Employment Practices Liability Insurance Frequently Asked Questions
What is employment practices liability insurance (EPLI)?
EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated. The number of lawsuits filed by employees against their employers has been rising. While many suits are filed against large corporations, no company is immune to such lawsuits. Unfortunately, Auto Dealers have been a frequent target of these suits.
Recognizing that all companies now need this kind of protection, some insurers provide this coverage as an endorsement to their Garage Liability insurance policy. Other companies offer EPLI as a stand-alone coverage.
EPLI can provide protection against many kinds of employee lawsuits, including claims of:
- Sexual harassment
- Discrimination
- 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
The cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past.
Also, your employment screening and risk management policies and procedures are given great weight by the underwriters.
The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements.
The policy covers certain legal defense costs, whether your company wins or loses the suit.
Sexual harassment lawsuits have increased by over 130% from 1991 to 1997, an average of 15% annually.
Policies also typically do not pay for punitive damages or civil and criminal penalties.
Liability covered by other insurance policies such as workers' compensation are excluded from EPLI policies.
To prevent employee lawsuits, educate your managers and employees so that you minimize problems in the first place:
Create effective hiring and screening programs to avoid discrimination in hiring.
Make sure you are complying with all employment hiring laws such as the Fair Credit Reporting Act.
Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.
Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor.
The use of an outside firm for the reporting of claims is highly recommended.
The U.S.supreme court has ruled that companies must be proactive in their efforts to avoid harassment and discrimination.
It is not enough to simply make it a part of your company policy.
Make sure supervisors are properly trained and know where the company stands on what behaviors are not permissible.
Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.
For A Glossary of Employment Practice Liability insurance terms: Click Here
Criminal Codes by State: Click Here
For questions regarding Human Resources or employment regulations you may want to contact Jennifer McBennett of Seay Management Consultants at (407) 426.9484 or email jennifer@seaymanagement.com