In 2015, a food and beverage director at Omni Hotel in Corpus Christi filed a lawsuit alleging that her employer repeatedly discriminated against her by paying her less than her male counterparts.
After the U.S. Equal Employment Opportunity Commission found her complaint invalid and an initial court dismissed her claims, she appealed to a federal district court where a jury awarded her $25 million in punitive damages.
Employment practices liability insurance, or EPLI, protects your business if an employee alleges wrongful employment practices such as discrimination, wrongful termination, or breach of contract.
In this guide, we’ll explore:
- What is employment practices liability insurance?
- What does EPLI cover?
- Who needs EPLI?
- How much does EPLI cost?
- How quality control programs impact your EPLI
- How to get EPLI coverage
- The EPLI claim process: What to expect
- Get the employment liability coverage you need from a partner you trust
What is employment practices liability insurance?
Employment practices liability insurance protects your business from potential financial losses arising from employment-related lawsuits.
What does EPLI cover?
EPLI covers legal costs, settlements, and judgments associated with employment-related claims brought against you. It typically covers alleged wrongful acts by you as an employer, including:
- Sexual harassment
- Wrongful termination
- Breach of employment contract
- Failure to promote
Who’s covered by EPLI?
EPLI covers the employees you’d expect, including directors and officers, and full-time, part-time, and seasonal employees. Your coverage can also include individuals often excluded from other types of policies, such as:
- Independent contractors
- Temporary employees
- Owners and their family members
- Third parties
Be sure to tell your agent if you want your coverage to extend to any of these individuals. This broader EPLI coverage can be valuable if any of the above have hiring and firing responsibilities, or are otherwise exposed to employee disputes.
What is not covered by EPLI?
There are a few things typically excluded from employment practices liability coverage, including:
- Intentional or criminal acts
- Bodily injury or property claims covered by your general liability policy
- Wage and hour disputes, unless specifically added to the policy by endorsement
- Violations of the Fair Labor Standards Act, unless specifically added to the policy by endorsement
- Injuries and illnesses covered by your workers’ compensation policy
What is and isn’t covered can vary, so it’s important to be familiar with your specific policy details. At POWERS, we go through a thorough assessment with all clients to ensure the policies they buy fit the risk they face.
EPLI vs. professional liability insurance
While EPLI focuses on employment-related claims, professional liability (E&O) insurance protects you from client claims of negligence or errors in the professional services you provide.
EPLI vs. employee benefits liability insurance (EBLI)
EPLI and EBLI are similar in both name and function – but there are some key differences. Both coverages relate to your interactions with your employees, but they cover different things.
EPLI covers employee claims related to employment practices, while employee benefits liability insurance covers claims of mismanagement of employee benefit plans, like health insurance or retirement accounts.
Who needs EPLI?
Most businesses, regardless of size, can benefit from EPLI coverage. If you have one employee, you face the risk of an employment claim. However, the more employees you have, the higher this risk becomes.
We recommend EPLI particularly for businesses operating in industries with higher employment practices liability risk, like:
- Hospitality and restaurants
- Financial services
- Retail and customer service
How much does EPLI cost?
The cost of employment practices liability insurance varies depending on a number of factors, including:
- Business size and number of employees
- Policy limits and deductibles
- Claims history
- Risk management practices
Because insurance rates can vary, it’s important to work with a risk manager to find the best solution. Businesses with complex risk profiles will find the most value from partnering with an independent insurance agent that will help them proactively manage risk for long-term success.
How equal employment opportunity (EEO) programs impact your EPLI
Robust equal employment opportunity programs can positively impact your EPLI premiums. This could include:
- Anti-discrimination and zero-tolerance harassment policies
- Diversity and inclusion initiatives
- Discrimination and harassment training for employees
- Reasonable accommodation policies
- Complaint investigation procedures
By demonstrating a commitment to fair employment practices, you can foster a positive workplace culture and prevent EPLI claims, reducing your premiums over time.
How to get EPLI coverage
An experienced agent should recommend insurance policies for you based on your business’s unique exposures and risk profile. If your agent hasn’t recommended EPLI but you think it could be a good fit, ask about it.
Your agent will find the best options based on your risk assessment and present them to you. At POWERS, we cover the following questions when presenting clients with coverage options:
- Does the pricing match the client’s expectations?
- Does the policy have the appropriate limits, deductibles, and coverage enhancement endorsements?
- What are the carrier’s financial stability, reputation, and claims process like?
- What added value can the carrier offer the client – e.g. HR resources and a legal help hotline?
At POWERS, we work with some of the best business insurance carriers in the U.S. There’s no need to spend hours researching providers – we’ll make recommendations tailored to your business.
The EPLI claim process: What to expect
If you need to file an EPLI claim, don’t panic. Thousands of claims are filed every day.
The claim process is different for every carrier and agency, so we recommend learning your insurance agent’s process before you need to file a claim. That way, you’re prepared when the time comes.
Here’s the claim process for POWERS clients:
- Contact your POWERS account manager or claims handler before you call the insurance carrier.
- A POWERS expert will provide a claim consultation to help you evaluate the severity of the claim, your deductible level, contractor referrals, and what to expect going forward.
- With your approval, your account manager will submit the claim to the carrier on your behalf. In some cases, you might choose not to file a claim.
- We’ll pass along your claim number and your adjuster’s contact info.
- You’ll work directly with your adjuster to provide relevant evidence, like incident reports, complaint letters, employment contracts, employee handbook, and personnel files.
- If your claim is covered, the carrier will offer a settlement amount to the claimant or provide a defense if a lawsuit is filed against you.
- The claim will be resolved through a settlement agreement or a court decision.
During this process, your POWERS claims consultant will be with you every step of the way.
Get the employment liability coverage you need from a partner you trust
Many businesses can benefit from product liability, but how can you make sure you get the right coverage and the most value from your policy? Who will guide you through the claims process when an incident happens?
Any agent can write you an insurance policy. But you don’t need any agent – you need a business partner with proven risk control expertise.
At POWERS, we spent more than 30 years developing what we call “the POWERS Process.” We use this five-step framework to get a deep understanding of your business and make recommendations that not only give you the right insurance coverage but also help you make smart decisions to grow your business.
We know from decades of experience that a one-size-fits-all approach to risk management simply doesn’t work. We’ll take you through a series of discussion points to drill down and uncover exposures you’ve never considered. Then, we’ll build a plan to safeguard your business and look toward the future.
|Insurance as a stand-alone product||Insurance integrated into your customized risk management plan|
|Multiple, run-of-the-mill applications to assess your risk||Customized, proprietary assessment for a deep understanding of your risk|
|Focused on up-front cost savings||Focused on long-term cost control|
|Salespeople who write your policy and ghost you until renewal||Partners who help you make smart, growth-focused business decisions|
|Say they care about your business’s success||Show you we care by setting your risk management plan in motion|