Why EPLI Coverage Is So Important Right Now

November 26, 2019

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image credit: Pair Srinrat/shutterstock.com

In today’s #MeToo corporate climate, no company, large or small, is immune to the lawsuits that are becoming more commonplace. Lawsuits can mean costly legal and attorney fees that will hit your company’s bottom line. In some instances, these costs can decimate a business, with no hope of recovering. The average cost for defending and settling employment law cases is $160,000. How can you protect your business against such possible future claims? Look into Employment Practices Liability Insurance (EPLI).

EPLI provides coverage for employers and/or their employees against wrongful acts arising from the employment process. If you’re under the impression your General Liability policy already covers such acts, think again. Moreover, coverage for third-party employment practices liability claims is precluded under commercial general liability (CGL) policies by means of CG 21 47 (7/98). This standard exclusionary endorsement — which is routinely attached to CGL policies — specifically excludes coverage for "harassment" and "discrimination."

Most EPLI policies provide coverage for four major categories of employment-related offenses, for claims brought by both your employees and claims (for Discrimination and Harassment) brought by third parties against your employees:

Discrimination

Although EPLI forms can vary in their definition of “Discrimination,” it typically refers to decisions to hire, fire, promote, or grant tenure on the basis of race, color, religion, creed, age, sex, national origin, disability, appearance, sexual orientation/preference, or pregnancy as it relates to the workplace.

However, there are some exceptions to this coverage. Some policies contain “catchall provisions” or “omnibus clauses,” which cover claims alleging discrimination on the basis of race, color, religion, creed, age, sex, national origin, disability, appearance, pregnancy, sexual orientation or preference, or claims made by "any other protected classes" of persons.

Harassment

EPLI provides coverage for harassment, both sexual and non-sexual. Sexual harassment is the more common work-related offense. It encompasses unwelcome sexual advances, verbal or physical conduct, or request for sexual favors that:

  • Are either explicitly or implicitly made a condition of employment
  • Are used to make decisions that affect a person’s employment
  • Interfere with job performance
  • Create an intimidating, hostile, or offensive working environment

Wrongful termination

Under an EPLI policy, the term “wrongful termination” is normally defined as the “actual or constructive termination of the employment relationship in a manner that is wrongful and against the law or that breaches an implied agreement to continue employment." If left undefined, it is actually in the insured’s best interest because the definition serves to restrict the scope of coverage available.

 

"All other" workplace torts

EPLI also includes forms that can provide coverage for various claims alleging actions other than discrimination, wrongful termination, or harassment.

Here is a list of commonly covered workplace torts:

  • Constructive discharge
  • Defamation, libel, slander
  • Infliction of emotional distress or mental anguish
  • False arrest or false imprisonment
  • Invasion of privacy
  • Wrongful discipline
  • Wrongful demotion
  • Negligent/wrongful evaluation
  • Failure to enforce company policies and procedures
  • Defamatory statements in connection with an employee reference
  • Negligent supervision
  • Negligent hiring
  • Coercion
  • Failure to grant tenure
  • Wrongful deprivation of a career opportunity
  • Retaliation
  • Wrongful failure to employ or promote

Of course, simply having the right coverage is not enough. Employers must ensure their corporate culture is one where discrimination and harassment of any kind is not tolerated. Training, employee education, and employee handbooks with published policies regarding acceptable behavior are all a good start.

Interested in learning more about EPLI? Contact TSIB today!

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Topics: Employer's Liability Insurance

Written by The TSIB Team

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