Employment practices liability insurance, or “EPLI,” is a type of management liability insurance. If you hire employees or independent contractors, you take the risk that a dispute will develop between you and them.

You will have to consult your policy documents to confirm exactly what coverage your Employment Practices Liability insurance provides but here are a few scenarios that typically would and would not be covered:

What EPL insurance covers:

Wrongful termination
Occurs when an employee’s termination breachers one or more terms of a contract of breaks a rule of employment law.
Discrimination
unfavourable treatment of an employee, such as failure to promote, based upon sex, race, age, or disability.
Sexual misconduct or harassment
involves unwanted sexual advances or obscene remarks to an employee.
Defamation of character
this happens when a false statement is written or spoken about an employee with the intention of harming their reputation.
Invasion of privacy
an employee alleges that an employer unreasonably searches their private space , or conducts surveillance in areas where employees expect privacy, such as a dressing room or bathroom.

What EPL insurance does NOT cover:

Bodily injury
This is usually covered by General Liability
Contractual liability and breach of employment contract claims
This is usually covered by E&O
Criminal and fraudulent acts
Violation of employment laws and other regulations

EPL insurance claim examples

An age discrimination lawsuit was brought by a highly paid 62 year old sales representative, who was employed by the YounGuns. He was terminated for not meeting his sales quotas. Despite layoffs and cutbacks at the company, there was no documentation that shows the sales rep was a poor performer. The suit was for $500,000 but was settled for $100,00 plus $15,000 in defense costs

A group of Indian descent applicants sued a private retail store for ethnic and racial discrimination after learning they had all been denied employment strictly based on their race and ethnic background. The defense cost and settlements amounted to over $200,000.

Several female employees at a dev shop, CodingAndStuff, complained that their CEO was sexually harassing them. As required by law, the President proceeded to investigate the complaints. Within one month of the start of the investigation and without apparent backing of the board members, the President was terminated by the CEO under the pretext of performance issues, despite the fact that he was given a raise a few months earlier. The President filed a separate wrongful termination suit due to the conflict between the Board of Directors and the CEO. The settlement and Defense Cost exceeded $1,000,000

The Assistant to the Chief Financial Officer was terminated for divulging confidential information to staff regarding impending company layoffs. A suit was brought by the assistant for retaliation and sexual harassment as she claimed the CFO always made suggestive comments and improperly touched her. Defending the CFO cost over $150,000.

Get A EPL Quote

If you’re interested in learning more about a customized EPL insurance program, you can always reach out to a member of our team by phone 646.854.1058 or email info@foundershield.com or get a quote below!