E.P.L.I. Insurance, commonly referred to as “Employer’s Liability” or simply as “E.P.L.I.” is NOT the same thing as Worker’s Compensation. Worker’s compensation insurance protects you from the costs of work-related injuries or illnesses suffered by your employees while “E.P.L.I.” insurance protects you against claims brought by your employees regarding work practices and issues such as sexual harassment, discrimination, hostile work environment, and so on. The fact is that the number of lawsuits filed by employees against their employers has been rising for many years. While almost all business owners are familiar with general liability and property insurance, unfortunately, very few of them have ever heard of Employment Practices Liability Insurance (E.P.L.I.). As already stated, this type of insurance covers businesses against claims made by workers who allege that their legal rights as employees of the company have been violated. This is NOT the same thing as general liability or worker’s compensation and few, if any, business owner policies contain E.P.L.I. coverage.
While most suits are filed against large corporations, it is s simple fact that no company is immune to such lawsuits. E.P.L.I. insurance provides protection against many kinds of employee lawsuits, including claims of:
- Sexual Harassment
- Hostile Work Environment
- Wrongful Termination
- Breach of Employment Contract
- Negligent Evaluation
- Failure to Employ or Promote
- Wrongful Discipline
- Deprivation of Career Opportunity
- Wrongful Infliction of Emotional Distress
- Mismanagement of Employee Benefit Plans
E.P.L.I. policies will typically pay for and protect your company against the costs of defending a lawsuit in court and for resulting judgments and settlements. The policy covers legal costs, whether your company wins or loses the suit, although these policies typically do not pay for punitive damages or civil or criminal fines.
What are some of the exposures you face as an employer?
Wrongful Termination Claims:
More than any other aspect of the employment relationship, the discharge of an employee has the potential to result in litigation. E.P.L.I. policies cover claims by former employees alleging that he or she was wrongfully terminated. Some policies also cover claims of “constructive discharge” by employees who claim that they could no longer tolerate the work environment and were compelled to resign or retire.
Policies can also cover claims by employees who charge that they were the subject of an adverse employment decision solely because they disclosed an unfair or illegal practice by the employer. This is one of the few policies to specifically cover whistleblower claims. Sometimes these matters are referred to as “Section 132″.
Wage & Hour Claims:
The FLSA (Federal Labor Standards Act) sets the minimum wage and maximum hour/overtime requirements. The Wage and Hour Division of the Department of Labor manages the administration of the FLSA. FSLA actions are frequently NOT covered without specific E.P.L.I. insurance policies.
Policies can also cover claims by current, former or prospective employees who charge that they were the victim of employment-related discrimination on the basis of any federal, state or local law that prohibits discrimination by employers on the basis of:
- National Origin
- Sexual Orientation
- Marital Status
- Disability or Handicap
The definition of discrimination can include any future changes in those laws such that any additional categories of discrimination against employees will be included within the coverage afforded by a policy. Claims by employees who charge that they were discriminated against for exercising their rights under worker’s compensation, COBRA or other similar laws, can also be covered.