What Is Employment Practices Liability Insurance (EPLI)?

What Is Employment Practices Liability Insurance (EPLI)?

Employment Practices Liability Insurance (EPLI) is a type of insurance coverage designed to protect employers against claims made by employees or former employees related to various employment-related issues. These claims can arise from a variety of scenarios, and EPLI typically covers legal expenses, settlements, and judgments resulting from such claims. Your general liability policy likely has an exclusion for EPLI incidents. So a separate policy is required. It's also important to note that defense costs for EPLI are typically inside the limit of insurance. 

Common types of claims covered by Employment Practices Liability insurance include:

  1. Wrongful Termination: Claims arising from an alleged unfair, discriminatory, or retaliatory termination of an employee.

  2. Discrimination: Claims based on alleged discrimination in hiring, promotion, compensation, or other employment practices based on factors such as race, gender, age, religion, disability, or other protected characteristics.

  3. Harassment: Claims related to workplace harassment, including sexual harassment, and failure to take appropriate actions to address harassment complaints.

  4. Retaliation: Claims where an employee alleges retaliation after engaging in protected activities, such as filing a complaint or participating in an investigation.

  5. Employment Misrepresentation: Claims related to misrepresentations made by the employer about the terms and conditions of employment or the nature of the job.

  6. Failure to Promote: Claims alleging failure to promote an employee based on discriminatory or unfair practices.

  7. Wage and Hour Violations: Claims related to violations of minimum wage, overtime laws, or other wage and hour regulations.

  8. Invasion of Privacy: Claims alleging invasion of employee privacy, such as improper monitoring or unauthorized disclosure of personal information.

  9. Negligent Evaluation: Claims based on an employer's alleged negligent or unfair evaluation of an employee's performance.

Third Party Employment Practices Liability Insurance (Third Party EPLI) is a specialized type of insurance coverage that extends the protection of traditional EPLI beyond claims brought by employees and former employees. While standard EPLI typically covers claims made by your own employees against your company, Third Party EPLI covers claims brought by non-employees against your company.

It's important to note that EPLI usually doesn't cover intentional criminal acts, bodily injury, property damage, or other non-employment-related claims. Depending on how the policy is written, it may not cover Third Party EPLI claims. The scope of coverage will vary depending on the policy, so employers should carefully review the terms and conditions of their specific EPLI policy with their independent agent to understand what is covered and what is not. This insurance can be essential for businesses to protect themselves from potentially costly lawsuits and legal expenses resulting from employment-related claims.


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