Employment Practices Liability Insurance Policy - Coverage, Benefits and Exclusions

An Employment Practices Liability Insurance Policy provides cover for legal expenses and compensatory damages for lawsuits alleging Employment Practices Violation.

Employment Practices Violation means any actual or alleged:

1. unfair or wrongful dismissal, discharge or termination, either actual or constructive, of employment, including breach of an express or implied contract;
2. employment-related misrepresentation;
3. employment-related breach, violation or non-compliance with the Data Protection Act 1984 and 1998, terms and conditions of employment and the Company’s Code of Conduct, if any, or any similar legislation in any other jurisdiction;
4. employment related libel, slander, humiliation, defamation, infliction of emotional distress, invasion of privacy;
5. breach of any oral or written employment contract or quasi-employment contract,
6. wrongful failure to employ or promote;
7. wrongful deprivation of career opportunities;
8. wrongful demotion;
9. wrongful discipline;
10. failure to furnish accurate job references;
11. failure to grant tenure or negligent employee evaluation;
12. sexual or workplace or racial or disability harassment of any kind (including the alleged creation of a harassing workplace environment);
13. violation of employment discrimination laws (including workplace and sexual harassment)
14. unlawful discrimination (including but not limited to discrimination based upon age, gender, race, colour, national origin, religion, sexual orientation or preference, pregnancy or disability);
15. failure to provide adequate employee policies and procedures;
16. retaliation (including lockouts);
17. violation of an individual’s civil rights relating to any of the above; and (xvi) for the avoidance of doubt, any other claim pursuant to the Equal Pay Act 1970 and the Employment Rights Act 1996, relating to any past, present or prospective employee;

Some common EPLI claims include:

• Discrimination (based on age, gender, race, disability etc.)
• Sexual harassment
• Wrongful termination
• Retaliation
• Failure to promote
• Breach of employment contract
• Workplace bullying and abusive work environment

Even with good HR policies and practices, employers can face employment related allegations and lawsuits. An Employment Practices Liability Insurance Policy helps protect businesses against such employment related Claims. Employment practices liability insurance protects both the organisation and its employees against personal grievance claims brought by current, prospective or former employees.

In today's legal landscape, employment-related lawsuits are on the rise. An employer is more likely than ever to face employee related lawsuits like sexual discrimination or harassment claims.

Even false allegations by employees require defence in courts which incur legal fees, thus causing losses to the business. Hence, it is very important for businesses to have an Employee Practices Liability Insurance Policy (EPLI Insurance) in place to defend and settle employee claims.

The cost of not getting covered by an Employment Practices Liability Insurance Policy is particularly high due to the following reasons.

Increase in Wrongful Termination Lawsuits - As companies downsize and lay off employees during recessions, disgruntled former employees are more likely to file wrongful termination suits alleging discrimination, lack of notification, etc. This can lead to an increase in EPLI claims.

Wage and Hour Disputes - Due to cost-cutting, businesses may violate wage and overtime pay regulations. This leads to employee lawsuits which falls under EPLI.

Discrimination Claims - Often the targets of layoffs and terminations are women, minorities and older workers. Allegations may arise claiming discriminatory firing which is an Employment Practices Liability Claim (Claim).

When these types of claims occur, proper EPLI coverage with adequate limits helps businesses to reduce the impact.

Any company which has employees, whether it is a Small Business/Startup or a large MNC should secure itself with an Employment Practices Liability Insurance Policy.

Large corporations or MNCs usually have adequate HR policies and employment practices in place to deal with any employment lawsuits. However, startups or small businesses are more vulnerable to employment-related lawsuits which can cause significant financial losses.

Hence, it is important that small businesses and startups are aware of the right employment practices and get insured with an Employment Practices Liability Insurance Policy (EPLI Insurance) to secure themselves from employment-related lawsuits.

To prevent employment-related lawsuits, ensure proper employee guidelines and HR policies are in place so that all problems are averted in the first place. Having proper guidelines in place and enforcing them also helps reduce the Cost of EPLI policy.

Creating a Positive Workplace Culture - Promote diversity, inclusion and respect among all employees. Make sure that discrimination or harassment is not tolerated.

Comprehensive Employee Training - Conduct regular training on company policies and employment laws. Leave no room for doubt on expected behaviors.

Clear and Enforceable Policies - Maintain a legally compliant employee handbook that is regularly updated. Uniformly enforce policies and implement disciplinary measures where needed.

Effective Communication - Provide frequent performance updates and discuss improvement areas with employees. Explain reasons behind terminations, layoffs, denied promotions transparently.