Every employer, no matter how small, faces the specter of being sued by a past, present or prospective employee at some time.
In fact, such employment practices claims are widespread – so much so that most businesses are much more likely to have an employment practices liability claim than a general liability or property loss claim.
Nearly three-quarters of all litigation against corporations today involves employment disputes, which can be extremely costly. The expenses associated with an employment practices claim are significant.
In 2018, the Equal Employment Opportunity Commission resolved 90,558 charges of discrimination and recovered about $505 million in remedies for discrimination plaintiffs.
In addition, the EEOC recovered nearly $70 million for victims of sexual harassment through litigation and administrative enforcement that year, up roughly 50% from $47.5 million in 2017.
Keep in mind, the above are just penalties and do not include defense costs, which can exceed $100,000 per claim for employers.
Now, as the workplace continues to gradually adjust back to normal after the COVID-19 pandemic, a new wave of employment practices liability claims is on the rise.
Many companies are requiring employees to receive the COVID-19 vaccine before they are allowed back to work in person. This has caused a sharp rise in employment practices lawsuits regarding workplace discrimination.
On the other hand, workers who are in favor of requiring the vaccine are equally willing to file similar claims in the name of workplace safety. According to data tracked by Fisher Phillips, about 3,700 COVID-related employment practices lawsuits have already been filed.
It’s simply impossible to satisfy both sides at once, so if you haven’t already been hit with an employment practices liability suit of this sort, you can consider yourself very lucky.
For these reasons and more, employment practices liability insurance is crucial for any employer. The risks of being sued by an employee for discrimination or an unsafe work environment have increased substantially, particularly due to COVID-19.
Employers need EPLI coverage because comprehensive general liability policies and workers’ comp policies exclude employment-related claims.
EPLI coverage policies cover:
- Defense costs (court fees, attorney fees and related costs).
- Payment of settlements and/or judgments up to the policy’s limits.
- Any fines or penalties levied by government agencies.
EPLI policies cover business owners as well as directors, officers, and managers. Some policies also cover employees. Additionally, you can buy third-party policies to cover claims brought by non-employees, such as clients.
Types of action covered include:
- Discrimination based on gender, race, national origin, religion, disability or sexual orientation
- Sexual harassment or other unlawful harassment in the workplace
- Wrongful termination
- Failure to employ or promote
- Employment-related misrepresentation
- Failure to adopt adequate workplace or employment policies and procedures
- Employment-related defamation or invasion of privacy
- Negligent evaluation of an employee
- Wrongful discipline of an employee
- Employment-related infliction of emotional distress.
NOTE: Wage and hour claims, or disputes regarding overtime pay for non-exempt employees, have become more expensive in recent years, so most EPLI policies exclude this coverage. Business owners may be able to find endorsements to add wage and hour coverage.
EPLI claims can be extremely expensive. The average cost of a discrimination claim is $125,000, and 25% of judgments exceed $500,000.
Most businesses are wise to have at least $1 million in coverage. However, higher coverage limits increase your premium cost, so you want to balance your coverage needs and your budgetary concerns. Call us at 513-943-4560 or send us a message here if you want further information or need help in gauging your EPLI coverage needs.