Posted: 10.31.2007
Often asked what Employment Practices Liability Insurance covers, my common response is to start with Sex, Drugs and Rock n’ Roll.
Phillip M. Lyon, Vice President – Commercial Insurance
Often asked what Employment Practices Liability Insurance covers, my common response is to start with Sex, Drugs and Rock n’ Roll. No, not a reference to the 1977 release by Ian Dury and the Blockheads but an easy way to remember the critical elements of a complex set of insurance coverages. All three of these elements can provide the basis for allegations against you, the employer, for employee lawsuits. It works like this.
Sex is the reference for the coverage protection afforded for any aspects of discrimination in the work place be it sexual harassment; gender, race or age discrimination, or for allegations for failure to promote.
Drugs is the descriptor for the elements involved in managing your employees starting with your initial interviewing and hiring practices as well as any communications involving conducting and recording employee reviews or disciplinary action proceedings.
And last but not least, hopefully Rock n’ Roll does not describe your management style including but not limited to, termination policy procedures as well as retaliatory impact towards employees.
As corporations with employees, we operate within an increasingly complex set of labor laws and regulatory environment. Try as we might, dissatisfaction on the part of employees can result in allegations that give rise to lawsuits that are both expensive in time and defense expense. It is for this reason that every company should consider purchasing Employment Practices Liability Insurance or EPLI as it is commonly referred.
EPLI allegations are not cheap to settle. Yes, sometimes a nominal amount of money can make a problem go away but not always. Here are a couple of examples where substantially more money was involved to remedy the situation:
- In Illinois, an African-American employee sued her former African-American small business employer for retaliation and recrimination after she was terminated after refusing to back him in a race discrimination case with another employee. Jury award: $3.1M plus $2.8M in punitive damages.
- In Michigan, a manager of a rental business sued his employer for discrimination and wrongful termination. He alleged that he was terminated because he was overweight and suffered from a disability which caused him to sweat profusely. Jury award: $284.5k.
- In Iowa, two former employees sued a uniform cleaning service for sexual harassment, retaliation and hostile work environment alleging that their supervisor made sexist comments and retaliated against them when they would not acquiesce to his advances. Jury award: $608k
EPLI policy forms can vary greatly in their coverage and content. When you need them to work, you really need them to work.
As Mark Twain once said, a banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it rains. At ALCOS, we aren’t bankers. We are insurance professionals and we build solutions that withstand the rain. Talk to us about your EPLI concerns. Talk to us about your business.
