The Critical Role Of Employment Practices Liability Insurance

The Critical Role Of Employment Practices Liability Insurance

Just as important as professional liability coverage, EPLI protects a business against rising claims of discrimination, harassment, retaliation and wrongful termination.

By Ben Young, Christie Vu and Gregory Boornazian

An employer can do everything right and still be served an Equal Employment Opportunity Commission (EEOC) notice.

Alleged discrimination charges under Title VII of the Civil Rights Act of 1964 accounted for 61% of the EEOC cases filed in 2021.[1] Employment Practices Liability Insurance (EPLI) helps protect against liability from false allegations just as much as accurate ones. Claims that aren’t legitimate or don’t hold up in court still cost business owners real money to defend.

EPLI is a business’s main protection against claims of discrimination, harassment, retaliation and wrongful termination, and with such claims on the rise, it is just as important as professional liability coverage. Broad form EPLI will cover a business for defense costs, indemnity and third-party claims. Added benefits often include “duty to defend” language and 100% defense cost allocation.

Smaller businesses often argue that their staff is one big happy family, but the reality is this is simply not true. Employees have certain expectations of their employers, and even long-term, reliable employees can seize an opportunity for personal gain.

Knowing and complying with employment laws is a business owner’s first defense against certain fines and penalties. When mistakes are made, employers can rely on strong legal counsel, but ignored and unreported errors will only escalate matters over time.

Consider the following real claims scenario:

An employer in the Midwest was summoned by the U.S. Department of Labor for Fair Labor Standards Act violations due to a timekeeping discrepancy and a misunderstanding of U.S. overtime policies by the company’s management. Engaging the injured parties, paired with the fast action and cooperation of their legal team, saved the employer from a criminal investigation and punitive fines. The employer paid the owed back wages, but without proper insurance provided by a reliable company with an experienced claims team, the consequences of their mistake could have been a lot worse!

Business owners have a lot on their plates and managing an EEOC claim can be a stressful and costly expense. Utilizing EPL coverage through a highly rated carrier is an efficient risk transfer for this exposure. Engaging expertise, particularly in the event of frivolous allegations, can save a business valuable time and money.

For more insight on today’s changing employment landscape, check out Protector Plans’ eBook.

[1] Seyfarth “EEOC-Initiation Litigation,” 2023.

This information is intended for informational purposes only. Protector Plans Executive Liability is not liable for any loss or damage arising out of or in connection with the use of this information.