What Is EPLI & How Does It Work?

What Is EPLI & How Does It Work?

Most employee claims or lawsuits against your small business can pose a significant threat to your finances. However, with employment practices liability insurance or EPLI in Astoria, NY, you can protect your company from such costly accusations.

EPLI can protect your company when current, former, or future employees accuse it of employment-related mistreatment, discrimination, and related issues. With this coverage, you will be compensated for costs such as:

  • Legal defense fees
  • Out-of-court settlements
  • Court-awarded judgments against your company

Why Buy EPLI?

  • 60% of employers will be sued for employment-related disputes at some point. Legal defense costs for such lawsuits can be high, even if your business did nothing wrong.
  • Most small businesses don’t have proper legal resources, employee handbooks, and other measures that can minimize their vulnerability to unfair employment practices claims. As such, they face the highest risk of employment-related lawsuits.
  • Some EPLI policies include extra coverage for labor dispute mitigation and human resources consultation.

Extent of Coverage

An EPLI policy can protect your small business against employment-related claims, such as:

  • Wrongful termination
  • Sexual harassment
  • Discriminatory practices based on factors like gender, age, disability, race, religion, or nation of origin
  • Workplace retaliation
  • Violating employment contract terms
  • Defamation
  • Punishing an employee for a fabricated infraction
  • Retaliation
  • Privacy breach
  • Illegally subjecting an employee to emotional distress
  • Discriminatory failure to hire
  • Unfairly denied promotion
  • Inaccurate performance evaluation
  • Breach of family medical leave laws

What Does EPLI Exclude?

EPLI policies won’t protect you against specific employment-related issues, including:

  • Punitive damages or fines
  • Damages owed as per your contractual obligations
  • Workers’ compensation claims
  • Fraud or malice
  • Criminal conduct
  • Breach of wage and hour laws
  • ERISA, COBRA, or WARN Act violations
  • Employment-related claims issues before the commencement of coverage
  • Mistreatment of employees engaging in legally protected actions like strikes

Cost of Coverage

Factors that can increase the cost of EPLI Insurance in Astoria, NY include:

  • A large workforce
  • Operating in a risky industry
  • High employee turnover rates
  • A high claims frequency
  • Absence of risk mitigation programs/practices
  • Higher coverage limits
  • Lower deductibles

EPLI Vs. Professional Liability

EPLI and professional liability or errors & omissions insurance are different. A professional liability policy protects your company against negligence claims or substandard work filed by your clients, not employees.

Other EPLI-Related Considerations

  • Coverage is claims-made: EPLI doesn’t cover you against incidents and claims that occurred before your policy’s effective date.
  • Shrinking limits: Unlike most general liability policies, EPLI coverage limits are reduced by legal defense costs.
  • Deductibles: Choosing a higher deductible means that you’ll pay more out of pocket before your EPLI coverage kicks in.

Tips to Reduce Risk

There are certain measures you can take to reduce your company’s vulnerability to employment-related claims. These include:

  • Enforce zero-tolerance policies for employee discrimination or mistreatment in your organization.
  • Provide your employees with a company policy manual stipulating employment terms and conditions.
  • Develop clearly defined roles and expectations for each employee.
  • Regularly evaluate job performance and file results for each employee.
  • Always conduct thorough pre-hire screening to avoid unqualified candidates and incompetent hires.
  • Avoid asking applicants to disclose their high school graduation year or any information that can form a basis for age-based discrimination.
  • Create and display your corporate policies on visible spots in your offices.

These are some of the facts to keep in mind when assessing your EPLI requirements. If you’d like to learn more about finding proper financial protection for your small business, contact us at 01 Insurance. We are happy to help address your specific coverage needs today!