Employment Practices Liability Insurance, (EPLI)
This policy covers the insured entity and can cover the directors and officers if it is endorsed as such, and its employees from liability that arises out of employment practices. The liability exposures from employment practices usually come in the areas of wrong termination, discrimination, and sexual harassment and/or harassment in general. An employment practices act usually can mean an actual act or an alleged act.
There are many other employment acts that can lead to employment practices liability claims. Not all policies and coverages are the same so you as the client need to be careful in making sure you have the coverages that you are seeking.
Some of the other common wrongful acts are:
- a breach of a written or oral employment contract or even an implied employment contract can be grounds for an employment related wrongful act.
- Almost anything that is employment related that has been misrepresented by the employer can be being a wrongful act.
- Wrongful failure to promote for open positions or a wrongful demotion can also lead to wrongful employment practices.
- Violation of any federal and state discrimination laws such as sexual harassment is a wrongful act.
- Depriving somebody on a possible career opportunity can be viewed as a wrongful act.
- Harsh and severe discipline can be perceived as a wrongful employment act. Sloppy and negligent employee evaluations can also lead to claims from employees.
- Invading an employee’s right to privacy can also open Pandora’s Box for lawsuits.
- Defaming an employee via libel or slander will also invoke claims.
- Sexual or workplace harassment of any kind is illegal.
- Sometimes an employer basically has constructively discharged the employee and this can lead to a wrongful termination action.
- Anything employment related that has to deal with retaliation or humiliation of an employee grounds for a lawsuit.
- Negligence can arise from a wrongful reassignment of job or duties.
- Lastly any violation of federal, state or local civil rights laws is a wrongful practice.
Most employment practices liability policies have exclusions that do not cover directors and officers, unless specifically endorsed, or to cover employees for employment workers compensation claims. Usually these policies also exclude losses from employment related benefits, stock options, etc.
Employment practices liability insurance typically excludes several items within the coverages. A typical exclusion would be excluding anything to do with violating workers compensation laws. Usually there are exclusions dealing with employer employee labor contract disputes. Claims from violating the National Labor Relations Act or Fair labor standards act or the Occupational Safety and Health Act would be excluded. This policy excludes any acts arising out of lock-outs, strikes, labor negotiations, or collective bargaining agreements.
This policy also does not cover directors and officers wrongful acts, or any type of fiduciary liability actions, or Internet liability acts. There are separate and distinct policies to cover all those exposures. Third party, employment practices actions are usually excluded on this policy but you can usually added by endorsement. That would provide protection from wrongful acts by your employees to third parties. Typically you would see that where a sales person out in the field or some other employee is at your client’s place of business and they engage in some wrongful sexual or harassment practice. The premium for this type of policy usually starts at a minimum of $2,500 in annual premium, depending on the number of employees, your industry, the limits that you choose, and if you’ve had any prior claims.
