The Three Things You Need to Know About Employment Practices Liability Insurance (EPLI)

Employment Practices Liability Insurance

Being an employer sometimes has its own risks. One of those risks are employee claims. The Equal Employment Opportunity Commission’s (EEOC) on West Madison Street in Chicago is getting busier and busier with employee claims. Harassment, discrimination, retaliation etc. As the head of a business with employees, you should have a couple of strategies in order to minimize the risk of being sued. The Employment Practices Liability Insurance, also known as EPLI, is one of those strategies.

However, in order to be savvy with such strategy, you need to know the three most important things about the Employment Practices Liability Insurance.

What exactly is EPLI and what is the coverage?

The Employment Practices Liability Insurance is intended for employers. It protects the employer and covers the costs associated with employment relationship claims and litigation. Generally, EPLI covers claims made by employees (current and former) or applicants who never got hired at your company. EPLI also protects the employer against third-party claims. 

The typical claims covered by the Employment Practices Liability Insurance are a lot. Including, but are not limited to – discrimination, wrongful discharge, harassment, workplace bullying, wrongful evaluation, failure to promote and retaliation. However, the EPLI does not cover claims for violations of the Fair Labor Standards Act. Like not paying for overtime, for instance. Nor claims under ERISA, COBRA, or the National Labor Relations Act.

Should my company purchase Employment Practices Liability Insurance?

Well, the answer is not straightforward, as you should consider several factors before deciding. First of all, the EPLI cost is based on:

  • The number of your employees;
  • The number of previous lawsuits against you or your company, if any;
  • Percentage of employee turnover;
  • Type of business you are engaged in
  • Whether you have established employee rules, practices and employment policies.

The statistics show no mercy. U.S. companies have a 10.5% chance to receive an employee-related claim. Furthermore, Illinois companies have much higher chance to get sued by an employee. 35% higher chance, to be exact. The average financial damage for a small or medium sized company is around $160,000. 

Common mistakes regarding EPLI

It is normal for a company to focus primarily on running its business. In most cases a working company will prefer to not lose momentum than worry about insurance policies. So, it is easy to overlook something. Something critical. The Employment Practices Liability Insurance is one of those critical things. It often gets overlooked. Some companies, for instance, have never heard of EPLI. They are totally oblivious if they have such insurance or not. Sometimes they know they have EPLI, but don’t know if it is up to date. Or what is the policy period. Neglecting to ascertain whether an event constitutes a claim is another mistake. 

However, one of the biggest mistakes companies make regarding EPLI is thinking their existing policies address employment practices claims. So they don’t need Employment Practices Liability Insurance. Sooner or later most companies find out this is not true. Of course, some find it out the hard way. 

In order to have the maximum coverage for you and your company, you should contact Argo Insurance. Get expert advice and discuss all the options that we have for your business insurance. Call us now for a quote or compare offers from multiple quality companies right here: