Employment Practices Insurance
EPLI Insurance – A Defense Against Employee Law Suits
Employment Practices Liability Insurance, (EPLI) is a form of liability insurance which responds to claims brought by employees for perceived employment related violations.
It is a form of coverage traditionally perceived by smaller businesses as unnecessary. However, within the last decade, it has become one of the fastest growing forms of coverage in the United States due to a significant increase in claims against employers over the past 10 years. These include wrongful termination, sexual harassment, discrimination, invasion of privacy, breach of contract, emotional distress, and wage & labor law violations. The General Liability policy does not respond to these claims, forcing the employer to navigate this legal challenge on their own.
Claims Against Employers Are On The Rise
Claims against employers are on the rise. More employees are filing claims if they feel they are not being treated fairly. The Department of Labor, (DOL) and The Equal Employment Opportunity Commission (EEOC) have a mandate to provide a safe and non-discriminatory workplace. They actively investigate employment discriminatory complaints and relentlessly pursues employers with investigatory summons, lawsuits, and record penalties and fines.
In reality, any employee employer disagreement can be a potential claim, if not satisfactorily resolved. Passed over for a promotion, perceived sexual favor or advances, racial profiling, termination, perceived hostile environment, management’s inaction to a grievance, are valid grounds for an EPLI complaint.
Another common complaint is exempt and non exempt employee classifications. Non exempt employees are entitled to overtime pay of one and a half times their regular pay for all hours worked over 40 in a week. Classifying employees as exempt is favorable to the employer. However, the definition of an exempt employee is very narrow in scope. This results in significant fines, penalties, and back pay to employees who were incorrectly classified as exempt.
Even if claims are ultimately deemed without merit, companies still incur legal defense costs and disruption to operations while the case is under investigation.
PEOs Defend Employee Law Suits
PEOs are the first line of defense to avoid EPLI cases. Certified HR Specialists and Payroll Specialists work closely with clients to review internal HR processes, payroll time sheets, and employee files, to ensure they remain compliant. If a issue is discovered, the team quickly implements corrective measures. If a claim is filed, the team works hand in hand with labor law attorneys to evaluate worse case outcomes and provide the client with options for resolution. PEOs also have a provision for Mediation and Binding Arbitration built into their employment contract. This serves as a strategy to limit legal expense and provide speedy dispensation of cases.