Employment Practices Liability Insurance

As a business owner, you have succeeded and grown in your established field. Once you reach the business size that has employees, you may, at some point, face a lawsuit alleging discrimination, wrongful termination, or any number of violations of employee rights and federal or state labor laws. Roughly one out of every ten employers face such a charge. In states with labor-friendly laws, the odds are even higher. Employment Practices Liability Insurance (EPLI) is designed to protect against such lawsuits’ substantial cost. Some EPLI policies also include prevention and risk management tools to help you improve and maintain compliance with applicable laws to reduce risk.

According to the most recent biannual report on employment lawsuits by Hiscox, a representative study of 1,214 closed claims from small to medium-sized enterprises with fewer than 500 employees showed that 24% of employment charges resulted in defense and settlement costs averaging $160,000. On average, these cases took 318 days to resolve. Cases that go to jury have significantly higher costs and time.

Labor laws can be complicated, and even good employers can unintentionally break them. Employment Practices Liability Insurance protects against labor law violations, including those caused by other employees. EPLI helps protect you against a broad range of labor law missteps and violations, including:

  • Sexual harassment
  • Discrimination based on gender, age, race, religion, or sexual orientation
  • Illegal background checks
  • Unpaid interns
  • Violating wage and hour laws
  • Employee misclassification as exempt or non-exempt or as contract workers
  • Wrongful termination
  • Benefits mismanagement
  • Breach of employment contract

If you currently have a Business Owner’s Policy (BOP) or a Commercial General Liability policy, you may be able to add EPLI as an endorsement. Coverage is also available as a stand-alone policy. Some factors affecting the cost of EPLI coverage include how many people you employ, what policies, procedures, and practices you have in place, and whether you’ve been sued before.

Hitchings Insurance agents are experienced in employee benefits and knowledgeable about human resources. We understand the importance of EPLI coverage and will help you find the proper protection to mitigate losses or costs if you face a charge.

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