Delivery Service EPLI Initiative Answers to Frequently Asked Questions
- What is Employment Practices Liability Insurance?
Employment Practices Liability Insurance (EPLI) provides defense and indemnity protection against claims arising from the employer/employee relationship. The policy shields employers – plus all current, former, and prospective employees, directors, officers, and even the corporate entity – against a broad spectrum of employment-related claims.
- Isn’t coverage for employment-related claims provided under a General Liability policy?
No. For the most part, General Liability (GL) policies specifically exclude coverage for such allegations as employment discrimination, breach of contract, and wrongful discharge.
- My client has already instituted a very robust set of human resources policies and procedures. They don’t view EPLI as a necessary coverage.
Your client is not alone. Recent studies show that roughly 7 out of 10 businesses don’t purchase this valuable coverage. This is a critical mistake that can have devastating financial consequences for employers. Keep in mind that even the most frivolous or groundless allegations need to be defended.
Agents should make it a point to inform their clients about the exposure. This is more than just an altruistic gesture; failure to do so can open up the agent to an E&O claim
- You mentioned how the lack of EPLI coverage could have an adverse financial impact on a company. Could you be more specific?
Recent events – such as COVID and the #MeToo movement – have thrust the employer/employee relationship into the public spotlight. Among the more recent trends:
- A common misconception is that employment-related lawsuits only target large corporations. In reality, about 41.5% of such actions are brought against firms with fewer than 100 employees.
- The financial damage of an employment suit can be dramatic; the cost of an out-of-court settlement averages $75,000. Typical jury awards can exceed $217,000 if the case goes to trial. There is other – if less quantifiable – consequences for a firm involved in such a suit. They include lost productivity, propensity for other employees to pursue “copycat” actions, and adverse impact on the company’s reputation.
- Over the last 20 years, employee lawsuits have risen by more than 400%
- What are the key features of your EPLI product?
The wrongful employment acts covered under the policy include allegations of Discrimination, Wrongful Termination, Harassment (both sexual and workplace), and Retaliation. Legal defense is provided to protect employers against asserted violations of ADA and Wage & Hour laws.
The ability to sue a company for of unlawful discrimination or harassment is not limited to employees. Individuals outside of the firm (clients, customers, vendors, etc.) can also initiate legal proceedings as a result of these actions. Our EPLI product covers allegations brought by third parties.
- What other aspects of the product should be reviewed with my client?
Here are some other important points:
- Advocacy Defense. True litmus test for any insurance policy is how well it responds in the event of a claim. All EPLI losses are handled by Wilson Elser – an internationally recognized law firm with over 45 years’ experience employment practices litigation.
- Coverage Territory. The form offers worldwide coverage…so long as the suit is filed in the United States.
- Consent to Settle Provisions. Some EPLI products have rather stringent consent to settle provisions. This policy clause makes the insured personally responsible for additional out-of-pocket costs or litigation expenses beyond what the carrier recommended in its original settlement offer. Our policy contains a 75/25 “soft hammer” clause whereby the carrier and insured share the incremental costs beyond the original settlement offer.
- Can you help my client protect themselves from EPL-related loss?
While it is impossible to fully “bullet-proof” a company against an employment practices claim, we do offer tools to help mitigate the risk. They include:
- Hotline. All policyholders are given access to a toll-free hotline. This facility – staffed by legal professionals – allows companies to get advice on human resource-related incidents before they become claims.
- Employment Practices Self-Audits. Our insureds are also provided with access to an on-line toolkit that allows them to review the adequacy of HR policies and procedures. Topics covered include Recruitment, Hiring, and the Termination Process.
This support is offered at no additional cost to the policyholder.