the best and brightest employees in a competitive marketplace. However, if the benefits administrator or someone else in the company mismanages employee benefits, it can open you up to employee lawsuits.

Employee benefits liability insurance can shield your organization from employee lawsuits.

Sexual harassment: Sexual harassment comes in many forms, and it doesn't just mean that one person makes sexual advances toward another. An unwelcome sexual advance, whether verbal or physical, can be a form of sexual harassment if it impacts a person's job. Sexual harassment can happen when someone's performance at work is negatively affected by specific actions or behaviors. 

Discrimination: According to the U.S. Equal Employment Opportunity Commission, discrimination occurs when someone is treated differently or less favorably than others. Discrimination involves unfair treatment because of race, color, religion, gender identity, sexual orientation, national origin, disability, age or genetic information. 

Wrongful termination: A termination is wrongful if it breaks state or federal laws or the employer's written or verbal termination criteria. Most states allow at-will employment, which means neither the employer nor the employee requires a reason to terminate the relationship. While an employer is not required to provide a cause for discharging an employee, terminations are considered under certain conditions.

Breach of contract: When one side fails to uphold its end of the bargain as specified in the agreement, the employment contract is breached. When employers breach employment contracts, they are subject to employee lawsuits.

Negligent evaluation: According to the International Risk Management Institute Inc. (IRMI), a negligent evaluation claim can be brought against an employer that gives a negative employee evaluation (excessively negative, unfairly low or otherwise inaccurate) that does not reflect the employee’s true level of performance.

Failure to employ: Wrongful failure to employ is a category of employment claim in which an employer is accused of refusing to hire an applicant who is qualified to do a certain job. Occasionally, claims alleging wrongful denial of employment are combined with an accusation of discrimination.

Failure to promote: Failure to promote is illegal when it is motivated by a person's gender, race, color or national origin, ethnic origin, religion, physical or mental disability, medical condition, age (if over 40), sexual orientation, gender identity or expression, ancestry, HIV/AIDS status, marital status, military or veteran status, political affiliation or status as a victim of domestic violence, stalking or sexual assault.

Wrongful discipline: Wrongful discipline is an employment-related claim in which an employee alleges that they were disciplined for a violation that never occurred or that the employee committed the infraction but the discipline meted out was excessive.

Deprivation of opportunity: Wrongful deprivation of a career opportunity is an employment-related claim in which the employer is accused of failing to give specified types of training that will improve the employee's career.

Wrongful emotional distress: Employees suffer from emotional distress resulting from workplace discrimination, harassment or a hostile work environment. Emotional distress damages are frequently awarded in wrongful termination, retaliation and sexual harassment lawsuits.

Benefits mismanagement: When managing a benefits program, a simple clerical error could cause an employee to be denied critical coverage such as health insurance when it is most needed. EPLI covers benefits mismanagement to protect against employee lawsuits brought because of benefits administration mismanagement.

What Types of Businesses Need EPLI?

Industries that are uniquely suited for the benefits of EPLI coverage include:

Retail establishments: From teenagers to the elderly, most retail establishments use a workforce that includes people of all ages. Various employment issues can arise that retail storeowners must be aware of, including wrongful termination and age discrimination.

Restaurants: Employees in the foodservice industry may be subjected to gender discrimination, harassment, retaliation and unfair wage practices. Lawsuits can be brought against companies that deny employees promotion opportunities or fail to accommodate employees and customers with disabilities.

Warehouses: Warehouse employees have job duties involving heavy lifting and other types of physical labor. Warehouse employees may feel discriminated against because of working conditions, harassment or wrongful termination.

Small corporations: Many small-business owners avoid EPLI insurance because they believe it is prohibitively expensive. However, a small-business owner's protection against sexual harassment, discrimination or termination cases is provided by EPLI, and the protection it provides is much too valuable to do without.

Financial entities: Employees in the financial sector have lofty goals in terms of their professional development. They have high standards for their employer as well. A common complaint in this industry is being denied advancement opportunities or suffering unfair treatment. Other prevalent complaints include harassment, ageism and gender discrimination.

Benefits of EPLI

Employee claims can interrupt operations, lower morale, harm your brand and result in significant financial losses. Fortunately, employment practices liability insurance can protect businesses from potential employee lawsuits. The following are some of the benefits of EPLI.

Risk-management assistance: Employers who apply basic risk controls are better able to prevent employment-related disputes. Insurance companies often offer risk-management and human resources advice. If you use these services, an employee lawsuit against your organization is less likely.

Legal assistance: Employers with comprehensive EPLI policies can get help from legal resources as a policy perk, which can be important if you need help quickly.

Added protection for directors and officers: Many organizations require EPLI in addition to directors and officers (D&O) insurance to protect themselves from employment-related claims. As a result, the limits on your D&O insurance will not be exhausted unnecessarily by a separate policy that covers wrongful terminations, discrimination, invasion of privacy and other employee-related litigation.

Payment for judgments or settlements: Any judgments and settlements against your company can be reimbursed by EPLI. Lawsuits are covered by this policy regardless of whether you win them.

Compare EPLI 

To help you find the best fit for your business, Benzinga compiled a selection of the top EPLI providers for you to consider. Look through the list provided below to begin your search for employment practices insurance.

Do You Need EPLI?

The simple truth is that if you have employees, EPLI coverage is essential. Present and former employees can make an employment claim against you, regardless of the size or niche of your company.

You can count on Benzinga to offer dependable insurance and financial advice, so be sure to come back often for guidance in making the most informed financial decisions possible.

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