Employment Practices Liability

Employment Practices Liability Insurance (EPL) protects a company in the event of a suit or claim arising from an employee or employment issue.

Companies of every size continue to face an array of claims and suits from employees, and by government agencies overseeing employment issues. A few large settlements, or even a rash of smaller claims, can severely hamper a company’s operations, and place a drain on its assets. Even well run companies with comprehensive HR procedures in place are not immune; anything from misunderstandings to poor judgment on the part of managers can lead to costly and distracting lawsuits.

And even when a company successfully defends itself against a claim, the legal and defense costs can be considerable.

Common EPL claims and suits involve allegations of:

  • Wrongful termination/retaliation
  • Sexual harassment
  • Sexual, racial, or age discrimination Breach of contract
  • Invasion of privacy
  • Defamation

Coverage includes the costs of defense as well as judgments and settlements, up to the limits of the policy. Policies are normally written on a claims-made basis, meaning that coverage is triggered only for claims made when the policy is in effect.

Example Loss Scenarios

A female employee sues her employer claiming that several employees made inappropriate sexual comments to her. She also claims that her boss asked invasive questions about her personal life and relationships. Further, she also alleges that after she complained about the treatment, her manager retaliated; she was rudely excluded from meetings, removed from certain projects, and given negative evaluations without cause.

After arbitration, the company was obligated to pay the employee $250,000 in settlement.

A company is sued by an employee who claims he was subjected to a hostile work environment due to his sexual orientation. He alleged that his co-workers and manager continually made hostile comments about gays, and that his manager arbitrarily reduced his sales territory and sales incentives. The employee also claimed he was terminated after reporting these incidents to the company president. The employee filed suit claiming a hostile work environment, failure to pay commission and wages, defamation, and wrongful termination.

The settlement and defense costs for the company exceeded $300,000.

PRS can provide EPLI coverage for:

Company types

  • Public
  • Private
  • Not for profit

Business classes

  • Financial Institutions
  • Auto Dealerships
  • Educational Institutions
  • Foreign Nationals
  • Healthcare
  • Law Firms
  • Manufacturers
  • Quasi-Governmental Entities
  • Restaurants/Hospitality Retail
  • Service Providers
  • Staffing Agencies Technology