Risk & Business Magazine JGS Insurance Magazine Fall 2019 | Page 30

LIABILITY INSURANCE
EMPLOYMENT PRACTICES
LIABILITY INSURANCE:
A MUST-HAVE POLICY FOR EVERY BUSINESS
I
t isn’t a matter of if an organization
will experience an employment
practice related claim; it is only a
matter of when. In fact, according
to Advisen, a leader in data solutions
for the commercial insurance market, an
employer with as few as 100 employees can
expect a claim once every three years.
Employment practice related claims are
increasing, and the costs associated with
defending such claims can be staggering.
Perhaps most unnerving is that an
organization doesn’t have to be in the
wrong to face a potential lawsuit. Even the
best corporate policies and procedures may
not deter a lawsuit, making the purchase
of employment practice liability insurance
a crucial and necessary component to
a company’s overall risk management
portfolio.
EMPLOYEES EQUAL EXPOSURE
It’s simple. If an organization has
employees, it needs an employment
practices liability insurance (EPLI) policy.
These policies cover the cost of defending
EPLI claims and damages awarded to an
30
employee for wrongful acts committed by
the employer.
However, each EPLI policy has very specific
wording on exactly which wrongful acts
are indeed covered. In general, most EPLI
policies provide the following coverage:
•
•
• Defamation
•
•
• Harassment
•
•
•
Discrimination
Failure to Provide Equal Opportunity
Employment
Retaliation
Violation of the Family and Medical
Leave Act (FMLA)
Wrongful Discipline
Wrongful Failure to Promote
Wrongful Termination
The hiring, disciplining, promoting, and
training of employees requires more
human interaction than practically any
other aspect within a business. Because of
this, the exposure to employment practices
liability extends to past, present, and even
prospective employees.
WAGE AND HOUR CLAIMS
A common exclusion on most EPLI policies
is claims related to wage and hour. Laws
pertaining to wage and hour fall under the
Fair Labor Standards Act (FLSA). The Act
establishes minimum wage, overtime pay,
recordkeeping, and child labor standards.
Common claims include jobs which have
been misclassified or the denial of overtime.
And with our ever-improving technology,
claims for “off the clock” work, ranging
from checking emails to responding to text
messages, have increased. In each scenario,
an employee is paid less than what has
been assured to them under federal law.
Although coverage for wage and hour
claims can be added to an EPLI policy, it
will come at an additional cost. Claims
related to FLSA are on the rise as
employees themselves become more
knowledgeable about their rights under
the Act.
THE THIRD PARTY
In addition to wage and hour claims, third-
party claims are also commonly excluded
from EPLI policies. Also available for an