What Do EPLI Claims Look Like, and Why Do Businesses Need It?

What Do EPLI Claims Look Like, and Why Do Businesses Need It?

Employers sometimes get sued by ex-employees for claims such as wrongful termination or discrimination. It’s possible for even reputable high-quality firms to face employee lawsuits. The solution that protects against high legal costs for these cases is Employment Practices Liability Insurance (EPLI). Here’s what you should know about typical EPLI claims.

Why Do Businesses Need EPLI?

The main reason why businesses need EPLI is to keep the disruption of litigation under control. You can stay focused on your business goals while your insurance policy pays your attorneys. The policy pays for certain legal costs but not necessarily settlements. It’s the best way to avoid getting financially destroyed by lawsuits filed by ex-employees.

In recent years there has been a growing social concern about fairness and equality in the workplace. Ethics have come under focus relating, particularly on issues of sexual harassment and various forms of discrimination. This concern has led to an uptick in companies buying EPLI coverage.

Understanding EPLI Coverage

Your company’s EPLI coverage protects against a wide range of complaints that can usually be categorized as unfair treatment or rights violations. But every EPLI policy is unique, as different types of businesses have different risk levels.

EPLI coverage has its limits, as it usually won’t issue payouts for criminal or civil fines. You need to read your policy carefully before signing and ask an insurance expert questions for items you don’t understand.

Examples of EPLI Claims

The list is long of what ex-employees sue employers for, but EPLI claims generally relate to the following type of complaints:

    1. Retaliation: Whistleblowers sometimes face retaliation from supervisors who want to cover up a problem.
    2. Failure to Hire or Promote Disabled Workers: The American Disabilities Act (ADA) protects disabled individuals from job discrimination.
    3. Discrimination: This topic comes in various forms, often associated with race, gender, age, and belief system. Pregnant women can face discrimination from employers who want to steer clear of maternity leave issues.
    4. Wrongful Termination: Employers can face legal complaints when workers are fired without a written warning or a clear reason.
    5. Improper Background Check: Employers must comply with federal standards when conducting employee background checks. For these checks to be legal, job applicants must give permission.
    6. Invasion of Privacy: There’s been a rise in lawsuits in recent years from ex-employees complaining about how computer tracking and surveillance cameras invade their privacy.

What Can Your Company Do to Prevent EPLI Claims?

It’s great to have coverage to pay for EPLI claims, but it’s even better to avoid filing claims in the first place. One way to prevent EPLI claims is to prioritize employment fairness and employee well-being. Ethics and company governance need to be clearly defined so that all supervisors are trained to be on the same page in how they treat employees.

Protect Your Business with EPLI at CAV Insurance

A business needs to treat employees responsibly to avoid EPLI claims from stacking up. It’s important to have this coverage in case an ex-employee files a costly lawsuit. Instead of letting litigation drain your company’s resources, get the right insurance to cover financial loss. Contact us at CAV Insurance Agency Inc. for more information on reducing risks for your business.

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