EMPLOYMENT PRACTICES LIABILITY suit ’ s outcome . Beyond the basic employer protections provided by typical EPL forms , the full scope of coverage and available endorsements vary in the marketplace . Some key distinctions among carriers ’ policies include :
• Wage-and-hour insurance coverage endorsement . This covers claims alleging that an employer failed to pay overtime to an hourly employee . Typically , coverage applies to defense costs only ( not to settlements or judgments ) and is offered at a relatively low sublimit .
• Duty to defend versus duty to pay . When written on a “ duty to defend ” basis , the insurer retains the right to select defense counsel and control the process . On a “ duty to pay ” policy , the insured is responsible for defense and the insurer is obligated to reimburse the cost .
• Third-party coverage . Third-party EPL applies to claims made by nonemployees , usually customers , who allege that an employee engaged in wrongful conduct , typically sexual harassment or discrimination .
• Punitive damages . EPL forms originally excluded punitive damages . Today , coverage for these damages may be obtained either by endorsement or as part of an insurer ’ s standard EPL form , when allowed by law . Some insurers apply a sublimit to punitive damages coverage .
• Immigration Violation coverage . Employers are at risk for violating federal , state , or local immigration laws , and these violations are not covered by the basic EPL coverage form . Immigration Violation coverage has become available by endorsement to some carriers ’ policies . This endorsement provides coverage for defending managers charged with violations of immigration laws and both civil and , where allowed , criminal fines and penalties . Coverage is usually subject to a sublimit that is part of the policy ’ s overall limit .
• Crisis management services . In addition to insurance coverage provided by the policy , some carriers will offer public relations and other services to address reputational harm in the event of a highly publicized claim .
• Overall rate . Since March 2020 , rate increases have gone from single to double digits . This trend will continue into the foreseeable future as the true impact of COVID-19 layoffs and furloughs is yet to be seen . +
SUMMARY
For the past 30 years , employment practices liability has tracked closely with changing social trends .
TODAY , AN EMPLOYER ’ S RISK OF ALLEGATIONS BY EMPLOYEES IS HEIGHTED BY BOTH INCREASED PUBLIC INTOLERANCE FOR HARASSMENT AND INSTANT , WORLDWIDE DISTRIBUTION OF NEWS THROUGH SOCIAL MEDIA .
A Facebook post , a tweet , or a hashtag can quickly go viral , putting a company on the defensive and creating potentially devastating consequences . EPL insurance is more important than ever in this environment . And it is incumbent on insurance professionals to understand the insurance marketplace so they can best help clients manage risk .
ABOUT
THE
AUTHOR
THIS ARTICLE WAS WRITTEN BY JORDAN KURKOWSKI , RPLU , ASLI , MLIS
,
VICE PRESIDENT AND PROFESSIONAL
SIONAL LINES
BROKER WITH AMWINS
BROKERAGE IN
GRAND RAPIDS , MICHIGAN .
A version of this article was printed in the summer 2020 issue of Insights , a profession- al journal by the CPCU Society . It has
been reproduced here with the permission of
the CPCU Society , an affiliate of The Institutes
.
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