EPLI - What It Is and Why You Need It

EPLI stands for Employment Practices Liability Insurance. This is not the same as the general liability that most businesses do (or at least should) carry. EPLI is to provide specific protection to business owners from claims by employees that their legal rights have been violated or that they have been treated unfairly.

Your Employees Are Like Family

This is a common feeling among small businesses. Everyone knows everyone else and meets socially and helps each other out on family matters etc. So what is the need for EPLI? Isa supervisor who has been with you for 10 years suddenly going to sue you? Maybe! It does happen far more frequently than you think. It’s like a close-knit family that suddenly and irreversibly falls apart. The fact that the reason is foolish or illogical doesn’t matter when emotions run high. Yes, suing an employer is often an emotional reaction. Studies show that the most common reasons for employment practices lawsuits are:

• Retaliation for a real or imagined issue – 44.5%
• Race-related issues, both real and imagined – 34.7%
• Disability – 30.2%

You cannot afford to ignore these numbers.

Frightening Facts about Employment Liability Lawsuits

If you still feel that EPLI is not important, the following may help to change your mind.

• Your most innocent remark or action can be misinterpreted. Anyone can have a bad day and an act or words that were a joke yesterday could cause anger today. That anger could lead to a lawsuit.
• The fact is that a business is 3 times more likely to be hit with an employment practice lawsuit than it is to experience a fire.
• The courts are becoming more sympathetic to plaintiffs in such cases. The average cost of an employee lawsuit has risen by over 25%, over the last 5 years.
• Businesses with 15 to 100 employees are the most common targets for federal discrimination claims.
• Only about 30% of small businesses have EPLI.
• Many business owners think that their general liability coverage protects them against employee’s lawsuits. That is not correct.

What EPLI Covers

EPLI coverage may vary depending on the insurance provider. In general, it includes:

• Wrongful termination
• Breach of employment agreement
• Failure to create or enforce adequate employment policies
• Invasion of privacy
• Discrimination
• Violation of FMLA
• Workplace harassment
• Retaliation

You probably have a number of different insurance coverages for your business. They are focused on protecting you from issues beyond your control or from actions against you by outsiders. But what about when a lawsuit comes from within? Without EPLI you could be left exposed to huge losses. Talk to your insurance broker to check if you have the coverages you need. If you do not have EPLI coverage, your broker will be able to suggest the right type of policy for your business.