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COMMITTED TO MAKING A DIFFERENCE

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Employment Practices Liability: An Overview

EPL COVERAGE FEATURES


Covered Perils
Discrimination Harassment Wrongful Termination

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Retaliation
Expanded Definitions of Wrongful Employment Act generally all revolve around these four perils Violations of FLSA, FMLA and USERRA and similar federal, state and local statutes

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EPL COVERAGE FEATURES


Definition of Claim
Written demand

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An oral threat leads to a notice of circumstance

Demand for monetary damages or non-monetary relief Civil proceedings

Arbitration proceedings but not any labor or grievance arbitration under a


collective bargaining agreement

Administrative or regulatory proceedings with the EEOC or similar federal, state


or local agency

Office of Federal Contract Compliance Programs (OFCCP) audit, Notice of


Violation, Order to Show Cause

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EPL COVERAGE FEATURES


Definition of Insured
The Organization Its subsidiaries

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any entity which, on or before the date of the inception of this Policy, is more than 50% owned by the Parent Organization, either directly or indirectly through one or more of its Subsidiaries Automatic coverage for acquisitions up to 25% of employee count at policy inception Affiliates? Joint ventures? Leased employees Independent contractors/1099 employees

Employees full time, part time, temporary, seasonal


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EPL COVERAGE FEATURES


Fair Labor Standards Act (FLSA) $100,000 sub-limit for defense costs and loss Defense Costs Outside the Limit of Liability $500,000 limit or more; under 200 employees Duty to Defend Panel counsel requirement 100% allocation of defense costs Consent to Settlement Provision 75/25 Hammer Clause Third Party Discrimination and Harassment 10% additional premium Full Prior Acts Punitive Damages where insurable most favorable venue

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Extended Reporting Period (ERP): 1-2-3 year options built in Notice of Claim or Circumstance as soon as practicable but no later than 60 days after expiration of the policy Non-cancelable by the insurer, except for non-payment of premium Three year installment option available on most accounts

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EPL COVERAGE FEATURES


Common Exclusions

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Bodily injury/property damage Coverage carve back for mental anguish, emotional distress, libel, slander, defamation,
humiliation and invasion of privacy resulting from a Wrongful Employment Act

Fraud or dishonesty except for vicarious liability of the entity ERISA-related claims except for Retaliation Statutory obligations except for Retaliation
(e.g. workers compensation, disability benefits, unemployment)

Strikes/lockouts/unionization except for Retaliation Prior and pending litigation Claims noticed to prior carrier Modification of real property (ADA accessibility) Defense Costs coverage only Breach of Express Employment Contract Defense Costs coverage only

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Did you know

COMMITTED TO MAKING A DIFFERENCE

An employer is more likely to have an EPL Claim than a General Liability or Property loss. Fewer than 25% of employers currently carry EPL. There are over 25 million small businesses in the US with under 500 employees and not publicly traded (Source: www.sba.gov )

Three out of five employers are sued by former employees every year (Source: Society of Human Resource Managers)
General Liability policies do not cover EPL or can be endorsed with watered-down coverage at low limits.

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MYTHS OF EPL
MYTH #1

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EPL was created by the Insurance Companies to create new premium sources.

MYTH #2

The exposure is no higher today than it was in the past.

MYTH #3

Employees are already protected under other insurance policies.

MYTH #4

Internal Risk Management is adequate to protect my business.

MYTH #5

EPL premiums are too high and the underwriting process too time consuming.
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EXPOSURES - FEDERAL LAWS


Fair Labor Standards Act of 1938 (FLSA) Administered by the Department of Labors Wage and Hour Division Equal Pay Act of 1963 (EPA) Title VII to the Civil Rights Act of 1964 Executive Order 11246 of 1965 Age Discrimination in Employment Act of 1967 (ADEA) Americans with Disabilities Act of 1990 (ADA) Americans with Disabilities Act Amendments Act of 2008 (ADAAA) Family and Medical Leave Act of 1993 Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) Employment Non-Discrimination Act (proposed) 2007 (ENDA)

COMMITTED TO MAKING A DIFFERENCE

Genetic Information Non-Discrimination Act of 2008 (GINA)

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EEOC INVESTIGATIONS What An Employer Should Know


is

COMMITTED TO MAKING A DIFFERENCE

The average time it takes to process an EEOC investigation

229 days
(longer if there is a delay in responding to information
requests) to get a determination.

Think of the defense costs as well as the cost of the time of the people involved!!
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EXPOSURES - FEDERAL LAWS


The BIG ONE for Employment Practices insurers
Civil Rights Act of 1991

COMMITTED TO MAKING A DIFFERENCE

Amended Title VII Allows for

a jury trial punitive damages damages for mental anguish and emotional distress
In 1992, the first stand-alone EPL policies hit the marketplace.

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EPL CLAIM TRENDS

COMMITTED TO MAKING A DIFFERENCE

Over 40% of EPL claims are brought against private employers with under 100 employees (Source: SHRM) Most litigious states: CA, NJ, IL, TX, FL and NY. (Source: Insurance Journal) Employment practices liability claims represent 30% of all civil litigation in the United States today. (Source: Bickmore Risk Services) 550 EPL lawsuits are filed every day (Source: Insurance Journal) 67% of discrimination cases settled by jury verdict are in the plaintiffs favor The average cost to defend an EPL claim is $150,000. (Source: Insurance Journal) The median jury award is $250,000 plus 19% of all cases had punitive damages assessed.

Median punitive award = $259,000 (www.juryverdictresearch.com)

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IS EPL INSURANCE ALONE ENOUGH?C PeopleSystems


FREE risk management tools are a part of the policy.

OMMITTED

DIFFERENCE

MAKING

TO

Human Resource consulting services available via toll free


numbers (8:00am to 7:30pm, Eastern) and online.

Sample HR Policies Anti-Discrimination/Anti-Harassment Electronic Communications Employment-At-Will HR News Center and recent employment law changes HR Resource Manual and Employment Forms

EPL is just one part of a total risk management plan for every employer.
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Thank you for your business!