Employment Practices Liability Insurance (EPLI) in 2023

16 November 2023
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The pandemic threw up enormous HR challenges for companies. They have had to stay on top of the complicated (and continually changing) patchwork of federal and state regulations covering everything from lockdowns to mask wearing and mandatory COVID vaccinations. Many organizations created multi-disciplinary taskforces to handle the crisis, as well as consulting with outside law firms; but the sheer complexity of the task has made it more challenging to strictly adhere to the rules.

Employment Practices Liability Insurance (EPLI) is a crucial form of insurance that protects businesses against employment-related lawsuits and risks. In the wake of the COVID-19 pandemic, the risk of such lawsuits has increased, making EPLI coverage even more essential for employers.

The Growing Risk for Employers:

Employers face potential employment liability risks daily, and small businesses are particularly vulnerable to costly employment claims. Defending against a single lawsuit can cost an average of $150,000, a significant financial burden for any business. Considering the potential expenses involved, it is crucial for business owners to ask themselves if they can afford such lawsuits without insurance coverage.

We have gathered a few takeaways from the COVID-19 impact on insurance claims.

  • EPLI claims did not decrease during the lockdown, but rather shifted to a virtual setting. For example, there have been cases of sexual or racial harassment or discrimination through online platforms, such as chat groups or video meetings.
  • Employers have faced complex and evolving regulations regarding COVID-19 safety measures, such as lockdowns, mask wearing, and vaccinations. Some of these decisions have led to lawsuits from employees who felt discriminated against or endangered by their employers’ policies.
  • Workers have become more empowered and vocal about their preferences and needs, especially regarding flexible working arrangements. Many employees enjoyed working from home during the pandemic and do not want to return to the office full-time. Employers have had to adapt and offer more options for remote work, as well as focus on their employees’ well-being.

The Cost of EPLI Coverage:

While the cost of an EPLI policy varies based on factors such as the type of business, number of employees, and past records, it is a necessary expense in today’s business landscape. The cost of not having coverage outweighs the cost of having it. As businesses grow and become more successful, they often become larger targets for employment-related claims. With more employees working together, the risk and exposure to such claims increase. Regardless of whether a claim is valid or not, the costs of defending the company remain the same. Without EPLI coverage, a company may find itself in a risky and expensive position, potentially having to settle claims.

Understanding EPLI Coverage and Exclusions:

EPLI policies offer various coverages, deductibles, and premiums. The typical coverage includes settlements, jury awards, defense costs, and attorney’s fees. It commonly covers claims related to discrimination, wrongful termination, and harassment. However, intentional violations of employment laws and union-management issues are generally not covered. Additionally, nationally written EPLI policies may not cover some state-specific claims. It is essential for employers to understand the specifics of their EPLI coverage to ensure they are adequately protected.

Wage and Hour Coverage:

Wage and Hour Insurance Coverage is an important component of EPLI. It protects businesses in the event of claims alleging failure to pay overtime or misclassification of employees under the Fair Labor Standards Act. However, finding insurance coverage for these claims can be challenging, as many companies have been hesitant to take on the associated risks. Working with insurance providers with access to markets offering this coverage can help address this challenge.

The Impact of COVID-19 on EPLI:

The COVID-19 pandemic led to an anticipated rise in EPLI claims. With businesses forced to lay off workers and implement new health and safety guidelines, the risk of wrongful termination claims skyrocketed. Employers face the challenge of balancing employee safety, government guidelines, and financial stability. These circumstances create an environment ripe for lawsuits, making EPLI coverage more critical than ever. It is important to note that obtaining EPLI policies may become more restrictive, highlighting the need to secure coverage if not already in place.

EPLI as a Viable Solution:

While no strategy is perfect, employers must proactively address the risk of employment lawsuits. EPLI remains a practical and cost-effective option to mitigate this risk. Reviewing current business policies and obtaining the appropriate EPLI coverage is crucial for protecting businesses and their financial stability.

Employment Practices Liability Insurance is a vital safeguard for businesses facing employment-related claims. In the post-COVID era, the risk of such claims has heightened, making EPLI coverage even more important.

It is important to review your current business policies and we are happy to help you take a look and provide information in how to fully protect your business. To learn more about EPLI coverage and get a free quote, please call us today at (877) 308-9663 or email [email protected].

Juan Cruz

VP – Marketing & Development

Juan Cruz is the VP – Marketing & Development at Inszone Insurance Services. He joined the company in 2016, bringing with him over 7 years of experience in direct response Marketing. Juan holds a Bachelor’s degree in Global Studies as well as a minor in Anthropology from the University of California Los Angeles (UCLA). In his current role at Inszone he oversees all aspects of marketing, entrusted with the task of building a consistent brand as well as successful direct response campaigns. During his career, Juan has helped multiple companies improve and expand their digital presence, grow their lead generation, and improve their brand.

Juan is a travel enthusiast with 25 countries visited so far, Scuba diver and Bike rider, believes in working hard to enjoy life to the fullest.

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