Employment Practice Liability (EPL) litigation impacts organizations of all sizes. The purpose of EPL Insurance is to insure organizations against allegations of illegal or discriminatory hiring and firing practices, sexual harassment, and other inappropriate employment actions. Defending EPL claims can be expensive, time-consuming, and damaging an organization’s reputation.
The following are a few risk management tips to mitigate EPL liability exposure:
- Job Application: Effective applications gather thorough details of a prospective employee’s work history and educational background. Applications are valuable screening tools and as safeguards from litigation. It is best practice to provide prospective employees with updated applications and that your employment attorney has reviewed your application to ensure that it is in compliance with the applicable State and Federal Laws.
- Employee Handbook: Employment handbooks should be updated and reviewed by your employment annually to include changes to company policy and new or amended employment laws and regulations. It is not enough to update the Employment Handbook, employers should also review updated policies and changes made in the handbook with employees in detail and require each employee to sign a confirmation indicating they have reviewed and received a copy of the Employee Handbook.
- Orientation: Employers should require all new employees to attend an orientation before they begin to perform their duties. Orientation should inform employees about the company policies and provide them with a detailed job description.
- Supervisor Training – Managers should be continually trained in compliance and safety regulations.
- Harassment: Establish policies that call for zero tolerance. Conduct on-going training for employees and volunteers on issues of discrimination and workplace harassment.
- Safe Environment: Safety practices are crucial to the work environment. Everyone should be trained on the importance of safety. Also, consider implementing active shooter protocols and plans.
- Exit Interview: An exit interview is critical for every employee laid off or terminated. Make sure that all payroll is paid on time.
- Purchase an Employment Practice Liability Policy: Many EPL insurance policies are written in combination with Directors & Officers Liability coverage. Make sure that the EPL policy is underwritten by a Best “A” rated insurance carrier and look for the following:
- Full Prior Acts Coverage
- Defense outside the limits
- Wage and hour cost of defense (most carriers exclude Wage & Hour)
- Duty to Defend
- Third Party Liability Coverage
- No “Hammer Clause”
- Reasonable Retention.
It is important to note that not all policies are created equal. If you have an EPL policy, be sure to review the terms, conditions, and exclusions to determine what liabilities are covered and any exposures to your company. Also, most general liability policies will not cover EPL claims, but it is also best practice to review those terms, conditions, and exclusion. We recommend that you review your insurance policies with your attorney to ensure your organization is adequately protected. Let us know if you have any questions regarding EPLI coverage or would like us to provide a quote. We are here to help!