Why Employment Practice Liability Insurance Is Needed To Protect Your Company

Risk Management

Employers are more likely to be sued by a worker than to have a fire or other disastrous loss. Small business owners may not have the time, energy, or experienced HR team to resolve disputes.

Employment Practice Liability Insurance (EPLI) is fundamental coverage for any business with even one employee. Age-old circumstances, and new ones, like an ongoing pandemic, have underscored the necessity of protecting your assets.

What is EPLI?

Employment Practice Liability Insurance indemnifies businesses against claims brought by employees. All employee allegations need to be recognized as a threat to the long-term viability of your company. Pearson Wallace can help.

What motivates an employee claim against businesses?

Legal entanglements begin with employment-related claims such as violation of rights under Federal Law including those contained in FMLA, The Fair Labor Standards Act of 1938, and The Equal Pay Act of 1963.

Doesn’t my liability policy cover employee claims?

In a word, no. The two most common business liability policies cover claims related to external events like theft and fire. Employment liability is a special policy that protects against internal threats to your organization.

Are you at risk?

In the current pandemic, vaccine mandates in the workplace have come to the forefront of employment practices. Unvaccinated workers often wish to remain so, and legal battles regarding their employment status will persist. The most common EPL claims are retaliation, sexual harassment, wrongful termination, and inappropriate employment conduct. Pearson Wallace’s insurance professionals will negotiate a policy designed to safeguard the future of your business.

What protections does an EPLI policy provide?

There are a multitude of possibilities for liability protections within this type of policy. Some are standard mechanisms that are common in EPLI policies; other coverages are optional endorsements and depend upon the specific needs of the business. Pearson Wallace is committed to crafting an individualized policy that makes sense for your business.

An Employment Practices Liability policy is designed to cover not only your organization; it also defends individuals working for, or on, the company’s behalf, such as managers and supervisors. Under federal law, employers have strict liability for a supervisor’s unlawful conduct.

This policy primarily covers cases of “failure to act” and miscellaneous workplace torts: (unintentional) wrongful acts against an employee. EPLI policies do not cover situations such as those involving injuries to employees, workers’ compensation disputes, instances of intentional employer wrongdoing, punitive damages, civil or criminal fines, defamation, or unpaid wages.

What do all these clauses mean?

Read on for a quick introduction to some standard coverages, or those you might want or need.

Duty to Defend: states that the insurer will provide the insured an experienced attorney to defend the business against covered claims. With legal counsel managing your defense your burden is reduced so you can run your business.

Retaliation coverage: covers charges of retaliatory actions toward an employee of a protected class who has filed a complaint. This is sometimes connected to a Workers Compensation claim.

No Hammer Clause: will protect you against entering into a damages settlement you don’t want. A hammer clause, also called a blackmail claim, consent to settlement, or settlement cap provision means the insurer can force a business into a settlement with an employee.

Wage and hour claims: employee misclassification claims and pay practice claims.

Mismanagement of employee benefits programs: also covered.

Who needs Employment Practice Liability Insurance?

Every business. If you have one or more workers, take steps to mitigate risk. Private and public companies, schools, retail.

How do I get a quote?

PWI helps keep your business solvent. Schedule a call with one of our agents to review your insurance needs now. NOTE: We don’t just write policies in the Berkshires or Western MA, we are licensed in MA, NH, VT, CT AND NY.

Whether your company is large or small, Pearson Wallace has your back!