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Return To: Employment Practices Liability Insurance (EPLI) – The Ultimate Guide
In recent years, the rise in employees filing lawsuits against their employers has been staggering.
Most of these complaints were made against large corporations, but any company can come under fire from employees who feel that their rights have been violated.
As such, smaller companies now feel the need to know more about these claims and how they can be avoided.
Here, we’ll discuss what EPLI is, along with various examples and how they can be best handled.
What Is EPLI?
EPLI stands for Employment Practices Liability Insurance and is a type of insurance related to management liability that covers an employers’ defense losses and costs due to employment claims.
This kind of insurance covers a vast range of claims — from sexual harassment, wrongful termination, failure to promote or employ, and more.
Below are some of the most common claims that employers face in their respective industries.
Examples of EPLI Claims:
| EPLI Claim Type | Number Of Claims | Percentage |
| Retaliation | 39,469 | 27.28% |
| Sex | 24,655 | 17.04% |
| Disability | 24,605 | 17.01% |
| Race | 24,600 | 17.01% |
| Age | 16,911 | 11.69% |
| National Origin | 7,106 | 4.91% |
| Color | 3,166 | 2.19% |
| Religion | 2,859 | 1.98% |
| Equal Pay Act | 1,066 | 0.74% |
| Genetic Information | 220 | 0.15% |
| Total EPLI Claims 2018 | 144,657 |
When do EPLI claims rise? There can be several answers to this question. Typically, employment-related claims increase when cases of the following are found:
Retaliation
This kind of case revolves around an employee who shouts discrimination or harassment, claiming that because they wanted their voice heard regarding these behaviors, they were punished.
A retaliation claim is often linked to a cut in the employee’s pay or a demotion resulting from having their opinion known. The employer might have made this decision if they didn’t want a work situation to become public.
Harassment
Harassment claims refer to a wide range of workplace harassment, with sexual harassment being the most common. In the last few years, claims for this have significantly increased, and many are due to unwelcome sexual advances.
Other forms of sexual harassment include sexual physical or verbal harassment and requesting sexual favors in the workplace.
Discrimination
An employee can file a claim against an employer if they feel that they are experiencing discrimination at work due to their race, age, ethnicity, or gender.
Because the country’s workforce is rapidly aging, many companies can expect that age-related discrimination claims will also rise steadily.
Failure To Promote or Hire
The reasons for these claims have a wide range of variations but are often related to a protected class of workers listed under the ADA (Americans with Disabilities Act).
All it takes is for an employee to think that they weren’t hired or weren’t promoted due to their disability. If an employee (or potential employee) has epilepsy, diabetes, blindness, or deafness and felt they were mistreated, then they have the right to file a claim against a company.
Invasion of Employee Privacy
This is another kind of claim which companies are now seeing more of. An invasion of employee privacy occurs when they feel that their right to privacy has been violated at work.
Such claims can take shape through security cameras within the company workplace or through an employee’s computer.
Wrongful Termination
There are times when an employee may feel that they were fired illegally, and because of this, they can file a claim for wrongful termination.
Before one can qualify to make this claim, there needs to be evidence of being unlawfully removed from work. This means that proof needs to be provided where one or more terms of the employee’s contract had been breached.
While it may not be easy for employees to win in these claims, just the legal process behind this can be long and will cost serious money for most employers.
Pregnancy and Lactation Accommodation
Under the Pregnancy Discrimination Act, any employee in the middle of pregnancy should work so long as the employee can still perform her duties.
Should an employee feel that she was fired because of her pregnancy, she is able to file claims against the company.
There’s also a federal law that obligates employers to accommodate mothers who breastfeed at work (covered by the FLSA, also known as the Fair Labor Standards Act). Through this law, a company that doesn’t provide mothers time to express milk in a private area can be sued by their employees.
Illegal Background Check
Every company has standards for screening employees as part of the FRCA, or Fair Credit Reporting Act.
Even if employers and companies have the right to look into credit reports and have access to criminal background checks, they need to ensure that a potential employee has provided them with written consent first.
Why Should Employers Observe EPLI Claims?
EPLI claims are essential, especially to employers — even those who think they’re running a fair and safe practice.
A company may even have well-trained employees who always get the work done, but consider these statistics: in just the last 20 years alone, a rise of 400% in employee lawsuits has been recorded.
Around 41.5% of these lawsuits have been filed against smaller companies, where there are less than 100 employees.
Those who take on claims in court and lose the battle lose an average of $217,000, not including legal fees or court costs.
EPLI coverage costs will depend on the kind of business you own, the number of employees working there, and the risk factors involved (like if the company has been taken to court in the past due to employment practices).
Having a policy behind your company protects it against the costs of defending a lawsuit in court, whether you win or lose.
To ensure that your company avoids employee lawsuits, ensure that your employees and managers are educated to prevent work-related problems in the first place.
Here are a few things you can implement yourself:
- Create corporate policies to be included inside employee handbooks and have them posted in various workplace areas to ensure they are clear to all employees.
- Make an efficient and effective screening and hiring program to eliminate discrimination in the hiring process.
- Ensure to document everything that happens and take note of your company’s steps to solve and prevent disputes between employees.
- Provide employees with guidance if they believe they are victims of discrimination or sexual harassment by another employee at work. Ensure that employees of a higher position know where your company stands when it comes to such matters.
At ALLCHOICE Insurance, we can help you to learn about all of your insurance needs, at no cost to you. Get in touch today for a free quote and helpful guidance on your EPLI coverage.