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