Ann Mullen
President at Mullen Insurance Agency, Inc. - Garland, Texas
In today’s economy and with rapid changes taking place across industries, employment practices liability claims have become a reality. No longer is the exposure limited to large companies or larger corporations. Indeed, smaller companies are equally at risk.
What is EPLI Insurance?
Perhaps, we need to first talk about what employment practices liability insurance (EPLI) applies to, i.e. what protection does it provide for Texas businesses. EPLI policies respond to claims involving discrimination, harassment, retaliation, wrongful termination, workplace torts and negligent violations of certain employment laws. Every workplace has become a potential time bomb because of changing demographics, structural changes and the continually evolving regulatory and judicial environment.
Is your business at risk for a employment practices claim?
Charges against employers for discrimination are up by 15.2%, while charges of harassment are up by 20%. Claims involving retaliatory treatment are up by 22.6%. The legal landscape for employers continues to change and become more difficult to successfully navigate.
The Lilly Ledbetter Fair Play Act of 2009 and the Americans with Disabilities Act Amendments Act of 2008 have significantly impacted an employer’s exposure to an EPLI claim. Layoffs, downsizing, salary freezes and reductions in benefits can be used by past and present employees as evidence of “tangible adverse employment actions” to file charges of discrimination, harassment, retaliation and wrongful termination.
Employment practices risks are real and fifty percent of the charges are against small business. Even though seventy-five percent of the claims are groundless, it’s important to remember that the average EEOC complaint exceeds a year to resolve.
Approximately ten percent of the claims result in an early settlement, but even those have an average cost of $7,500 to the employer. About two percent result in actual trials, and those claims result in an economic impact to the employer of $1,000,000 and up. Most of the claims fall somewhere in-between and end with arbitrations, administrative hearings or pre-trial settlements.
What can you do to protect yourself and your business?
Purchase EPLI coverage from a reputable professional liability insurance company. Before signing the dotted line, review with your agent the coverage features of the policy being considered. Look for broad definitions of the Wrongful Employment Act. Find out if the defense costs are limited or unlimited. Are they inside or outside of the primary policy limits? Does the insuring company have a duty to defend? Is there a place you can go for help if you have a human resource question?
How do you choose the right EPL Insurance?
EPLI comes in many levels of protection, and while your operation may not need the Cadillac version, it’s important you make an informed decision when choosing what is right for you.
As always, your first defense and best resource when it comes to insurance protection is your agent. Contact him or her to discuss your business and your exposure to employment practices liability claims.
As always, I appreciate the opportunity of discussing insurance coverages with you. Please call, e-mail or fax to me your insurance questions and concerns. I hope this article along with the others I publish will provide some light to the darker corners of insurance. amullen@mulleninsurance.com
If you’d like additional information on insurance for your business including EPLI insurance or you’d like to request a quote for your business, please visit https://mulleninsurance.com/e-p-l-i/ or give us a call at 972-681-6297.
Helpful EPLI Documents
These documents are provided courtesy of United States Liability Insurance (USLI). We partner with USLI to provide our customers with excellent EPLI coverage at affordable prices.
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