As with any coverage, there are items that EPLI doesn’t cover. These items include penalties & fines, claims of bodily injury, property damage, and actions that occurred outside of the United States, among others. Be sure to review your coverage with your agent carefully.
Most large corporations have the protection of substantial coverage and can deal with nearly any type of employment-related lawsuit. Unfortunately, new businesses and small businesses can be extremely vulnerable to this type of claim. Many of these businesses lack an employee handbook or a legal department that can advise on proper procedures to follow regarding terminating, disciplining, and hiring employees.
Employment Practices Liability insurance covers a variety of employment-related issues, including:
Retaliation
EPLI can protect against retaliation charges which are adverse actions against a person in response to a protected action or decision they’ve made. An example would be firing an employee for informing the authorities about illegal activities within your organization.
Defamation
EPLI can protect against committing libel (defamation in written word or pictures) or slander (defamation in spoken word) against a person. An example would be telling others that an employee or contractor is a thief without evidence.
Negligent HR Decisions
EPLI protects against charges of making improper or illegal decisions regarding someone’s compensation, promotion, or hiring. An example would be hiring an unqualified job candidate because they are related to the owner or manager of your organization.
Understanding employment law reduces EPLI risks
Many laws are in place to protect the rights of existing and potential hirees. While Employment Practices Liability insurance is a wise investment for many businesses, it’s essential to understand and carefully follow both federal and state employment laws.