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In 2019, employers paid a record $68.2 million to victims alleging sexual harassment and misconduct violations in the workplace. This highlights the need for companies to revisit their culture and ethics policies to protect against these types of claims. This kind of protection comes in the form of EPLI insurance, or employment practices liability insurance, a type of management liability insurance covering employers’ defense costs and losses from employment-related claims. While Employment Practices Liability insurance can cover a wide variety of claims, we’ll be looking at the most common types in businesses.
What is Employment Practices Liability Insurance?
In general, EPLI claims arise from allegations of various types of discrimination that occur within an organization. These disputes are prevalent, and federal and state governments’ legal and regulatory frameworks give employees several different ways to take action against their employers for wrongdoing.
EPLI insurance provides funds for payouts, shielding companies from expensive and time-consuming claims. Even if an allegation turns out to be unfounded, the employer in question could still suffer reputational loss and have to pay for legal defenses regardless.
Here are the common EPLI claims:
Failure to Hire or Promote
A common EPLI claim that’s filed is the failure to hire or promote an employee based on protected classes. The protected classes listed under the Americans with Disabilities Act (ADA) include deafness, cancer, blindness, epilepsy, and diabetes.
If an employee feels that they are not being considered for a role at a company or a promotion because of an ADA-protected condition, and they have proof of this mistreatment, they can file a claim.
Discrimination has always played a role in EPLI claims, especially claims around age, race, and gender. These involve employees or potential employees feeling they are at a disadvantage because of these elements.
When it comes to age discrimination, specifically, companies can employ age training and ensure they are protected for cases outside of their control. In general, providing anti-discrimination training is vital to keep employees aware of the role they play in company culture and increase workplace inclusivity.
Some employees may feel discouraged from filing an EPLI claim for fear of retaliation. This kind of claim coverage is included in an EPLI policy. Retaliation claims arise when an employee alleges discrimination based on a protected status, such as age, race, gender, or disability. In retaliation for making a claim, the employee is mistreated. This adverse treatment can include receiving a demotion or a pay cut, among others.
Wrongful termination is another frequent EPLI claim. While many employees feel they were unfairly fired, it takes specific qualifications for a wrongful termination claim to apply. To qualify for wrongful termination, an employee’s employment contract must be considered unlawfully terminated by their employer.
Sexual harassment claims, specifically, have been rising in recent years due to the #MeToo movement. It is unlawful to harass a person, whether they are an applicant or employee, because of that person’s sex. Harassment, in this case, can include sexual harassment or unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.
How to Avoid EPLI Claims
Companies need to instill a positive workplace culture from the top down if they want to avoid EPLI claims. Management and executives need to lead by example, especially when it comes to workplace fairness and compliance. Understanding the full range of employee protections can establish boundaries with employees and their supervisors and/or colleagues.
Here are some tips on how to avoid costly and common EPLI claims:
- Investigate candidates for employment during the hiring process.
- Require employees to sign an employment-at-will policy
- Ensure all new and current employees receive proper training for their roles. This can come in the form of harassment training and safety training.
- Create and enforce a strict zero-tolerance policy regarding harassment and discrimination in the workplace and ensure that executives and supervisors receive training.
- Immediately investigate all EPLI claims related to harassment.
- Create a code of conduct that demonstrates the consequences of harassment and discrimination in the workplace.
- Make sure the workplace policy on harassment and discrimination provides multiple methods of reporting.
- Create an employee handbook and thoroughly document all employee complaints, evaluations, and situations that led to employment termination.
While not all Employment Practices Liability claims can be avoided, making sure to be as transparent as possible in striving to be compliant and respectful can go a long way for businesses.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed, and place business in specialized markets. For more information about our products, or to become an agent, contact us today at (855) 248-1480.