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Is Your Business Covered For Employment Practices Liability?

A Business Insurance Update

Today more than ever, employees know their rights under the law. Over the years, the United States has created many federal laws and statutes to protect the rights of individuals including; Title VII of the Civil Rights Act of 1964, Title I and Title V of the Americans with Disability Act of 1990, The Age Discrimination in Employment Act of 1967, plus many other state laws. These laws require employers to act in accordance with very specific set of requirements and give employees the right to file lawsuits.

There are many reasons why an employee might make a claim against his or her employer. Typical allegations include wrongful termination, discrimination, harassment and even failure to promote. In an economic downturn, employers tend to have layoffs, and wrongful termination allegations can follow.

We also know that humans are prone to making comments that can be viewed as inappropriate by a coworker whether intentional or just a poor choice of words. Occasionally, a poorly phrased comment or two can lead to harassment allegations. Whatever the reason, Employment Liability claims are on the rise.

An Employment Practices Liability Insurance (EPLI) policy provides insurance against claims and lawsuits brought against an employer, its officers, directors, employees, and managers arising out of employee relationships. These policies generally cover charges in the following areas:

  • Discrimination – including age, sex, and gender
  • Sexual harassment
  • Invasion of privacy
  • Emotional distress or mental anguish
  • Wrongful termination or discipline
  • Negligent compensation, promotion or hiring decisions
  • Employee benefits mismanagement
  • Breach of contract for employment

An EPLI policy will defend the organization and pay the damages awarded under the terms, conditions, and limits of the policy. Most EPLI policies offer free legal assistance programs. This gives you the opportunity to contact an experienced legal firm to help assist you through an employment issue before it turns into a claim.  EPLI policies are written on a “claims made” form, which means it provides insurance coverage for claims that occurred and are made during the policy term or within an extended reporting period if selected. Some EPLI policies contain exclusions that limit coverage during events such as a major workforce reduction, acquisition or merger. Generally, criminal conduct is not covered by an EPLI policy.

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