I'm a Small Business - Why Do I Need Employment Practice Liability Coverage?
Businesses of all sizes and operations are susceptible to Employment Practice Liability claims, hereinafter called "EPLI". Small business are especially susceptible.
employment practice liability -
PROTECTING BUSINESSES
EPLI is essential coverage because all employers are going to be making important decisions , i.e, hiring practices and compensation.
Businesses of all sizes and operations are still susceptible to EPLI claims (especially small businesses; they usually don’t have an HR department, and if they do, sometimes are very disorganized).
Employment laws are constantly evolving (some state laws are more expansive than federal laws).
Employers must defend themselves (The defense cost alone can be very expensive for a small business owner).
What It’s All About
Liability coverage for businesses
Provides defense & liability indemnity within the limit
Responds to wrongful employment behavior in the workplace (doesn’t matter if charges are real, groundless or false – 100% of all charges require defense). Policies are usually a duty to defend coverage form.
Coverage Overview
Protects employers from claims brought by employees alleging:
Discrimination
Harassment
Wrongful Termination
Retaliation and Other Wrongful Acts
Coverages Claims brought by:
Full-time, par-time, temporary, seasonal, and leased employees
Volunteers | Applicants
Independent Contractors
Coverage includes:
Liability damages and defense costs
Punitive Damages where insurable by law
Third party violations coverage
Claim Scenario #1
(Age Discrimination):
An insurance agency terminated a file clerk for repeated poor job performance. Despite repeated attempts by the employer to rectify the misfiling of client files, the employee continued to make serious clerical errors at the agency. Employer terminated the employee. Employee filed a claim alleging age discrimination.
(Despite claim being groundless and employer having proper documentation, it still settled)
$15,000 Settlement and $9200 Legal Fees
Claim Scenario #2
(Third Party Racial Discrimination)
A family shopping at a supermarket alleged that store security followed them throughout the store. The family claimed the store security guard illegally harassed the family in what they believed to be a case of racial profiling, as others in the store were not subject to same scrutiny.
[case was groundless]
$8,000 Legal Fees
QUESTIONS:
1. Question: I own a Small “Mom & Pop” shop, little to no employees. The employees I do have are family members or friends. Do we still need the coverage?
Answer: EPLI includes 3rd party coverage – allegations of harassment or discrimination brought by non employee clients, customers or vendors may be covered. So a business with a small number of employees can be exposed to claims brought by Third parties.
2. Question : I have a Lessors Risk Policy (Commercial Building with: 5 or more apartments, mixed use building with retail and apartments, just a commercial building) – Does it cover discrimination against the applicant or the tenant by the landlord?
Answer: Yes, it may, if the policy includes Third party coverage (some carriers automatically include it). It responds to allegations of harassment or discrimination brought by customers , vendors or non employees. The potential tenant would be considered a “customer”.
"Disclaimer: The content contained in this blog is for informational purposes only. It should not be considered insurance advice since every client's needs and circumstances are different.. Bergen Insurance Group, LLC makes no representation as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All statements represent the sole opinion of the author and is provided on an as-is basis. For an actual description of all coverages, terms and conditions, refer to your insurance policy.”
