Employment practices liability insurance (EPLI) has grown in prevalence and complexity in the past decade. While it used to be coverage that only the larger corporates deemed a worthwhile purchase, now businesses of all sizes – including those that are small and family-owned – are seeing value in the product.
EPLI exposures are not tailored to one business sector or size. The wide array of possible employee claims (including, but not limited to: discrimination, wrongful termination, workplace and/or sexual harassment, pay disparity, breach of contract) can impact any business – and with the average cost per claim steadily increasing, it’s critical for all businesses to purchase EPLI, according to Vicky Dearing (pictured), SVP, professional liability and senior broker at Breckenridge Insurance Services.
“I started writing EPLI in 1994. Back then, there was a lot of co-insurance, the premiums were very large, and it was quite a basic coverage. Fast-forward to today and EPLI coverage has increased in complexity to include things like wage & hour, third-party liability, and crisis management,” said Dearing, who will be hosting an educational EPLI webinar on Thursday, May 09.
“The biggest change I’ve seen in the past decade is the addition of risk management tools. About 15 years ago, when EPLI was mainly co-insurance and it was expensive, it was hard to get smaller businesses on-board. They would say: ‘This coverage sounds great, but we really can’t afford it.’ Today, the walls have dropped quite a bit because smaller businesses see the value of the value-added risk management tools that often come with EPLI policies, such as HR hotlines, access to an attorney, employee handbook assistance and so on.”
Smaller businesses are also buying EPLI to protect themselves against ever-increasing court and claims settlement costs. If a small family-owned retail business with 10 employees finds itself in court fighting a discrimination claim, the first round of a US Equal Employment Opportunity Commission (EEOC) hearing could cost $15,000-$20,000. Even if the business is not at fault, small business owners are starting to realize they can’t afford a costly EPLI claim and stay in business.
Another factor that businesses of all sizes find challenging in the EPLI space is the ever-changing regulatory environment. Recently, there’s been a lot of back and forth by the US National Labor Relations Board about employment laws with regards to independent contractors. The EEOC and Congress are also considering making changes to Title VII of the Civil Rights Act, in order to acknowledge discrimination by sexual orientation – something most businesses and insurance companies already recognize despite sexual orientation not yet being a protected class under Title VII.
“Another thing businesses should keep an eye on are the wage & hour laws coming out of the Department of Labor. They need to stay up to date with those regulations and make sure they’re classifying employees correctly,” Dearing told Insurance Business. “The Family and Medical Leave Act is another important law for businesses. It’s not changing but it’s a law that a lot of people misunderstand. These are all things that the value-added risk management tools on good EPLI policies, such as HR hotlines and legal advice, can help with.”
Learn more about EPLI by joining this educational webinar on Thursday, May 09 from 11:30am to Noon ET, in which EPLI expert Vicky Dearing will discuss the array of possible employee claims, the cost per claim, and the ever-changing regulations that can be daunting for many businesses. You can also reach her directly at [email protected].