Employment Practices Liability Insurance (EPLI)

This policy includes coverage for defense costs and damages related to various employment-related claims. The obvious ones are: allegations of Wrongful Termination, Discrimination, Workplace Harassment, Retaliation, Defamation and unfair hiring practices. More uncommon examples are breach of employment contract, negligent evaluation, failure to employ or promote, deprivation of career opportunity and wrongful infliction of emotional distress. Litigation for these types of claims can become very costly, even if you end up with a win. In addition to the financial hit, these types of claims can disrupt business, hurt employee morale, and damage the company reputation. Small businesses need this coverage as much and possibly more than large firms, because they may be less able to take the financial hit. Over 40% of all Employment Practices claims are brought against companies with less than 100 employees.

Coverage details and options:

Limits up to $5,000,000

  • Duty to defend
  • $100,000 sub-limit for class-action wage and hour claims defense (in most jurisdictions)
  • No hammer clause and retention waiver for early settled claim
  • Definitive third-party coverage
  • Enhanced reporting provision
  • Definition of loss includes punitive, exemplary, and multiplied damages, where permitted by law, in the venue most favorable to the insured
  • Coverage for sold subsidiaries, whether sold before or during the policy period, continues during the policy period for acts committed during time as a subsidiary
  • Bilateral extended reporting period available, any insured has right to purchase
  • Defense inside and outside the limit
  • Defense and settlement provision (hammer clause) softened to cover 75% of defense costs and loss after insured’s final refusal to consent to settle a claim
  • Independent contractors included in the definition of employee
  • Defense costs coverage for claims involving the modification of real property
  • Spousal liability extended to domestic partners
  • Front and back pay included in the definition of loss

Claim Examples:

  • 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.
  • 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 Act.
  • National origin discrimination: $250,000 An employee sued a company for national origin discrimination in violation of Title VII, which prohibits employment discrimination based on race, color, religion, sex and national origin. The employee alleged that he was wrongfully terminated when he complained to his supervisors that coworkers had made disparaging remarks relating to his ethnic background. The plaintiff was awarded $250,000 in damages.

Coverages and exclusions differ by carrier and by state. Specific concerns can be discussed with an underwriter.

800.635.4742, ext 98302