What Is EPLI Coverage- Philadelphia Insurance Companies

Understanding Employment Practices Liability Insurance & How To Prevent Claims

The U.S. Equal Employment Opportunity Commission (EEOC) has stepped up investigations and enforcement actions related to workplace discrimination in recent years, making it more important than ever for companies to have the best employment practices liability insurance (EPLI) and proper EPLI risk management procedures to help mitigate EPL risks.

The EEOC reported 73,485 new discrimination charges in fiscal year 2022, a 20% increase compared with the previous fiscal year, and filed 91 employment discrimination lawsuits on behalf of alleged victims. By fiscal year 2023, the EEOC reported the number of new employment discrimination lawsuits filed had climbed to 143, a 50% increase.

The EEOC also reported it obtained more than $513 million in monetary benefits for victims of discrimination, $40 million of which was related to employment discrimination lawsuits. These amounts do not include legal fees incurred by the employers involved in these cases, which can be very costly.

What Is EPL Insurance?

Employment Practices Liability Insurance, known as EPL insurance or EPLI, provides coverage to employers for claims made by employees alleging discrimination, wrongful termination, or harassment.

Some EPLI claim examples include:

  • Sexual Harassment and Wrongful Termination: $1.5 million

Several female employees complained the CEO was sexually harassing them. The company's president proceeded to investigate the complaints. Within one month of the start of the investigation, the president was terminated by the CEO. The female employees filed a sexual harassment suit against the CEO. The president filed a separate wrongful termination suit.

  • Age Discrimination: $540,000

A 62-year-old sales representative was terminated for failing to meet his sales quota. Despite layoffs and cutbacks, no documentation showed the plaintiff was a poor performer. The sales rep sued, alleging he was wrongfully terminated because of his age.

  • Racial Discrimination: $200,000

A group of applicants sued a private retail store for ethnic and racial discrimination after learning they had all been denied employment strictly based on their race and ethnic background.

PHLY's EPLI coverage protects against EPLI claims and provides EPLI risk management services to help policyholders reduce risk. The coverage is available to companies with up to 4,000 employees and includes:

  • Worldwide coverage
  • Third-party liability coverage built into the form
  • Optional Duty to Defend Provision that allows an insured to choose defense counsel or tender the defense to the underwriter

Minimizing EPLI Claims Risk

To help reduce the likelihood of EPLI claims and reduce the risk if a claim is filed, PHLY has partnered with The McCalmon Group, Inc. to provide a suite of employment practices solutions to policyholders through The PHLYGateway.

The PHLYGateway is an online platform for organizations looking for EPLI risk management services that better control their EPLI exposure and provide an affirmative defense if an EPLI claim arises. PHLY makes this resource available for all Management and Professional Liability policyholders at no additional cost.

The PHLYGateway provides PHLY insureds access to:

  • E-training on topics such as sexual harassment and discrimination
  • Best practices such as a model employee handbook, weekly best management practices emails, and an archive of articles
  • A Best Practices Help Line that can provide guidance on employee related issues and concerns

No organization wants to face employment discrimination allegations or lawsuits. Even unjustified allegations can cause negative distractions and productivity loss, potentially impacting a company's reputation. The PHLYGateway can help PHLY customers operate within the legal employment parameters and have documentation of their efforts.

For more information on PHLY's EPLI coverage, visit our product page or contact your PHLY representative.

For information on our EPLI risk management services, please visit this page or contact us at PHLYRMS@phly.com.

IMPORTANT NOTICE - The information and suggestions presented by Philadelphia Indemnity Insurance Company are for your consideration in your loss prevention efforts. They are not intended to be complete or definitive in identifying all hazards associated with your business, preventing workplace accidents, or complying with any safety related, or other, laws or regulations. You are encouraged to alter them to fit the specific hazards of your business and to have your legal counsel review all of your plans and company policies.

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