What is Employment
Practices Liability Insurance
(EPLI)?
Employment Practices Liability Insurance, also known as EPL insurance is a type of liability insurance that covers wrongful acts arising from the employment process of a worker. EPLI covers all the management personnel, directors, and officers, and the workers as the insured. With this policy in hand, it could cover claims such as wrongful termination, sexual harassment, retaliation, and discrimination.
However, this policy has standard general exclusions, including bodily injury, property damages that are related to working operations. And intentional acts for the benefit of claim payments. If you are worried about your employee procuring an accident while doing his work, you should consider purchasing Workers' Compensation Insurance. Get a Free Worker's Compensation Quote.
Usually, coverage of EPLI is written on a claims-made basis. Meaning, the incident has to occur before the expiration of the policy. It is because some employees took months or even years to take courage before reporting the alleged incident.
This type of insurance could help pay the cost of defending the insured. Also, other legal costs or defense costs to settle the claim are applicable for coverage.
Coverage of Employment Practices Liability Insurance
Lawsuits for alleged employment-related discrimination are grouped into two categories:
- Disparate impact discrimination claims
- Disparate treatment discrimination claims
Disparate Impact Discrimination Claims
Disparate Impact Discrimination Claims involve the neutral policy of the business that affects a particular class of individuals. For example, one institution requires all police officers to be at least 5 feet to 10 inches in height.
Some female applicants may allege this requirement as unfair and discriminatory. Because the average height of a woman is significantly shorter than 5 feet and 10 inches tall. Therefore, this requirement can be used to file a Disparate Impact Discrimination Claims.
Disparate Treatment Discrimination Claims
Disparate treatment discrimination claims mainly focused on deliberate and illegal discrimination against an individual. And not against a class of individual as is the case in disparate impact discrimination claims. It includes discrimination, such as failing to promote an otherwise more than qualified worker due to its national origin and race.
Wrongful termination is a deed of terminating a worker in a procedure that is way against the law. Also, wrongful termination is comprised of so-called constructive discharge. With this situation, the worker maintains its job. However, it's work environment is intentionally made difficult, which leads to the worker to leave their job. They tend to leave their job to protect his or her emotional and physical well-being. For example, the worker is forced to work overtime for considerably lower pay than what he is earning from before.
Sexual harassment is comprising of a variety of manipulation, including requests for sexual favors, and sexual advances. Additionally, visual, physical, and verbal conduct of sexual abuse is also a type of sexual harassment. Sexual harassment has types that are most common in workplace entities.
Types of Sexual Harassments that EPLI Covers
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Hostile Environment Sexual Harassment
Hostile environment sexual harassment is an act of sexual misconduct that conceives an offensive working place. Additionally, a hostile environment that could lead to obstruction of the worker's performance. These sexual misconducts include but are not limited to threats, offensive sensual jokes, comments, and intimate pictures are a frequent basis. Usually, these pictures were used as evidence if such claims were filed.
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Quid Pro Quo Sexual Harassment
Quid Pro Quo sexual harassment happened when a significant sexual contact was made as a condition of its employment. Meaning the employee is forced to yield sexual favors in order to keep its job and retain some benefits and privileges.
For example, a manager commits quid pro quo sexual harassment if he is obtaining sexual favors from one of his employees. And the employee does the favor in exchange for promotion or raise on the employee's wage and hourly rate. If the employer is proven to be accepting sexual favors, he will be automatically strictly liable. Thus, the employer is not allowed to defend himself from a quid pro quo sexual harassment claim.
- Higher insurance premium in the future
- Difficult to attract top employees due to the company's negative public image.
- Increased deductibles on the future premiums
- A high potential of double lawsuits due to external and internal publicity
Hard Costs
Hard costs include settlement fees, attorney's fees, and jury awards, given the case is not settled between the two parties.
Soft Costs
Soft cost is any type of cost that is not considered as direct construction cost.
Claims related to alleged retaliation have increased over time. Usually, alleged claims such as retaliation have two distinct parts. The first portion is discrimination against the employee's protected status, including the worker's gender, race, and disability. The second part is that in retaliation for such a claim, the worker was treated negatively.
For example, after the worker performed poor work, the employee was demoted. Following the degradation, the employee files a claim alleging that she has been demoted due to racial discrimination. Shortly after the employee filed the complaint, she was persistently ignored or shunned by her co-workers and bosses.
Thus, with this example, the court of justice could rule that there was no discrimination based on race. Only the shunning did constitute retaliation —after the discrimination claim has been made.
In some instances, work-related claims do not just end in alleged discrimination, sexual harassment, wrongful termination, and retaliation.
Sometimes, claims that are related to inappropriate workplace conduct could deem into a higher amount of settlements. and damage rewards than the claims following discrimination, wrongful termination, sexual harassment, and retaliation. Because the compensation for this claim will not be just based on the employee's loss of salary. Improper Workplace Conduct may also need to cover the employee’s injury due to the inappropriate conduct
- Illegal requests of access for the social media account of the workers.
- Invasion of privacy
- Defamation
- Misrepresentation and fraud
- Intentionally inflict emotional distress to workers.
- Bullying
- Unlawful breaching of employment contract
- Coercion
- Unlawful and wrongful discipline
- Deprivation of career opportunity
- Failure to promote the employee and,
- Negligent evaluation
- Mismanagement of employee's benefits.
Acts of Inappropriate Workplace Conduct
Nowadays, employment work-related claims against businesses are remarkably rising. Fortunately, some of the massive corporations could deal with employment-related lawsuits because of its protection, which is substantial coverage of Employment Practices Liability Insurance. However, some business owners are prone to lose their business due to lacking a considerable amount of EPLI coverage.
Here at InsureHopper, our affiliated agents could help business owners find affordable Employment Practices Liability Insurance to help them minimize their risk of losses following employment claims. Get a Free Quote from different insurance companies to compare and start protecting your business against unexpected losses.