Employment Practices Liability Insurance

Employment Practices Liability Insurance

What is EPLI?

Employment Practices Liability is an area of United States law that deals with wrongful termination, sexual harassment, discrimination, invasion of privacy, false imprisonment, breach of contract, emotional distress, and wage and hour law violations. The Equal Opportunity Employment Commission and the Dept of Labor, along with individual state compliance, interprets and enforces these laws.

The world is a very different place than it was a few years ago.  The need for this coverage is directly impacted by the economy and devastating costs associated with claims. No entity is “too small” for this coverage as it’s only takes one employee to file a claim. State laws can also be broader than the federal laws and can often times be very difficult to decipher due to lengthy definitions. For many employment related laws in Texas, companies with 1 or 4 employee minimums can be sued (again, depending on the law). Moreover, claims can also arise from third parties (not your own employees) as well. In 2012, there were just shy of 1 million claims filed in the US, up from 2011. Your company most certainly carries general liability in the event of a slip and fall or bodily injury. For the second year in a row, there were more documented EPLI claims than general liability claims. This coverage is truly essential to protecting your business as litigation costs alone can be devastating.

  • Texas’ average EPLI claim defense costs in court have been documented at  $50,000 and is expected to rise this year.
  • A private company is more likely to have an Employment Practices claim than a General Liability or property claim.
  • 3 out of every 5 employers are sued by former employees
  • 65% of all companies that have ever fired an employee have been hit with an employment related lawsuit
  • In 2011, the median award for all plaintiff verdicts was over $200,000
  • Over 40% of all Employment Practices claims are brought against firms with less than 100 employees
  • Texas State laws can be found at http://www.twc.state.tx.us/crd/facts.html

Where do claims happen?

  • Discrimination/harassment (sex, age, weight, ethnicity, race, religion, pregnancy, disabilities, sexual harassment, hostile work environment, etc)
  • Wrongful termination or failure to hire
  • Fair Labor Standards Act (wage an hour claims)
  • Retaliation
  • ADA (Americans with Disabilities Act)
  • USERRA (Uniformed Service Employment and Reemployment Rights Act)
  • GINA (Genetic Information Nondiscrimination Act

How do I protect my business and make the right decisions to stay claim free?

Get a quote today! Many policies include access to professional HR Firms & Consulting companies that are included to support you in your business activities for no additional cost.  These services can help you with an employee handbook, answer questions and offer advice on how to handle day to day situations you may be faced with.

Claim Examples

Discrimination/Wrongful Termination: A female Marketing

Manager took leave subject to the Family Medical Leave Act

(FMLA) upon the birth of her first child. She was terminated

one month after her return to work for poor work performance

and the company eliminated her position. There was no

documentation of poor performance prior to her FMLA leave.

Third Party Liability: A blind customer entered a local

grocery store with his guide dog. The manager of the meat/

deli department asked the customer to take his dog outside

because he thought the dog presented a health hazard. The

customer sued for violation of the Americans with Disabilities


Internet/Email Liability: An employee who intended to email

a pornographic joke to only a single recipient accidentally

pressed the wrong button, sending the off-color joke to

the company’s entire workforce. The employer made

the employee send a follow-up email apologizing to the

workforce. Two months later, during a company downsizing,

an employee sued for a hostile work environment and used

the email as evidence.

Spousal Liability: The president of a company was being

threatened with a sexual harassment suit by one of his

employees. The president decided to transfer most of his

assets into his wife’s name in order to avoid being personally

sued and subjecting his personal assets to any possible

claim settlement against him. The employee later sued the

president for sexual harassment. The suit named both the

president and the president’s wife because of her ownership

interest in the president’s assets. These assets were later

subjected to the settlement provisions.

Retaliation: An African American employee of a barge repair

and painting firm complained to management that some of

his coworkers were using racial slurs and jokes.

His supervisor transferred him to an inside warehouse

position at a reduced hourly rate stating that it would be

better for him to work alone rather than be exposed to those

workers. The employee later sued for discrimination and

retaliation for reporting the discrimination.

Bri with Apogee Insurance Group was kind enough to put this material together for me.   Apogee helps us with policies requesting higher limits and stand alone products for professional, EPLI, data breach et

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