Along with the other aspects of directors and officers insurance (D&O insurance), employment practices liability is available on most policies. This liability insurance covers claims against the business or a member of the business in regard to certain HR practices.
Coverage under employment practices liability includes:
- Discrimination based on gender, race, sexual orientation, etc.
- Sexual harassment
- Wrongful firing or hiring
- Failure to promote
- Mismanagement of employee benefits
- Breach of employment contract
- Violation of privacy
- Retaliatory discharge
- Infliction of mental or emotional distress
These types of claims may come from current employees, former employees or potential employees. If a potential employee feels they have not been hired due to discrimination against their race, gender, etc., they may file a suit against the hiring manager. This would be covered under employment practices liability, whereas a basic D&O insurance policy would not.
While it’s important that all directors and officers receive proper training, both sensitivity training and basic training, it’s often impossible to avoid conflict between people. This is why insurance agencies should carry D&O insurance with an EPLI endorsement in order to protect employees and the company.
Unhappy agents can often reflect that unhappiness on the customer, which can drive away business. Ensure your insurance agency maintains a welcome, open environment. Be sure that all potential directors and officers undergo extensive background checks and training before hiring.
Why Do Insurance Agencies Need Employment Practices Liability Insurance?
Any business that employs workers should carry employment practices liability as part of their D&O insurance policy. Claims happen frequently between disgruntled employees and their employers, and lawsuits can be unfortunately expensive. Employment practices liability helps cover the cost of such a lawsuit.
What Does Employment Practices Liability Not Cover?
As with all insurance coverages, employment practices liability has certain exclusions. Criminal acts will not be covered under this liability insurance. They also do not cover claims filed between employees or accidents involving bodily injury or property damage.
Any physical injuries an employee may suffer on the job should be covered under workers compensation insurance, not D&O insurance or employment practices liability. Accidents relating to commercial vehicles are also not covered under PLI.
EPLI does not cover fraud, personal profiting or other types of theft committed on behalf of an employee, even directors and officers.