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As employment related claims continue to rise, businesses must evaluate all available options to attempt to mitigate costs and risks associated with these claims. One common way to address these issues is to obtain an Employment Practices Liability Insurance policy, commonly referred to as EPLI.
This post provides a brief overview of the purpose of EPLI coverage and the potential advantages to obtaining an EPLI policy.
What is EPLI?
EPLI policies provide businesses with coverage against claims for many employment based causes of action that are generally not covered under a standard Commercial General Liability policy. Although there is no uniform EPLI policy, EPLI policies generally cover claims for alleged:
-Discrimination (based on a host of protected classes);
-Failure to promote;
-Negligent evaluation; and
-Invasion of privacy.
Some polices will also cover claims for retaliation taken against employees for purportedly exercising their protected rights and breach of employment contracts. In many instances, even if these claims are excluded from coverage, a business will still receive a defense in connection with the claims as they are generally asserted in connect with one or more of the above-referenced causes of action covered under the policy.
Pros to Obtaining an EPLI Policy.
EPLI Policy Limitations.
While EPLI policies cover a wide breadth of employment based claims, they do not cover all employment related claims. EPLI policies generally do not cover:
– Wage/hour and overtime claims (e.g., claims filed under the FLSA);
-Violations of securities laws (e.g., Sarbanes-Oxley);
-Collective bargaining related activities under the National Labor Relations Act (NLRA);
-WARN Act claims; and
-Violations of non-compete and confidentiality agreements.
Furthermore, EPLI policies generally do not cover civil fines, penalties or punitive damages.
An EPLI policy can offer significant advantages in protecting against employment claims, especially for small and medium-sized businesses with limited human resources staff. This year when you begin the annual insurance renewal process, consider asking your insurance broker about available EPLI options. Many major insurance carriers provide policies at relatively economical rates. It could be a cost saver or, at a minimum, help your legal and human resources departments sleep easier at night.
Written by Employment Law