As a business owner, your employees are an important part of your operation. Depending on their job description, your employees may be covered under your Workers’ Compensation, United States Longshore and Harbor Workers’ Compensation Act, or Jones Act policy.
But what protects you, as the employer, when one of your employees makes a claim against you? Unless you have employment practices liability insurance (EPLI), you may be left with no coverage
EPLI is used to cover claims made against an employer by an employee for discrimination, wrongful termination, sexual harassment, or retaliation. While these are the most common types of claims, others can include failure to promote, invasion of privacy, defamation, or negligent evaluation.
One of the more important aspects of this type of coverage is defense costs, which, as you can imagine, can mount quickly. Unfortunately, most EPLI policies include defense costs within the policy limits. In other words, your defense can eat up a significant portion of your total liability limits before any judgment is awarded.
Because of this, you should consider higher limits; often, the premium increase for an additional $1 million in coverage is minimal.
Those covered under an EPLI policy include your employees, management, and your directors and officers. An endorsement can be added to the policy to also include third-party coverage, which provides protection against claims made by nonemployees.
One area that employers should keep in mind is the potential for claims related to the accessibility of their websites. Your EPLI policy may offer some coverage here, but only if you have third party coverage. This can provide protection for potential claims made under the Americans with Disabilities Act.
EPLI can often be attached to a workers’ compensation policy, a directors and officers policy, or written as a standalone policy. Limits can vary, so be sure to compare coverages.
Whichever way you obtain it, EPLI is an important part of your risk management strategy — and one that can prove to be very useful in our increasingly litigious society. If your agent has not brought this up, be sure to give them a call and ask for a quote.
