Employment Practices Liability
An Employment Practices Liability (EPL) policy covers your organization for allegations brought by employees alleging violations of employment law. It is designed to address an organization’s exposure to most employment-related claims, on a first and third-party basis.
In the event of an employment-related claim or Equal Employment Opportunity Commission (EEOC) charge, an EPL policy can protect your company from costly defense expenses as well as adverse judgments or settlements.
Employment risks are real and varied, and claims of wrongdoing are taken seriously in a court of law. The impact of these claims can be harmful to a company’s bottom line, regardless of their legitimacy.
Furthermore, these issues don’t have to reach a court of law to have a financial impact on your company. Administrative actions and complaints, mediations, arbitrations and settlements often prove costly.
Without an EPL policy, your company would have to not only find counsel suited to defend these claims but self-insure the costs.
EPL should be considered a vital part of any insurance program, given the aggressiveness of the EEOC and the increasingly high cost of claim settlements. In 2013, the EEOC reported a record high recovery of $372.1 million in monetary benefits resulting from the 93,727 charges received nationally. According to the 2012-2013 Edition of Jury Award Trends and Statistics, the median award of an employment practice claim in 2011 was $325,000, up from $172,500 in 2010.
Scenarios where EPL insurance can offer protection:
- A large settlement was rendered to a class action group after a company improperly used criminal and credit background checks on 300 potential applicants.
- More than $300,000 spent defending allegations of retaliation against a terminated employee as a result of previously filing a Workers' Compensation claim
- A large award was made to a highly compensated employee who, after being fired ostensibly for performance issues, won an age and gender discrimination lawsuit.