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EPL Questions & Answers?

What does the EPLI policy cover? 

Discrimination in hiring, firing and promotions: Harassment for both sexual and non-sexual acts; Inappropriate Employment Conduct; Personal Injury such as emotional distress, mental anguish and humiliation; Retaliation.

Who would bring a claim? 

Your past, present or prospective employees, leased employees, clients, vendors, temps, and sub-contractors

Who would they bring it against? 

The company, members of the management team, supervisors and/or another employee.

But we would never discriminate or harass. Why do we need the coverage? 

As with all liability insurance, you can do everything right and still be sued. Most people would not knowingly discriminate. Employment and harassment laws changes regularly, EPLI insurance protects you against claims that can come from failure to promote and failure to hire. The claim might come in the form of discrimination, but the allegation will be one of negligence.

How much can they get?

If the case does not go to trial, the average defense costs alone are $45,000. If it goes to trial, you can expect defense costs to exceed $100,000.

What will the policy pay for?

  1. Judgment or settlement
  2. Defense
  3. Investigation of a claim
  4. Punitive damages where insurable on a 
    most favorable venue basis

How much will it pay?

Up to the coverage amount purchased plus defense costs for the entire policy period regardless of the number of claims based on carrier.

Since the insurance company pays defense costs anyway, why is defense in addition to the limits of liability important?

If a $1 million policy is purchased, for example, that is the total amount the policy will pay for all claims including both defense and judgments. In many cases defense costs can exceed judgments. That is the value of having defense in additional or outside the limit of liability.

Some policies require me to pay a portion of the claim (co-insurance %) in addition to the deductible.

We can design a policy specifically for your needs.

What about deductibles? Will this always be my responsibility? 

Yes, but the policy reduces it by 50% for a wrongful termination claim if you follow the advice of an attorney approved by us prior to the termination.

The insurance company has to defend me. Right? 

If the policy has a duty to defend clause. If not, you must make arrangements to find an attorney and manage the litigation yourself. SELECT is a duty to defend policy.

OK, but I have an excellent attorney who handles most of my work. Do I have to use the insurance company’s attorney?

If your attorneys are experts in EPLI claims, the SELECT will give consideration to using them.

If we have no previous claims, what is wrong with Prior Acts exclusion?

If, for example, you laid someone off prior to purchasing an EPLI policy and that person sues you after you buy it, the claim might be excluded if you had knowledge of some issues. The fact is you really don’t know what may be going on with former employees. We recommend prior acts coverage in most cases.

I thought that in order to prove Discrimination in court, it has to be an intentional act. If that is true, isn’t an intentional act exclusion bad?

We agree completely. Yet a number of EPLI policies contain intentional acts exclusion. It is easy to define terms on paper, but it can get real tricky in a court situation. Defining intentional acts will be up to a judge and jury. It is possible to discriminate without it being intentional: for example, you terminated a 63 year old employee for cause, and they sued for age discrimination.

I heard that some EPLI policies will not cover me if an employee claims I am seeking revenge against him or her for one of their previous actions.

Yes. Some policies have retaliatory acts exclusion. Again we can design a policy to cover your specific needs.

Not all States permit insurance companies to pay punitive damages. How do you handle it?

Many States do not permit carriers to pay punitive damages. However, when determining if we can legally insure them, we will use the individual states jurisdiction’s law where they were awarded, where the event took place or the principal location of your company, whichever is most favorable to the payment of punitive damages.

What is Third Party Liability? Do I need it? 

It covers claims brought by non-employees such as customers, vendors, etc., who feel they have been discriminated against. Since every firm has customers and vendors, every firm has the need for this coverage.

Will new employees be covered automatically? 

Yes.

When should I report a claim?

We recommend immediately after you become aware of it, but in any event no later than 60 days after the claim is filed.

If I terminate an employee and they make threats that sound like he/she is going to sue, what should I do?

We recommend you report it immediately. As long as it is a covered claim and you reported it properly, the policy will cover it.

Can you help me improve our employee relationships?

At no additional cost, a Labor Law Review is available. Provided by a national law firm, it provides the type of assistance most medium size companies seek.