Protecting your business against litigation with employment practices liability insurance

Escalating since 2017, the endless media coverage of accounts of workplace wrongdoings of sexual harassment and other forms of discrimination have been a reminder that claims related to these issues are not slowing down anytime soon. In 2018, the Equal Employment Opportunity Commission (EEOC) recovered approximately $70 million for victims of sexual harassment lawsuits, compared to the $47 million it recovered in the previpus year.

Legislative bodies have reacted by enacting expanded worker protections that intensify business risks, making it more important than ever for an organization to financially protect itself ancf conduct the proper training for their employees to mitigate this risk. Failure to proactively address sexual harassment in the workplace can have significant negative consequences, including costly litigation, compliance exposures, loss of productivity and damage to overall employee morale. The publicity that can accompany such incidents potentially adds another enormous cost component to the loss from a crisis communications and reputational damage standpoint.

Beyond training and implementing detailed policies, it is necessary to have the proper financial protections in place. From discrimination to retaliatory discharge, companies with 100 or more employees can expect at least one employment liability claim every three years. General liability and other business insurance policies apply only to bodily and advertising injury and property damage, specifically excluding employment-related claims.

With employment practices liability insurance (EPÉI), your company is protected against claims of sexual harassment, along with the following:

* Discrimination.

* Wrongful termination.

* Employment-related emotional distress and invasion of privacy.

* Defamation.

* Retaliatory/constructive discharge.

* Workplace torts such as slander.

While EPLI provides an invaluable layer of protection, not all EPLI policies protect against lawsuits by third parties. What happens if you are sued by a customer or vendor? Many employers do not realize they are vulnerable to a significant insurance coverage gap that leaves them vulnerable to discrimination and harassment lawsuits from customers, vendors and suppliers.

Similar to coverage in a standard EPLI policy, a third-party EPLI endorsement generally covers external claims of discrimination based on race, religion, sex, age, national origin, sexual orientation and disability. It also protects your company from allegations of sexual advances and other verbal or physical actions that create a hostile or offensive environment.

A wage and hour endorsement can be added to an EPLI policy to defend against wage- and hour-related claims, which is another top employment-related risk exposure for employers. Workers can file a lawsuit when they are just a minute late for a meal or rest break or if their overtime was miscalculated even slightly. Wage and hour is not offered by every EPLI insurance carrier and usually has lower limits than the base policy.

Speak to your insurance broker about EPLI coverage options and ask for a review of your policies and procedures.