Unfortunately, in our increasingly litigious society, the question human resources professionals face today is not, “Will we get sued by an employee?” but rather, “When will we get sued by an employee?” To mitigate the heightened likelihood of lawsuits from disgruntled workers, more and more employers are looking into the potential of employment practices liability insurance, or EPLI. As an HR professional there are important things you need to know about what EPLI policies do and how they can protect you and your business.
What Does EPLI Do?
Employment practices liability insurance is a specialized kind of coverage which exists to defend an employer against losses from lawsuits that charge wrongful employment practices. It is a form of gap insurance and was created specifically to address litigation concerns arising from the Americans with Disabilities Act and Title VII claims against the Civil Rights Act of 1964.
It provides protection in case of a discrimination, breach of contract, wrongful discharge, harassment, discrimination or other lawsuits filed under these or similar legal acts. Such suits are usually not covered by general liability insurance or by liability insurance held by directors or officers. It covers legal and court costs accrued from defending these suits, including if necessary the cost of securing the services of an attorney to defend the case.
What is Excluded from EPLI Coverage?
Your individual EPLI policy will list all exceptions and exclusions from the coverage it provides. Such exclusions may vary from policy to policy but generally include such things as those that arise from employment contract, National Labor Relations Act (NLRA) violations, Worker Adjustment and Retraining Notification Act (WARN) violations, COBRA violations and claims related to the Employee Retirement Income Security Act (ERISA).
In addition, EPLI generally does not cover punitive damages. In fact, in some areas public policy forbids insuring employers who are directly liable for such damages. This means regardless of how your policy is worded, if a judge or jury awards damages of this nature, you are responsible for paying them out of pocket.
EPLI coverage is becoming common to the point where it is standard operating procedure in this ever more litigious age. The risk of loss from employment practices claim is huge, and a good human resources department will be well-acquainted with what EPLI can do for your company.
However, insurance does not replace employment practices. As an HR professional it is your job to make sure that you have sound employment practices in place so that when a lawsuit does come up, your company is well-positioned to defend against it. Indeed, many EPLI policies cannot even be initiated unless you have strong basic employment standards in place already. Be sure you have an employee handbook, you properly investigate all incidents and you include arbitration and mediation policies.
If you would like to strengthen your HR employment policies and procedures to defend against employment lawsuits you may face, we can help. Take a look at our and get in touch with us today for an evaluation of your HR procedures.