How to protect your business from employee lawsuits with EPLI 

Key takeaways:

  • There were 1,548 rulings on workplace-related litigation cases in 2020. 
  • Employment Practices Liability Insurance (EPLI) protects businesses from employee claims based on violations of legal or civil rights.
  • EPLI protects from claims such as harassment/sexual harassment, discrimination, wrongful termination, retaliation, wage practices, and a failure to promote.
  • EPLI policies cover legal expenses, judgments, settlements, and fines.

How can you protect your business from employee lawsuits if you are not in the wrong? Employment Practices Liability Insurance (EPLI) provides coverage for employers if an employee makes a legal claim against your business. This type of coverage is essential for companies of all sizes since it protects against a wide range of potential lawsuits. 

In this blog post, we’ll discuss what EPLI covers, as well as specific coverage recommendations based on your industry or type of business. We’ll also look at Florida’s requirements for EPLI and explore what a policy will cover. Let’s dive in! 

What Is EPLI? 

Disgruntled employees don’t always leave quietly. These days, the likelihood that your business could face a lawsuit based on a potential violation of legal or civil rights is much higher. The COVID-19 pandemic has also resulted in an uptick in lawsuits. The 2021 Workplace Class Action Litigation Report revealed 1,548 rulings on workplace litigation cases, which set a new record. 

Whatever an employee’s reasoning is, you need to protect your business and assets in the event of a lawsuit. EPLI shields your company from legal costs and results, including judgments or settlements. An employee may intentionally be trying to hurt your business. 

EPLI covers claims of wrongful termination, discrimination, harassment, and more. The legal costs of a claim can be astronomical. With the number of lawsuits against employers on the rise, it’s more important than ever to protect yourself and your business. You might not have necessarily done anything wrong, but some employees or ex-employees could end up choosing litigation out of anger or as leverage when negotiations fail. 

What does EPLI cover?

An EPLI policy can help protect your business from accusations of harassment or discrimination. In addition to providing protection from your employees, this policy can also protect you from claims made by customers, clients, vendors, and business associates or partners. Some carriers offer EPLI as part of a comprehensive Business Owner’s Policy (BOP), but others require you to buy a separate policy. 

Possible claims include:

  • Discrimination
  • Age discrimination
  • Retaliation
  • Violation of Family and Medical Leave Act (FMLA)
  • Wrongful discipline
  • Wrongful failure to promote
  • Wrongful termination
  • Harassment
  • Sexual harassment
  • Wage practices (wage and overtime calculation)
  • Issues with job classification

An EPLI policy will cover your company against the costs of defending a lawsuit in court and judgments, settlements, or fines collected through legal action. It covers directors, officers, management, and employees. The coverage includes physical damages such as attorney fees, whether you win or not. 

What’s not covered by EPLI?

On-the-job injuries, property damage, and intentional/dishonest acts are generally excluded from EPLI policies. However, different policies cover these instances, including workers’ compensation, property insurance, and liability insurance. EPLI also excludes punitive damages and civil or criminal fines. 

Industries at higher risk of employee claims

Is EPLI necessary for all businesses? It’s generally recommended, but these five industries face a higher risk of employee claims than others. They are: 

1. Retail

Retail stores usually have a varied workforce of all ages, genders, and ethnicities. This can place storeowners at higher risk of employee lawsuits, especially if the store has a lot of employees. The most common types of lawsuits in the retail industry are age discrimination, failure to promote, harassment, and wrongful termination. 

2. Restaurants

Food service establishments are at higher risk of lawsuits for gender discrimination, harassment, retaliation, and unfair wage practices. They are also vulnerable to lawsuits stemming from failure to offer accommodations or career advancement for employees with disabilities.

3. Professional services

White-collar industries are not immune to workplace claims. Professional employees often expect to be promoted within a reasonable time. A failure to advance a person can easily become the basis for a lawsuit. Even the perception of unfair or discriminatory behavior can bring cases, particularly with millennials and Gen Z employees. Common lawsuits in the professional sphere include harassment, gender and age discrimination, failure to promote, and wrongful termination. 

4. Manufacturing

Manufacturing is another industry that employs a wide range of ages, genders, and ethnicities. As with retail, this can lead to a higher risk of employee claims. 

5. Healthcare

From private practices to clinics and dental offices, healthcare-related businesses face a range of potential worker claims. They usually include harassment, discrimination, and wrongful termination. 

Florida law and EPLI

Businesses in Florida are not required to carry EPLI. However, we encourage every business to buy an EPLI policy, especially if they have one or more employees. You never know when a disgruntled employee (or ex-employee) will file a claim. 

Florida EPLI policies cover:

  • Wrongful termination
  • Sexual harassment
  • Discrimination
  • Employer retaliation
  • Failure to promote
  • Negligent evaluations 
  • Inappropriate conduct

Other recommended commercial policies

Small and medium-sized businesses in Florida need a range of commercial policies on top of EPLI to adequately protect themselves. Failure to plan can create harmful consequences. Here are some policies to strongly consider: 

Property insurance

Property insurance covers any space you rent or own. It covers the building you use and the parking lot, fencing, and signage. It also covers content inside the building, such as equipment, furniture, electronics, computers, and inventory. If you rent/lease office space, the property owner may have a commercial policy covering the physical building.

Commercial liability

Commercial liability insurance includes higher limits than a standard liability policy. It covers medical expenses, lost wages, and death benefits. This type of policy protects your business from costs related to lawsuits over bodily injuries and property damage that occurs on your property. 

Professional liability

Professional liability protects against negligence, errors and omissions, advertising injuries, and missed deadlines. It’s recommended for specific industries like accounting, healthcare, legal services, advertising/marketing, technology, and even freelancers.

Business interruption insurance

Business interruption insurance will cover your operating costs and lost income if your business shuts down because of a natural disaster, fire, or flooding (not related to a hurricane/storm). 

Business Owners Policy (BOP)

A BOP is designed for small to medium-sized businesses. A business owner’s policy combines commercial insurance policies, including:

  • Property insurance 
  • Liability insurance 
  • Business interruption insurance 

Cyber liability

This type of coverage pays for costs related to data breaches or other types of cyber events. If you store, transfer, or use the private data of customers or clients, you should consider cyber liability protection.

Workers’ compensation

If you employ one or more people, you might be required to carry workers’ comp in Florida. This policy covers medical bills and lost wages for employees injured on the job.

Commercial auto

Suppose you operate vehicles for business purposes, such as passenger vans or delivery trucks. In that case, you’ll need a commercial auto policy to cover property damage, injuries, and legal fees after an accident.

Avante Insurance and your business insurance needs

As a business owner or manager, it’s your job to protect your company from liability and other potential financial disasters. Of course, EPLI is only one element of business protection, but it’s a big one. To understand the policies you need, speak to a licensed insurance agent.

Avante Insurance can help you secure the right commercial insurance, such as EPLI, to protect your life’s work. Contact us to talk about your business needs and request a quote. We will ensure you have the right coverage to protect the enterprise you’ve worked so hard to grow.

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.