Employment Practices Liability (EPL)

Employment related claims impact organizations of every size, in every industry.

With exposures leading to employment practice claims increasing over the years due to economic conditions, demographics and the ever-evolving legal environment, it is important to protect your bottom line.

What is Employment Practices Liability (EPL) Insurance?
Coverage for defense costs and damages related to various employment-related claims including:

• Allegations of Wrongful Termination
• Discrimination
• Workplace Harassment
• Retaliation

EPL coverage is usually written on a claims-made basis. This means the incident resulting in the claim had to occur during the coverage period. Because employment claims often come months or even years after the alleged incident, an employer might be vulnerable if the insurance coverage was dropped or if tail coverage (liability insurance that extends beyond the end of the policy period) wasn’t purchased.

What does it cost?
The cost of insuring your business for EPL coverage depends on a variety of factors, such as the number of people you employ, if you’ve had prior suits lodged against the company, the percentage of employee turnover, and if you have established rules and practices in place.

Why do I need it?
Employers, big and small, are subject to Federal, State and local laws regarding employment practices. Exposures leading to employment practice claims have increased over the years. This can be attributable to economic conditions, demographics and the ever evolving legal environment.

Coverage highlights

• Damages
• Defense Costs & Legal Fees

Potential areas of concern

• You’re at risk of an employment claim from the moment you interview a prospective employee. For example, if you choose not to hire the interviewee, that individual could allege some sort of discrimination.
• If you hire that person and later fire them due to poor attendance, that discharged employee could claim wrongful termination.

Actual claim scenarios
National origin discrimination – $250,000
An employee sued a company for national origin discrimination in violation of Title VII, which prohibits employment discrimination based on race, color, religion, sex and national origin. The employee alleged that he was wrongfully terminated when he complained to his supervisors that coworkers had made disparaging remarks relating to his ethnic background. The plaintiff was awarded $250,000 in damages.

Discrimination and retaliation – $317,500
A plaintiff alleged that the insured discriminated against him on the basis of his age and disability. The plaintiff further alleged that he was terminated in retaliation for filing a workers compensation claim and for complaining about discrimination. The defendant contended that the plaintiff was not able to perform the essential functions of the job and that he was discharged for legitimate, non-discriminatory and non-retaliatory reasons. Travelers spent more than $175,000 defending the case and paid $142,000 in settlement costs.