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EMPLOYMENT PRACTICES LIABILITY

Employment Practices Liability Insurance Explained

Employment Practices Liability Insurance (EPLI) is designed to protect businesses from claims made by employees, former employees, or job applicants related to their employment practices. It covers a wide range of potential workplace disputes, including claims of discrimination, harassment, wrongful termination, retaliation, and other employment-related issues.

General Coverages

Pursuant to your particular policy language, coverage provisions, and exclusions; employment practices liability policies can include coverage for:

  • Discrimination Claims – Protects businesses from lawsuits arising from claims of discrimination based on age, race, gender, sexual orientation, religion, disability, or other protected categories.
  • Harassment Claims – Covers claims of sexual harassment or harassment based on any other protected characteristic.
  • Wrongful Termination – Provides protection if an employee claims they were unlawfully terminated, in violation of employment laws or contractual agreements.
  • Retaliation Claims – Covers claims made by employees who allege that they faced retaliation for engaging in legally protected activities, such as reporting discrimination, whistleblowing, or participating in an investigation.
  • Failure to Promote or Hire – Protects businesses from claims of discriminatory failure to promote or failure to hire based on factors like race, gender, or other protected characteristics.
  • Wage and Hour Violations – Includes coverage for claims related to wage and hour disputes, such as violations of minimum wage laws, overtime pay, or misclassification of employees.
  • Defamation Claims – Covers claims of defamation (slander or libel) made by employees regarding their reputation, especially during the course of employment.
  • Invasion of Privacy Claims – Provides protection against claims of invasion of privacy, including unauthorized searches of employees’ personal property or improper use of personal data.
  • Emotional Distress Claims – Protects against claims for emotional distress caused by discriminatory actions, wrongful termination, harassment, or retaliation in the workplace.

Claims Scenario

XYZ Tech Solutions is a mid-sized software development company. Jane, a senior developer, has been working at the company for 5 years. Recently, her performance has been declining, and she has been receiving negative feedback from her manager, Steve. Jane is involved in a whistleblowing incident, reporting a serious issue with a new software release that she believes could have significant security risks for customers.

Several weeks later, Jane is terminated from her position, with the company citing performance issues as the primary reason for her dismissal. Jane believes the real reason for her termination was retaliation for reporting the software flaws, as she had been one of the few employees who raised concerns about the issue. Jane decides to file a wrongful termination lawsuit, alleging that she was fired in retaliation for her whistleblowing actions, which she claims is a violation of her rights.

Jane files a lawsuit against XYZ Tech Solutions, accusing the company of wrongfully terminating her in retaliation for her whistleblowing about the security vulnerabilities in the software. Jane is seeking $200,000 in damages for lost wages, emotional distress, and other related claims. The company also incurs significant legal fees to defend the lawsuit.

How Employment Practices Liability Insurance Helps:

XYZ Tech Solutions’ EPLI policy covers the legal defense costs, which amount to $50,000 in attorney fees, court costs, and other expenses associated with defending the wrongful termination claim.

After a lengthy trial, XYZ Tech Solutions is unable to prove the dismissal was based solely on performance issues, and the court rules in favor of Jane. The company settles the case for $150,000 to avoid a prolonged court battle. The EPLI policy covers this settlement amount.

Contact CastleWise to discuss Employment Practices Liability Insurance coverage.