Get to know Employment Practices Liability ~ Insurance Academy
Employment Practices Liability is one of the guarantees in the Directors and Officers insurance policy that provides protection from all lawsuits from employees in connection with cases of dismissal, discrimination and sexual harassment and so on.
Employment Practices Liability (EPL) is essentially an area of United States labor law that deals with wrongful termination, sexual harassment, discrimination, invasion of privacy, false imprisonment, breach of contract, emotional distress, and violations of legal wages and hours. This can be categorized as a form of Professional Indemnity. Work practice liability insurance (EPL) is sold as a type of management liability insurance, which is linked to Professional Indemnity/Professional Liability insurance.
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Usually EPL deals with laws and protections that exist under Title VII Civil Rights Act 1964, ADA (Americans with Disabilities Act) 1990, Civil Rights Act 1991, ADEA (Age Discrimination in Employement Act) 1967, and Family and Medical Leave Act (FMLA). The Equal Employment Opportunity Commission (EEOC) interprets and enforces these laws.
The EEOC recognizes eleven types of employment practice discrimination: age, disability, equal pay/compensation, genetic information, national origin, pregnancy, race/colour, religion, retaliation, gender, and sexual harassment.
Analysis of annual total claims shows that the EPL claims rate matches the unemployment rate: from 2007 to 2008, total claims in the US jumped 13% as mass layoffs increased by about a third. In 2012, allegations of retaliation, race, and sex discrimination (including harassment and pregnancy) were the most common types of discrimination that prompted EPL filings.
EPL Insurance
A growing product in the insurance market is Employment Practices Liability (EPL) insurance which is a policy that business owners can purchase to protect their organization from employee claims for the rights protected under the above action. Recently, with the expansion of privacy laws, employee privacy concerns have come to the fore as personal employee data is stored electronically. This is not always covered under EPL policies, but the insurance industry has responded by offering Cyber Liability and Network Security policies.
The EPL insurance policy offers protection from lawsuits as a result of:
- Incorrect termination of employment
- Discrimination
- Sexual harassment
- Employment contract violation
- Evaluation error
- Mistakes in Hiring or Promoting
- Discipline that violates
- Deprivation of career opportunities
- Suffering as a result of emotional stress
There are now federal and state laws governing the liability of employers to their employees. Laws also differ from country to country; e.g., California is often considered a pro-employee state when it comes to employer responsibilities. The state of California also refers to the EPL as EPLI.
Like most types of Professional Liability insurance, EPL insurance policies operate on a claims basis. This means that policyholders can only receive insurance benefits if they were covered at the time of the discrimination event that triggered the claim and at the time the claim was filed.
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