Employment Practices Liability Insurance (EPLI)

Protect your organization against costly litigation with EPLI.

What is Employment Practices
Liability Insurance (EPLI)?

EPLI covers an employers’ defense costs and losses from employment-related claims, including wage and hour disputes and allegations of discrimination, harassment, retaliation and unlawful termination.

Do you need employment practices liability insurance? The short answer is yes. If you have employees, you have liabilities.

Do You Know the Top 5 EPLI Best Practices?

Age discrimination settlements can cost your company millions. Watch to learn the top five employment liability best practices to follow in order to reduce the likelihood of age discrimination lawsuits occurring.

EPLI claims are on the rise

In the last two decades, the frequency of EPLI lawsuits has risen an astounding 400%. Employers must be vigilant when it comes to protecting themselves against claims of discrimination. Having the right EPLI coverage is a good first step. Use this checklist to help defend yourself.

Did You Know?

Companies large and small share the burden equally. As many as 41% of EPLI-related lawsuits are brought against private companies with less than 100 employees. Your business is three times more likely to be sued as the result of an EPLI claim than it is to experience a fire.

Avoid Risk: Understand Common EPLI Claims

The 5 Most Common EPLI Claims Employers Need to Know

When you have employees, you are exposed to a broad risk of exposures and liabilities. When you know the trends in EPLI claims, you can put together a plan to reduce that exposure. Learn about employment practices liability insurance trends that you can get ahead of such as fair pay, wage theft, worker classification, gender identity and restroom access, and effective compensation.

Fair Pay

• Does my organization have up-to-date job descriptions that include criteria for skills, education, seniority and responsibility?
• Does my organization assign consistent compensation to similar jobs performed by individuals with similar skills, education, seniority and responsibility?
• Are men and women assigned projects or clients with commission/bonus potential on a consistent basis?

Wage Theft

Wage denial or employee benefits that are rightfully owed to employees costs U.S. workers as much as $50 billion annually. Wage theft can include forcing employees to work “off the books,” not providing consistent meal and rest breaks and failure to pay overtime and earned tips. Clear, consistent policies and proper manager training can help you avoid wage theft.

Worker Classification

• Review federal economic reality and state labor tests, as well as IRS guidelines for classifying workers.
• Determine if you are classifying “contractors” and employees performing similar tasks consistently.
• Perform misclassification audits on a monthly or quarterly basis

Gender Identity and Restroom Access

• Permit employees to use the restroom associated with their gender identity.
• Don’t ask employees to provide medical or legal documentation of gender identity to access gender-appropriate restrooms.
• Provide additional single- and multi-occupancy, gender-neutral restrooms with lockable stalls.

Effective Compensation

Millennials currently make up 50% of the U.S. workforce. As that number continues to rise — it will reach 75% by 2025 — this segment is driving a dynamic shift in pay practices from a merit-driven system to a value-based approach. Employers who create a performance management program built on a results-driven culture that integrates compensation, rewards and performance will be well positioned to avoid potential EPL claims.

Employment Practices Liability Insurance FAQ's

Employment Practices Liability (EPL) insurance, also known as EPLI, covers employee claims made alleging their legal rights have been violated by the company, or a fellow employee or employees.

EPLI covers both the organization and its insured persons including officers, directors, employees and independent contractors for legal defense costs, settlements and judgements that arise from claims of:

• discrimination (e.g., age, sex, race), sexual harassment, hostile work environment, or bullying
• wrongful termination or wrongful discipline
• breach of employment contract, deprivation of a career opportunity, or failure to employ or promote
• mismanagement of employee benefits
• defamation or privacy violations, and
• violations of common employment laws.

Written demands, Equal Employment Opportunity Commission (EEOC) charges, or lawsuits may trigger coverage.

EPL insurance policies typically exclude wage and hour claims, as well as coverage for violations of Worker’s Compensation laws; the Fair Labor Standards Act (FLSA); National Labor Relations Act (NLRA); the Worker Adjustment and Retraining Notification Act; Occupational Safety and Health Administration (OSHA); and the Employee Retirement Income Security Act (ERISA). EPLI does not cover punitive damages or claims resulting from criminal acts.

All employers are subject to demands by prospective, current and former employees for actions alleged to be discriminatory, retaliatory or hostile. More recently, the #MeToo movement has focused board member attention on employment practices and insurance coverage for the company and its director and officers.

EPL coverage will vary depending on the number of employees, coverage limits and the breadth and depth of a business’ anti-discrimination policies, as well as the number and severity of past discrimination claims and EEOC complaints or lawsuits.

Enforcement of the Fair Labor Standards Act (FLSA) and similar state laws have resulted in huge damages from employee misclassification issues, such as classification of an employee as full time versus part time, independent contractor versus employee, or salaried versus exempt.