6.21.2024

Safeguarding Workplaces with Employment Practices Liability Insurance

Arguments, miscommunications, and charges of misconduct in the demanding workplace of today can escalate fast and result in costly and destructive lawsuits against businesses.

Employment Practices Liability Insurance (EPLI) is a must-have for companies that want to lower the risks that come with their hiring practices. It protects you from claims made by current and past employees as well as people who want to work for you.

This guide goes into great detail about what EPLI protects, who needs it, and what it doesn't protect.

What Is Employment Practices Liability Insurance?

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Employment Practice Liability Insurance is a type of policy that helps protect businesses from the financial consequences associated with claims of alleged employment-related wrongful acts.

Typical incidents covered by EPLI include claims of discrimination, wrongful termination, sexual harassment, wage-and-hour disputes, and more. In essence, EPLI acts as a buffer between a company's financial resources and the potential costs arising from employment disputes.

Who Needs Employment Practices Liability Insurance?

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Any business with employees can benefit from EPLI. Small businesses, often lacking a dedicated human resources department, may be especially vulnerable to employment claims, making EPLI a smart investment.

Larger organizations, due to the sheer number of interactions among employees, also encounter significant risks. Businesses of all sizes in any industry can face employment practices claims and should consider EPLI as part of their risk management strategy.

What Does Employment Practices Liability Insurance Cover?

EPLI provides coverage for various actions taken against a business related to its employment practices. This can include:

  • Defense costs – Arising from litigating a claim, whether meritless or not.

  • Settlements and judgments – Costs to resolve cases out of court or judgments awarded by the court.

  • Claims of various forms of discrimination – Based on age, gender, race, disability, and other protected characteristics.

  • Allegations of sexual harassment – Including unwanted advances and hostile work environment claims.

  • Wrongful termination allegations – Claims that an employee was terminated for unjust or illegal reasons.

  • Other employment-related issues – Such as defamation, invasion of privacy, or failure to promote.

What Does Employment Practices Liability Insurance Not Cover?

EPLI has its limitations and typically does not cover:

  • Criminal fines, penalties, or punitive damages were prohibited by law.

  • Claims related to the National Labor Relations Act (NLRA), Occupational Safety and Health Act (OSHA), and other statutory violations.

  • Issues subject to workers' compensation or unemployment benefits.

  • Claims arising from intentional or dishonest acts, although defense costs may be covered until willful misconduct is confirmed.

Securing EPLI for your business guards not just against financial damages but also supports a more equitable and well-guided workplace. Regular training and sound employment practices, in conjunction with comprehensive insurance coverage, can significantly mitigate the risks that today's employers face.

How Much Does Employment Practices Liability Insurance Cost?

The cost of Employment Practices Liability Insurance varies based on several factors, including the size of your business, the number of employees you have, your industry, and your claims history.

Typically, smaller businesses might find premiums as low as a few hundred dollars annually, while larger corporations could see costs in the thousands or more.

Insurance providers will also consider the company’s turnover rate, the robustness of company policies pertaining to employment practices, and whether the company has had prior claims.

How to Get the Best Employment Practices Liability Insurance

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Choosing the best EPLI coverage involves assessing several critical aspects:

  • Comparative Shopping: Obtain quotes and policy details from various insurers to compare coverage and costs.

  • Coverage Details: Ensure that the policy limits, deductibles, and exclusions align with your business’s risk exposure.

  • Reputation and Reliability of the Insurer: Choose insurers known for easy claim processes and financial stability.

  • Customization: Opt for insurers who offer customizable policies that can be tailored to the specific needs and risks of your business.

Is Employment Practices Liability The Same As General Liability?

No, Employment Practices Liability coverage is not the same as General Liability Insurance. General Liability policies cover physical risks, such as bodily injuries or property damage caused by the business’s operations.

In contrast, EPLI specifically protects against claims related to employment practices such as discrimination, wrongful termination, and harassment. These areas are not covered under a general liability policy.

What’s The Difference Between Professional Liability and Employment Practices Liability?

Professional Liability Insurance, also known as Errors and Omissions (E&O) Insurance, covers liability for damages arising from the rendering of or failure to render professional services. This is particularly relevant for businesses providing advisory services, like lawyers, consultants, and accountants.

Unlike EPLI, which covers employment-related claims, Professional Liability addresses negligence, misrepresentation, or incorrect advice provided during professional services.

Get Covered With EPL Insurance & Protect Your Business

Securing Employment Practices Liability risk Insurance is a critical step in safeguarding your business from potentially devastating financial and reputational damage arising from employment-related claims. In today’s complex legal environment, EPLI provides essential protection, enabling business leaders to focus on growth and day-to-day operations with greater peace of mind.

Overall Landscape of Business Operations

Managing risks related to work is very important in the complex world of business. Many years of experience and knowledge in many fields make Hotchkiss Insurance a trustworthy partner for companies all over Texas.

These companies include home builders, independent trade contractors, general contractors, and commercial contractors.

Hotchkiss Insurance makes sure that your business is not only covered but also set up for success and smooth operations by providing custom insurance plans that are based on the specific needs of each client. Get strong Employment Practices Liability Insurance from Hotchkiss Insurance to protect your business from possible employment practice claims.

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