A. Employment Practices Liability means different things to different people, but is commonly defined as a liability resulting from actual or alleged wrongful termination, sexual harassment or discrimination against an employee. Employment Practices Liability Insurance (EPLI), then is any insurance policy that covers the liability for claims arising from any of these types of employment –related risks.

Q. What are some examples of risks covered under an EPLI policy?

• Breach of employment contract or quasi-employment contract
• Promise of a promotion or raise in return for sexual favors
• Employment – related misrepresentation
• Wrongful discharge
• Wrongful deprivation of a career opportunity
• Failure to grant tenure
• Negligent evaluation
• Invasion of privacy
• Employment-related wrongful infliction of emotional distress

Q. Who is an Insured under an EPL policy?

A. The corporate entity and its directors, officers and employees may be covered.

Q. Isn’t this coverage provided by a General Liability policy?

A. General Liability policies were not designed to cover today’s discrimination, breach of contract, and wrongful discharge claims.  Numerous courts have held that such employer conduct does not constitute an "occurrence", but is deemed an "intentional act" that falls outside the coverage provided by the standard GL policy.

Other exclusions may also apply. For example, most GL policies exclude wrongful discharge and discrimination claims brought by past, present, or prospective employees. In addition, many GL carriers exclude bodily injury claims by employees and consider employment-related emotional injuries to bodily injury. Likewise, Umbrella policies frequently contain exclusions relating to termination or failure to promote an employee or failure to hire a prospective employee.

Q. Why is there a sudden need for this coverage?

A. the 1990’s have seen an astonishing rise in the incidence of claims alleging wrongful employment practices. The increase in claims is attributable to many factors, including a drastic corporate downsizing, new federal legislation directly affecting employment practices and an increased presence of women and minorities in the workplace. EPLI has emerged within the last couple of years to address the avalanche of claims that have been financially devastating to corporations.

Q. Why would a well-managed, financially-stable corporation need EPLI?

A. Even the best managed companies can be sued, and sometimes successfully for employment-related practices. The management of people is such a complex and demanding task that it creates numerous opportunities to make mistakes.

Further continued strains on the economy and increased performance demands on employees can heighten tensions between supervisors and employees. Increasing legislation and regulatory requirement son employers serves only to add to the already antagonistic employer/employee relationship.