Employment Practices Liability (EPL) differs from other professional and management coverage since it protects the company from acts which violate the employees’ legal rights of employment.
What are these rights?
- Sexual Harassment
- Discrimination (sex, race, national origin, age religion or color)
- Wrongful Termination
- 4. Constructive Discharge
- Infliction of Emotional Distress
- Violation of the Family Leave Act
The meaning of the laws regarding these rights and insurance coverage for these acts is fairly well established. Policy language and court cases have hammered out some of the conflict.
From a risk management perspective, sensitivity training and the development and implementation of strict behavioral guidelines greatly reduces the risk of claims.
Three factors in this risk change almost daily and must be addressed. State laws may expand the protected classes (sexual orientation) covered by employment law. These suits are massively expensive to litigate. Thirdly, outsiders like contractors, customers, and suppliers are now claiming under this tort.
Although States regulate insurance, insurance companies tend to be regional and national; therefore, policy language does not always represent state law or the conditions under which the laws apply.
Have your state-licensed insurance agent read policy language to assure proper coverage in each state your company operates.
The policy limit includes litigation costs and claim payouts. Legal fees are not add-ons as in other liability policies. So, as the insurance company lawyer negotiates at length, your available funds to settle dwindle. This process can become a very dangerous game of chicken for your assets. Increase limits accordingly and keep informed as to the progress of any negotiations.
Customers, suppliers and contract labor are beginning to avail themselves of this course of action. Train all employees and implement strict behavioral protocols at all levels and duties.
Most important, assure your managers spot poor or reckless behavior early, and correct it. Zero tolerance policies work in this area. You wouldn’t want to work in a truly hostile environment. Don’t turn your back on these behaviors
