Do You Need Employment Practices Liability Insurance?

According to the 2012-2013 Edition of Jury Award Trends and Statistics, the national median award for employment practice claims in 2011 was $325,000, up from $172,500 in 2010. This figure confirms what many in the employment law community already know to be true, that the number of employment practices claims has increased, and with that increase there has been an increase in the size of awards over the years as well.  There is no reason to believe that this trend will not continue, and no business should believe itself to be immune from employment practice claims.

Every business of size should seriously consider carrying Employment Practices Liability Insurance (“EPLI”) to protect itself from employment-related claims, which can encompass everything from sexual harassment, to wrongful termination, to defamation.  Although a business’s first line of defense should always be thorough up-to-date and well written HR procedures and policies, EPLI coverage can be a valuable lifeline when an expensive and lengthy lawsuit is looming and it just may save your business from financial ruin.

Costs of EPLI policies vary greatly; the price is generally based on your business type, size and associated risk of employment practices.  Insurance companies will normally want to review copies of the HR forms, policies, and manuals to assess risk probability.  If you seeking EPLI, there are some things you should be looking for in a policy. These include, but are not limited to,

  • A broad definition of “insured,” so that all directors, officers, and employees are covered;
  • A broad definition of “claim,” so that criminal, civil, and administrative proceedings are covered, as well as arbitrations and investigations;
  • A practical deductible that can be met if the insurance is needed;
  • A carve-out for claims under federal statutes; if an employee brings a whistleblower claim for exercising rights pursuant to certain statutes such as COBRA, ERISA, or OSHA, you will likely want these claims to be covered by the policy; and
  • A choice of counsel provision so that the business can utilize an employment attorney that is familiar with the business, locality, governing law, and particular claim.

As an added bonus, some EPLI insurers even offer additional services free to their customers, such as a call-in line for general employment questions or sample employee handbooks. EPLI can offer peace of mind and valuable protection in the increasingly litigious employment law arena, and the attorneys at McBrayer, McGinnis, Leslie & Kirkland, PLLC, are happy to provide assistance in this area.

Luke A. Wingfield is an associate with McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Wingfield concentrates his practice in employment law, insurance defense, litigation and administrative law. He is located in the firm’s Lexington office and can be reached at lwingfield@mmlk.com or at (859) 231-8780. 

This article is intended as a summary of federal law and does not constitute legal advice.

Article originally appeared on McBrayer Employment Law Blog, mcbrayeremploymentlaw.com.

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Through over twelve years of practice Luke Wingfield has developed a diverse practice and obtained extensive trial experience throughout the courts of the Commonwealth of Kentucky. Mr. Wingfield's practice is concentrated in a number of areas, the first being insurance defense and insurance coverage matters. Mr. Wingfield on a near daily basis defends the insureds of insurance companies in cases ranging from wrongful death claims, to premises liability, to construction defects, and essentially everything in between. He also routinely handles declaratory judgment actions seeking to have courts determine the scope of insurance coverage available for certain claims and advises insurance company clients as to whether there is or is not insurance coverage in certain instances. Secondly, Mr. Wingfield routinely handles administrative matters and assists clients through the complicated web of rules and regulations that serve to trip up even the most vigilant of businesses in their operations and which confound individuals seeking relief. Thirdly, Mr. Wingfield handles employment law matters ranging from the draft of employee handbooks, to defending charges of discrimination before the EEOC and various Human Rights Commissions, to defending litigation alleging things such as violation of wage and hour laws and discrimination. Fourth, Mr. Wingfield routinely handles trademark matters for individuals and businesses, through both obtaining trademarks to making sure the trademarks they have obtained are protected to the full extent of the law.

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