Employment Practices Liability Insurance: Four Key Questions

You need Employment Practices Liability insurance (EPLI) to protect you from lawsuits filed (justly or unjustly) by anyone who you employ, have employed, or even considered employing.

Before you buy this essential coverage, be sure to ask these questions:

1. Who is insured? This should include the company as an entity, along with officers, directors, and every type of employee (full-time, part-time, temp, leased, loaned and seasonal). The importance of this becomes clear if you’re ever sued for a sexist slur made by temporary receptionist to a job applicant.
2. What claims does the policy cover? You want coverage for every eventuality: monetary damages, all types of legal proceeding from criminal to regulatory, settlements, judgments, lost pay, defense fees and punitive damages.
3. How does the policy define “wrongful employment practices” beyond the obvious (sexual harassment and racial discrimination)? Make sure that you have coverage for violations of federal, state, local and common law on employment discrimination;, deprivation of career opportunities; defamation; retaliation, negligent job evaluation, and failure to have an acceptable written employment policy.
4. What does the policy exclude? EPLI should include wrongful practices that might have taken place before you bought coverage – so you don’t have to worry about a suit by that disgruntled vice president you fired three years ago for pilfering paperclips.

A word to the wise: use EPLI as a last line of defense. Risk management for your business should include diversity and sensitivity training. The U. S. Equal Employment Opportunity Commission offers a wealth of free training resources, guides, compliance information, and links to free training throughout the nation.

As always, we stand ready to offer you our professional advice, free of charge.