Employment Practice Liability Insurance (EPLI)
However, while these insurances cover many aspects of risks that may arise during business operations, they do not provide compensation for all incidents.
I would like to discuss one such coverage that is not typically included in business insurance, which is Employment Practice Liability Insurance (EPLI). Listed below are the types of incidents that EPLI provides compensation for. Please review to determine if it is necessary for your business:
- Discrimination: Claims by employees who believe they have been discriminated against based on age, race, gender, religion, national origin, or disability within the company.
- Harassment: Claims by employees who have experienced harassment (including sexual harassment) within the company.
- Retaliation: Claims by employees who believe they have been retaliated against by the company/employer for raising complaints regarding discrimination or harassment.
- Failure to Promote: Claims by employees who believe they have been unfairly denied promotion opportunities.
- Breach of Employment Contract: Claims by employees who believe the company has violated terms of employment contracts.
- Wrongful Discipline: Claims by employees who believe they have received unfair discipline or punishment from the company.
- Invasion of Privacy: Claims by employees who believe their privacy rights have been violated by the company/employer.
- Wage and Hour Violations: Claims by employees who have not received proper wages.
- Emotional Distress: Claims by employees who have suffered emotional distress due to the company/employer's actions or policies.
If incidents of these types occur, the coverage necessary to compensate for such events is not typically included in business insurance. Employment Practice Liability Insurance (EPLI) covers the legal expenses required to resolve these incidents and, if necessary, compensation costs within the coverage limit.
Although the frequency of incidents is increasing, EPLI is not automatically included in business insurance. There are two ways to obtain coverage: by adding it as an option to business insurance or by obtaining a standalone policy. While standalone policies may have higher premiums compared to adding options to business insurance, they offer broader coverage.
EPLI coverage limits can easily reach up to $1,000,000, and premiums usually vary based on the number of employees. Additionally, Third-Party Liability Insurance, which can be added to EPLI, is also important. While the incidents mentioned earlier occur between employees and the company, similar incidents can occur between the business and clients. Third-Party Liability Insurance compensates for such incidents.
For example, if a customer entering a business is mistakenly perceived as a thief, they may file a discrimination claim against the business, alleging discrimination based on race. In such cases, Third-Party Liability Insurance within EPLI would provide compensation for this incident.
Employers may still face accusations from employees or customers, even if they treat them fairly. Insurance serves as a precaution against unforeseen incidents. The legal costs associated with handling such incidents independently can be very high.
