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EPLI Coverage….. Heck no, I don’t need it. We’re all like family here.

Yes, everyone is like family, until the first accusation of sexual harassment, wrongful termination, favoritism, nepotism, gender discrimination, off color joke, retaliation discrimination, racial discrimination, computer monitoring, privacy invasion, FMLA, FLSA & ADA violation…. is voiced.

At that time, one is very quickly brought down to earth with the realization that this one big happy family, may not be very happy after all.

So, what is an EPLI policy? It is an Employment Practices Liability Insurance Policy. It is a policy so often overlooked in risk management assessments, but offers protection against one of the most frequent claims, i.e. an employment related claim. And, conversely, is one of the most affordable means to protect your company from a discrimination (age, sex, race, disability, wrongful termination, harassment) and other employment related allegations.

According to the Department of Labor, “employees and other plaintiffs won 41% of all jury trials, and 26% of all non jury trials, and punitive damages were assessed 19% of the time. The average verdict in EPL cases exceeds $500,000. Employment issues make up approximately 30% of all civil litigation in the US”. According to the experts at Chubb Insurance, 2013 will bring about a higher frequency of claims in Retaliation & ADA, and Increase in Social Media Claims, ie comments on Facebook, Twitter, MySpace etc.

In tough economic times, companies look for ways to reduce costs. Advertising and Insurance are usually the two areas most frequently hit in this downturn. However, it is precisely in these difficult economic times that the incidence of EPLI claims are on the rise. Employees who have been terminated and are unable to find a job will more often than not blame their employers for perceived wrongdoing and file a claim against their former employer with the EEOC.

Statistics: (1)
A private company is more likely to have an EPL claim than a GL or Property Claim.
3 out of every 5 employers are sued by former employees.
65% of all companies that have ever fired an employee had an employment related lawsuit.
Over 40% of all EPL Claims are brought about against firms with less than 100 employees.
70% of employees are not in compliance with the Fair Labor Standards Act (FSLA)
State laws are broadening and increasing claims and the likelihood of guilty verdicts.

Which leads us to the question, “Who is the EEOC?”

The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit”

Next question, what authority does the EEOC have?

The EEOC has the authority to investigate charges of discrimination against employers who are covered by the law. Our role in an investigation is to fairly and accurately assess the allegations in the charge and then make a finding. If we find that discrimination has occurred, we will try to settle the charge. If we aren’t successful, we have the authority to file a lawsuit to protect the rights of individuals and the interests of the public”. (source www.eeoc.gov)

A quick visit to www.eeoc.gov where the latest EEOC settlements are posted is reason enough for concern. The EEOC actively investigates charges of discrimination and seeks redress against companies of all sizes, large, small, private and public. All it takes is a phone call to report a tip, and set the wheels in motion.

The EEOC received a record 99,947 charges of discrimination in 2011. The staff delivered relief of $404,000,000 for victims of workplace discrimination.

The EEOC has the mandate to investigate all charges of discrimination. If a business does not have the resources to pay for EPL Insurance, they certainly do not have the resources to fight the EEOC who is the body responsible for investigating the alleged charges.

As the number of discrimination claims filed by employees continues to rise, employers need to find ways to protect themselves. Even if the employer did nothing wrong, and the suit is without merit, the employer will still have to pay for defense which could exceed $50,000 very quickly, depending on the complexity of the case and the nature of the charges brought against them. It is important to note that the mere charge of employment practices misconduct must be investigated & defended. Folks, this is serious!!! This is the new “slip and fall”.

This is where EPLI steps in. It covers allegations of discrimination, wrongful termination, sexual harassment, a variety of other employment related claims that violate employees’ civil rights or their ability to perform their job in a fair, safe & acceptable environment. It provides defense and indemnifies the company for such claims brought against them.

Beyond defense, most EPLI policies offer the employer a Human Resource Hotline, free of charge. This Hotline is geared to making sure the employer has adequate counsel to discuss any employment related issue PRIOR to it becoming a potential EPL claim.

Think of it as your own in-house legal counsel who will walk you through the steps you need to take to counsel, discipline, and terminate an employee.

Another topic worth mentioning is the third party EPLI claim, where a claim is brought about by an employee / third party. Under the traditional EPLI, the wrongful act arises out of the interaction between employer and employee, ie. employment practice. The third party EPLI broadens the coverage to include anyone, clients, vendors, who has a contact with the business and the employees.

There are two basic instances of third party EPLI. One is where your employee claims to have been harassed by a third party, i.e. a vendor, a client, a “third party” who comes to your place of employment, a complaint was filed, and no action was ever taken to address that employee’s concern.

The second is where an employee harasses or discriminates against a third party, someone outside of the company, while on the clock, a claim by a third party that one of your employees discriminated against them.

Bottom line, as long as a company has employees, there will be instances of disagreements and accusations. EPL Insurance may end up being the policy that may make the difference between the survival or the demise of a company.

Call us today to request a free quote on EPL Insurance. Or email ShahrukhS@Cglobalins.com


Chubb Insurance

Apogee Insurance Group.