What is Employment Practices Liability Insurance?

November 12, 2019

Employment Practices Liability insurance provides coverage to an employer against allegations made by former, current, or prospective employees for “wrongful employment acts.” Wrongful employment acts can range from discrimination allegations (sex, race, age, disability, HIV status, gender recognition, etc.), wrongful termination, failure to promote, various forms of harassment, hostile workplace, emotional distress, invasion of privacy, and wage and hour violations. These types of claims are specifically excluded under Commercial General Liability and Workers Compensation/Employers Liability policies so a separate policy is needed. 

The discharge of an employee or failure to hire a prospective employee raises a big risk on an employer. While an employer has the right to hire and fire at will, an employee can threaten to sue for wrongful termination. Government laws towards employers and rights of employees change often and most employers are not even aware when they are acting in non-compliance. Even if claim allegations are groundless, the legal fees for defense add up quickly and oftentimes it is less costly to settle the suit out of court. Unfortunately, unless the employer has up-to-date employee handbooks, regular supervisor & HR training, and well-documented employee files, the employer ends up losing these claims, even when they are innocent. These claims are not just aimed at the large corporations; 40% are brought against business owners with fewer than 100 employees. 

Employment Practices Liability claims are becoming more and more commonplace and the premiums are rising to reflect same. A claim can occur at anytime so please do not delay. Call today for a quote: (732)-946-9300 and ask for Jennifer.