EPLI insurance lawsuits are large and more common than you may know. Washington Resorts was recently forced to pay $570,000 to settle an Equal Employment Opportunity Commission (EEOC) sexual harassment lawsuit1. Not long afterward, Guidewire Software paid $200,000 for disability discrimination2 and Baltimore County paid $5,400,000 for age discrimination3. In fact, the EEOC reports close to 200 new charges every day4, many of them against small businesses.
Companies must be proactive regarding protecting against employee lawsuits. The examples provided may seem large, but EEOC settlements have averaged $258,678 over the last twenty-two years5, and those figures don’t even include defense costs. With employee discrimination lawsuits rising, opting for comprehensive EPLI insurance coverage can allow businesses to operate more securely.
EEOC settlements have averaged $258,678 over the last twenty-two years”
A Portion of a Larger Strategy
EPLI insurance should be only one part of a company’s larger plan to reduce the impact of employee lawsuits. Proper employment practices and managing employees fairly and equitably is not only the right thing to do, but also the best line of defense. In addition, employee training along with appropriate human resource strategies, processes, and documentation greatly reduce the likelihood of wrongful acts ever occurring. However, should those efforts fail, EPLI insurance is a strong backstop.
EPLI is a form of liability insurance covering wrongful acts stemming from employment. Some of the most frequent types of claims covered include wrongful termination, discrimination, sexual harassment, and retaliation after reporting an issue at work. Policies can also cover claims of inappropriate workplace conduct from supervisors and directors, including defamation, invasion of privacy, and negligent evaluation.
Though retaliation, wrongful demotion, and sexual harassment are well-known examples, refusal to hire is a growing trend. Courts are holding companies liable for not hiring certain individuals when such refusal is considered unlawful.
Policies vary, but typically cover wrongful acts such as:
- wrongful demotion, failure to promote, negative evaluation, reassignment or discipline, and wrongful refusal to employ
- wrongful termination
- wrongful denial of training, wrongful deprivation of career opportunity, and breach of employment contract
- negligent hiring or supervision
- retaliation for declining to perform an illegal act, filing a complaint, testifying, and whistleblowing
- libel, slander, invasion of privacy, defamation, and humiliation
- verbal, physical, mental, or emotional abuse
Ensure your EPLI policy covers acts of third parties, such as contractors and other service providers. Wrongful acts don’t need to come from within your company for liability to exist. For example, if an outside IT consultant harasses an employee, your company could be held liable if it knew about the issue and did not take proper steps to mitigate it.
A Few Last Points
- General liability insurance policies do not cover EPLI claims.
- EPLI is often wrapped together with D&O Insurance and other coverages in a management liability insurance policy.
Contact your Bankers Insurance agent with any questions regarding EPLI insurance. Not a client of ours? Let us earn your business! Each client is assigned a personal agent in our office, given their email address, and provided a phone number that rings right on their desk.
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- Washington Resorts Pay $570,000 to Settle EEOC Sexual Harassment Lawsuit
- Guidewire Software to Pay $200,000 to Settle EEOC Disability Discrimination Lawsuit
- Baltimore County Will Pay $5.4 Million to Settle Long-Running EEOC Age Discrimination Lawsuit
- Charge Statistics (Charges filed with EEOC) FY 1997 Through FY 2019
- EEOC Litigation Statistics, FY 1997 through FY 2019