Everything You Need To Know To Better Understand Employment Practices Liability Insurance
This Guide to Employment Practices Liability Insurance , better known as EPLI, will give you a better understanding the following:
- Do I Need Employment Practices Liability Insurance?
- What Does Employment Practices Liability Insurance Cover?
- What Are The Most Common Types Of Employment Practices Lawsuits?
- How Much Does EPLI Insurance Cost?
Whether you need answers to these questions or just want Employment Practices Liability Insurance quote, you’ve come to the right place.
Do I Need Employment Practices Liability Insurance?
A study in 2014 performed by Advisen showed that Small Businesses are at a greater risk for employee lawsuits than they imagine.
According to the study, companies with 100 employees or less can expect an Employment Practices claim once every 3 years, however only 23% of those small businesses purchases Employment Practices Liability Insurance.
Of those claims filed, 51% will result in a win by the plaintiff (the employee).
Scary Employment Practice Liability Claims
- In 2018, the EEOC fielded over 200,000 inquiries regarding potential discrimination claims.
- The EEOC received more than 7,600 sexual harassment charges in FY 2018.
- The average cost of settling out of court for an employment claim is $75,000.
- The average jury award for an employment-related case is $217,000.
- The average duration of an employment claim spans more than 300 days.
The scarier thought is that the average claim costs small businesses approximately $160,000 in defense and settlement costs.
What Does Employment Practices Liability Insurance Cover?
Employment Practices Liability Insurance (EPLI) protects an employer from employees’ claims alleging suchs things as discrimination, wrongful termination, harassment (including sexual harassment).
EPLI pays for liability damages and defense costs due to these charges brought by full-time, part-time, temporary, seasonal employees, applicants for employment, recognized volunteers, and independent contractors.
What Are The Most Common Types Of Employment Practices Lawsuits?
The U.S. Equal Employment Opportunity Commission classifies the various Employment Practices Violations as follows:
Age Discrimination
Age discrimination involves treating an applicant or employee less favorably because of his or her age
Disability Discrimination
Disability discrimination occurs when an employer or other entity covered by the Americans with Disabilities Act, as amended, or the Rehabilitation Act, as amended, treats a qualified individual with a disability who is an employee or applicant unfavorably because she has a disability
Equal Pay / Compensation Discrimination
The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work
Genetic Information Discrimination
Treating someone unfavorably due to a person’s genetic information and/or the genetic tests of family members
Harassment
Harassment is unwelcome conduct that is based on race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information
National Origin Discrimination
National origin discrimination involves treating people (applicants or employees) unfavorably because they are from a particular country or part of the world, because of ethnicity or accent, or because they appear to be of a certain ethnic background (even if they are not).
Pregnancy Discrimination
Pregnancy discrimination involves treating a woman (an applicant or employee) unfavorably because of pregnancy, childbirth, or a medical condition related to pregnancy or childbirth.
Race/Color Discrimination
Treating someone (an applicant or employee) unfavorably because he/she is of a certain race or because of personal characteristics associated with race (such as hair texture, skin color, or certain facial features). Color discrimination involves treating someone unfavorably because of skin color complexion.
Religious Discrimination
Treating a person (an applicant or employee) unfavorably because of his or her religious beliefs.
Retaliation
Laws prohibit punishing employees or applicants for asserting their rights to be free from employment discrimination
Sex-Based Discrimination
Treating someone (employee and/or applicant) unfavorably based upon that person’s sex, and gender identity.
Sexual Harassment
Harassment can include unwelcome sexual advances, requests for sexual favors, and/or offensive remarks about a person’s sexual orientation
How Much Does EPLI Insurance Cost?
The average Employment Practices Liability Insurance (EPLI) premium is approximately $20 per employee, but that premium can vary greatly.
EPLI is most often added to a business’s Business Owners Insurance Policy, but can also be written as a stand alone policy.
EPLI Premiums, for most insurance carriers, are based upon the following factors:
- Type Of Business
- Number & Type Of Employees
- EPLI Coverage Limits
- Deductible
- Whether Or Not Third Party Employment Practices Liability Is Chosen
Type Of Business
Most businesses are eligible to purchase EPLI with “standard rates” and include some of the following:
- Physician Offices
- Retail and wholesale stores
- Restaurants
- Offices
- Motels
- Machine shops and light manufacturing operations
- Auto repair garages
- Auto dealerships
- Contractors
However, most carriers find certain businesses to be higher risk, and will not offer Employment Practices Insurance, here are a few of those:
- Ambulance service, first aid or rescue squads
- Career and vocational consulting firms
- Consultants
- Employment agencies, including employee leasing firms and temp agencies
- Fire departments
- Government offices
- Municipalities
- Private membership golf and country clubs
- Schools and camps associated with schools
Number & Type Of Employee
Employment Practices Liability Insurance rates are typically presented and rated Per Employee.
Insurance Providers differentiate per employee pricing in accordance to whether of not the employee is considered “Full Time” or “Part Time”.
Full Time employees offer a greater risk than part time employees, so a full time employee carriers a premium than a part time employee.
Employment Practices Liability Insurance Limits
Most insurance carriers offer the following coverage limits:
- $10,000
- $25,000
- $50,000
- $100,000
- $250,000
- $500,000
- $1,000,000
- $2,000,000
The higher the coverage limit, the higher the premium
Deductible Options
Most insurance carriers offer the following deductible options
- $5,000
- $10,000
- $25,000
The higher the deductible, the lower the premium.
Third-Party Employment Practices Liability
Third-Party EPL coverage provides coverage for charges brought by customers, vendors or clients
You can expect an approximate additional premium charge of 15% of the base EPL premium