Employment practices liability insurance (EPLI) insures businesses against claims by workers that their legal rights as employees of the company have been violated.
Some insurance companies provide EPLI coverage as an endorsement to their Business Owner's Policy (BOP). An endorsement is a provision that changes the terms and conditions of the insurance policy. Other insurers offer EPLI as a stand-alone coverage.
EPLI provides 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 the type of business, the number of employees, and various risk factors such as whether the company has been sued over employment practices in the past.
EPLI policies will insure the company against the costs of defending a lawsuit in court and for court judgments and settlement of lawsuits. The policy covers legal costs (including attorney fees), whether the company wins or loses the lawsuit.
EPLI policies typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies such as workers’ compensation are usually excluded from EPLI policies.
An employer should educate and train its managers and employees to prevent such problems and to decrease the likelihood of claims and lawsuits by:
• Implementing effective hiring and screening programs to avoid discrimination in hiring.
• Publishing corporate policies in employee handbooks so the policies are clear to everyone.
• Informing employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor or another employee—and making sure supervisors and employees know what behavior is unacceptable in the workplace.
• Documenting everything that occurs when such an issue arises—including the steps taken to prevent mistreatment of employees and efforts to correct any mistreatment.
In Texas, Employment Practices Liability Insurance (EPLI) provides businesses with coverage against claims made by employees alleging violations of their legal rights. EPLI can be offered as an endorsement to a Business Owner's Policy (BOP) or as a standalone policy. It covers a range of employee lawsuits including sexual harassment, discrimination, wrongful termination, and other employment-related issues. The cost of EPLI depends on various factors such as the size of the business, the number of employees, and the company's litigation history. EPLI policies cover legal defense costs and settlements, regardless of the lawsuit's outcome, but typically exclude punitive damages, civil or criminal fines, and liabilities covered under other insurance policies like workers' compensation. To mitigate the risk of claims, Texas employers are advised to implement thorough hiring practices, clearly communicate corporate policies, educate employees on unacceptable behaviors, and document all incidents and preventive measures related to employment practices.
