Employment Practices LIability
What employers need to know about EPLI and D&O Coverage
There are many forms of workplace discrimination:
Sexual Harassment – Other forms of Harassment – Invasion of Privacy
Failure to Promote – Wrongful Termination – Defamation – Etc.
Employment Practices Liability will pay for legal costs, possible settlements and damages
to the employee that filed the claim.
What is the difference between EPLI and D&O
If a prospective, present or past employee sues the company for wrongful employment practices:
EPLI (Employment Practices Liability Insurance) protects the COMPANY
D&O (Directors & Officers Insurance) protects the DIRECTORS, OFFICERS, OWNERS
While every company should consider EPLI coverage, supplementing with D&O is increasingly important for:
Non Profits – Executives that make hiring, firing and discipline decisions – Companies seeking funding – Companies with distressed financials Companies considering mergers or acquisitions – Companies looking to acquire top executives or investors
If Employer LOSES
May have to pay
- Lost wages and benefits
- Attorney and Court Costs
- Employee’s legal fees
- Compensatory Damages (Damage to Reputation, Pain and Suffering)
If Employer WINS
Employment related claims tend to be very lengthy in the court system.
- Attorney costs can be very high
- Court costs
For businesses of all sizes:
Average settlement is about $75,000
Average jury award is about $250,000
Defense averages about $120,000 per claim
If a business loses its case, it must also pay for the claimant’s legal fees – averaging $200,000
Source: The Hartford
Preventive Measures
Factors that impact Employment Practices Risk
Number of Employees – Turnover – HR Practices
Industry (retail, hospitality, and higher customer interacting professions)
OnBoarding & OffBoarding
- Make sure all processes are vetted and properly documented
- Raise and hour protocols are up to date
- Consult with an attorney if you are terminating multiple people at once
Poor Performance
- Make sure each incident is properly documented siting examples and explaining how the employee was reprimanded
- Get your managers and supervisors on board with documenting
HR Procedures
- Have written policies and procedures on how company handles harassment
- Provide training to employees annually on harassment in the workplace
Options for Protection
Many General Liability or Business Owner Plans (BOP) offer an endorsement for EPLI coverage. D&O coverage must be purchased as a separate policy.
EPLI limits generally range from $10,000 to $250,000 without additional underwriting.
$250,000 to $1,000,000 may be available with some underwriting questions.
We would typically look to a monoline EPLI policy for limits $500,000 +