Liability Insurance

Employment Practices Liability Insurance

Employment practices liability insurance, also called EPL, is a policy that protects business owners against wrongful termination, discrimination or sexual harassment suits from their current, prospective or former employees. As a business owner, it is your responsibility to ensure you are covered in case you are accused of wrongful employment practices.

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Employment Practices Liability Insurance

The list of accusations includes improper dismissal or discipline, financial and emotional loss due to demotion without any valid reasons, lack of promoting a deserving employee. Most of this discrimination fall underclasses that involve race, gender, religion, sexual orientation and nationality.

Not being considerate of individuals civil rights include mental, emotional, and disabilities, can lead to a lawsuit. More people are aware of their rights in today’s society and are demanding fair and equal treatment.

Business owners should protect their business as well as themselves. The potential threat lies primarily with former disgruntled employees who can complain of being dismissed on unfair terms. The chances of being sued by a former, current or potential employee are very high.

What Employment Practices Liability Insurance covers

  • wrongful employment practices covered by EPL include Harassment
  • Discrimination
  • Employment-related libel, slander, humiliation, defamation or invasion of privacy
  • Wrongful discipline
  • Coercion or humiliation with race, marital status, gender, age, physical and mental impairments, pregnancy, sexual orientation, and any other protected class established by federal, state and local statutes
  • sexual harassment,
  • Actual or alleged wrongful dismissal, discharge or termination
  • It also applies to breach of employment contract, employment-related emotional distress, and mental anguish

The cost of EPL Insurance

Depending on the size of the business, the cost is based on the location, industry, number of employees, payroll, experience, and history of claims.

Is Employment Practices liability insurance necessary

Unlike worker’s compensation which is mandatory, EPL is not a requirement by law.

Worker’s compensation covers employees in case of a work-related injury, while employee practices liability insurance covers claims of violating employees rights.

However, the insurance is necessary if, as a business you

  • Hire promotes, demote or fire employees
  • Offer promotions to employees
  • Supervises employees
  • Manages benefits for employees

As a business owner, some lawsuits may seem baseless and trivial. However, they may end up costing your business financial losses. Different insurers offer different coverage’s depending on the level of coverage you want for your business. To protect your business, it is essential to understand the different policy terms by talking to a professional insurance agent.

What is not covered by an employee practice liability insurance

  • Criminal or malicious acts
  • Worker’s compensation
  • Employee strikes

Employment practice liability insurance sometimes extends to third party liabilities. It covers customers and non-employees who can sue a business based on the actions of the business employees. Without third party coverage, the business is left vulnerable. For example, a customer may decide to sue your business. Without third party coverage, you are unprotected, and any damages, losses or compensation will be out of pocket.

As you compare different insurers, it is advisable to choose a reputable insurance provider. Know the expenses you are likely to incur as well as your deductible.

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