What is EPLI?
Employment Practices Liability insurance (more easily dubbed EPLI) is a type of management liability insurance that covers employers’ defense costs and losses from employment-related claims. While EPLI can cover a wide variety of claims, for the purposes of this article (and your attention span) we’ll be focusing on the most common EPLI claims in the industry.
So exactly what kind of claims does EPLI cover?.
Typically, these claims arise from allegations of different kinds of discrimination employers practice against their employees. These disputes are surprisingly common and the legal and regulatory frameworks of our federal and state governments give employees several ways to take action against their employers.
1. Failure to hire or failure to promote
One common claim that’s filed under EPLI is failure to hire or promote based on protected classes. These protected classes that are listed under the Americans with Disabilities Act (ADA) include, but are not limited to, deafness, blindness, diabetes, cancer and epilepsy.
It comes down to this: if an employee feels that there are not being considered for a position or promotion because of an ADA-protected condition, and they have proof of the mistreatment they are being given because of this condition, they can file a claim alleging the above.
Other common EPL claims that employers see are discrimination based on age, race and gender, which involves employees or potential employees feeling they are at a disadvantage because of their age, ethnicity or gender.
Age discrimination is currently an interesting one to which companies should devote their attention. America’s workforce is aging, so naturally age-related discrimination employment practices claims are likely to rise as well.
In fact, according to the US Bureau of Labor Statistics, workers aged 55+ will make up 25% of the US workforce by 2024, compared to 13% in 2001. And despite the aging workforce, a Hiscox report found that only 38% of workers received any form of age discrimination training in the past 12 months.
The point here is simple: employ age (or general discrimination) training in your company, and to ensure your company is protected for cases outside of your control, and work with Founder Shield to secure your company the best EPLI policy on the market!
While there have been a rise in EPLI claims in recent years, some employees can still feel discouraged to file a claim in fear of retaliation from their employers. But do not fear, employers! This is a claim that can be covered under your EPL policy as well.
Retaliation claims arise when an employee alleges discrimination based on a protected status (e.g., race, gender, disability) and, in retaliation for making such a claim, the employee is treated adversely, such as receiving a demotion or a cut in hours or pay.
For example, a female employee alleges that she keeps getting passed over for a promotion by her male counterparts because of her sex. In retaliation, management offers a promotion but cuts her hours.
Aside from discrimination claims, sexual harassment claims have been making a rise in recent years. The Equal Employment Opportunity Commission (EEOC) states that
“it is unlawful to harass a person (an applicant or employee) because of that person’s sex. Harassment can include ‘sexual harassment’ or unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.”
Sexual harassment is another common claim filed under EPLI, which should come as no surprise to most people reading this, with the rise of the #MeToo Movement. In fact, according to the National Law Review, in 2018 alone the EEOC recovered over $70 million in for those filings, making it one of the more common claims filed for under EPLI.
5. Wrongful Termination
Finally, wrongful termination is another frequent claim that’s filed under EPLI. While many employees feel wrong upon being terminated from their job, it takes certain, very specific qualifications for a “wrongful termination” scenario to apply. To qualify as wrongful termination, an employee’s contract of employment must be considered unlawfully terminated by an employer, which entails a breach of at least one, if not more, terms of the employment contract.
Why Should I Care?
So, why is it important for you, as an employer, to care about EPLI coverage? You may be saying to yourself, “I run a safe and fair workplace,” or “my employees are well-trained and none of this could happen to me.” But consider this: in the last 20 years, employee lawsuits have risen 400%, roughly 41.5% of those lawsuits being brought against private companies with less than 100 employees.
And, if you wind up going to court and losing, the average jury awards $217,000, which doesn’t even include court costs and legal fees. In addition, even if there is a frivolous case against you from a disgruntled employee, you will still need to fund the upfront costs to defend your company.
So, instead of risking spending tons of money on settlements and court costs, invest in EPLI for your company today and protect yourself from potential claims tomorrow!