What is Employment Practices Liability Insurance, and Why Kansas and Missouri Employers Need It.

By Dan Bukaty

What is Employment Practices Liability Insurance?
Employment Practices Liability (EPL) insurance shelters businesses from the financial consequences associated with a variety of employment-related lawsuits brought by past, present, and potential employees. By adding a third-party coverage endorsement, EPL insurance can help protect businesses against legal conflicts that may occur between employees and third parties, such as vendors or customers.

There continues to be a growing trend of employment-related lawsuits resulting from the improper hiring, managing, and terminating of employees. The Equal Employment Opportunity Commission processes more than 100,000 complaints each year alleging workplace wrongdoing. The current economy and the willingness of disgruntled employees to sue presents an increasing risk to business owners.

Why is Employment Practices Liability Insurance Necessary?
Employers of all types and sizes can be exposed to employment-related lawsuits. Smaller employers are often at greater risk because they don't have a dedicated HR staff to provide constant oversight. From the initial new-hire interview, through training, promotions, reassignments, and even retirement, employers are at risk of running afoul of the many and various federal and state labor laws. The largest majority of these claims are proven groundless. Still, they are expensive to defend. Having EPL coverage can help protect employers from the potential financial and productivity losses incurred when fighting these types of real or alleged allegations.

How Well Do You Know These Federal Labor Laws?

How Does Employment Practices Liability Insurance Respond to Claims?
Employment Practices Liability insurance typically covers both the cost of any judgment or settlement, plus defense costs, up to policy limits, and subject to the policy deductible. Also, most insurance carriers provide free HR training programs and complimentary HR consulting services. When claims arise, insurance carriers can quickly step in with well-seasoned legal counsel to help insureds negotiate a favorable outcome.

What Types of Claims are Covered by an Employment Practices Liability Policy?

Employment Practices Liability Claims Examples

Pregnancy Discrimination
An employer experienced a downturn in business. Several employees were let go, including a pregnant woman about to take four months of maternity leave. She filed a lawsuit alleging wrongful termination and pregnancy discrimination. A jury awarded her $500,000 plus $175,000 in attorney fees. The employer incurred an additional $200,000 in defense costs.

Sexual Harassment
An employee was terminated when she failed to show up for work for two days. The employee sued for sexual harassment alleging her co-workers had made sexually explicit comments to her and had inappropriately brushed up against her. The employer settled the matter for $100,000.

Retaliation
An employee was terminated for falsely accusing his employer of improper medical billing practices. Even though the employer was found innocent of any improper billing, it still faced a retaliation claim from the employee for the termination. The employer incurred defense costs of $150,000 in defending and eventually settled the matter for $30,000. Defense costs in this matter were high due to the need to review voluminous billing records during discovery.

Disability Discrimination
An employee notified his employer he had developed a degenerative bone disease and arthritis. He requested he be allowed to telecommute as a reasonable accommodation for his disability. His request was denied. The employee filed suit alleging disability discrimination. A jury awarded him $45,000 plus $225,000 in attorney fees.

Age Discrimination
An employer terminated a 50-year employee for performance issues and customer complaints. In his place, the employer hired someone younger. The former employee filed a charge with the EEOC alleging that he was terminated because of his age and replaced with a younger employee. He then filed suit in federal court. The employer settled the matter for $125,000. It also paid an additional $75,000 in defense costs.

Take Action Today to Buy Employment Practices Liability Insurance
Every day, your company is at risk of being second-guessed by the Equal Employment Opportunity Commission (EEOC), Department of Labor (DOL), disgruntled employees, and opportunists.  Even unfounded complaints of workplace wrongdoing can paralyze your company and damage your brand. Choose Employment Practices liability insurance to protect your company from potential employment-related lawsuits. Kansas & Missouri policyholders insured through Bukaty Property & Casualty Services have unlimited access to knowledgeable Employment Practices Liability professionals. We help our clients understand the risks they face, and we provide proven solutions that advance favorable outcomes. To learn more, email us at service@bukatyagency.com.

Useful Links for Additional Information on Employment Practices Liability Insurance

 What is Employment Practices Liability Insurance (EPLI).

Employment Practices Liability Insurance - Everything You Need to Know

Bukaty Companies - HR Consulting & Training Services