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PEO Added Value: Employment Practices Liability Insurance

06/21/2018  |  By: Renee McGowen, Manager, Employment Partners

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For LBMC Employment Partners’ PEO clients, Employment Practices Liability Insurance (EPLI) coverage is afforded through the PEO contract and arrangement. For PEO clients who may not realize you have EPLI coverage, here are some key points of the exposures, as well as information about reporting responsibilities for activities that could result in a potential issue or claim.

What Is Employment Practices Liability Insurance?

Employment practices liability insurance (EPLI) covers businesses against alleged claims by workers that their legal rights as employees of the company have been violated. With a recent dramatic uptick in such claims and numerous lawsuits filed by employees, it is important for businesses to be aware of EPLI, as well as to be prepared for possible legal fees that can arise in the event of a claim. Current monetary awards for these types of employment-related claims are rising in cost and seem to have no end in sight.

Importance of Employment Practices Liability Insurance to Your Company

Though many of the above-mentioned lawsuits are filed against larger corporations, smaller companies are also seeing lawsuits being filed against them. Because of this growing trend, it is wise to be familiar with EPLI coverage, as it protects against multiple employee lawsuits that can be triggered due to incidents involving these claims:

  • Failure to promote or employ
  • Discrimination
  • Sexual harassment
  • Negligent performance evaluation
  • Wrongful termination
  • Wrongful discipline
  • Wrongful infliction of emotional distress

Further, be mindful that wage and hour claims are specifically EXCLUDED.

The Current State ofEmployment Practices Liability Insurance and Responsibilities

As we have noticed a trend in “late reporting” of Employment Practices Liability claims, it is important for employers to understand that multiple departments are involved in the process. Human Resources is typically on the front lines, with Finance departments or company owners often in the lead or reporting incidents. Thus, precise and ongoing communication must exist between all departments involved in the process. It is believed that the key reason for late reporting of these incidents is due to companies assuming that claims might go away. With an EPLI policy, any incidents that might give rise to a claim should be reported immediately to avoid severe penalties. Any incidents that could be potential EPLI issues should be reported to your PEO HR manager immediately including but not limited to any EEOC charges/notices.   

Your EPLI coverage limits and deductibles under the PEO policy

  • $6,000,000 Policy Aggregate Limit
  • $2,000,000 Per Claim Limit
  • $15,000 Client Retention/Deductible for clients with 1-50 employees
  • $25,000 Client Retention/Deductible for clients with 51+ employees

Want to ensure you have a clearly-defined plan for employment-related matters? LBMC Employment Partners can make sure you are equipped and prepared. Contact us today to learn more!

Posted in: PEO