Understanding risks as an employer
Employment Practices Liability insurance (EPLI) is an important insurance policy for sports and recreation organizations to cover expensive claims. This policy is usually purchased either in combination with a Directors & Officers Liability policy or can be purchased on a standalone basis.
Employment Practices Liability insurance covers liabilities that can out of the employer – employee relationship. The primary types of covered liabilities include wrongful discipline or termination, discrimination, and sexual harassment. The better coverage forms typically cover a number of other workplace liabilities that are created by state and federal statutes and case law.
Below are samples of the types of employment offenses that are covered by one of the broader forms on the marketplace through Chubb:
- Breach Of Employment Contract can refer to an oral, written, or implied contract, including policy obligations listed in employee handbooks, manuals, etc.
- Employee Discrimination is any violation of employment discrimination laws including wrongful termination, demotion, denial of tenure, refusal to hire, and refusal to promote based on person’s race, religion, creed, national origin, disability, sex, HIV status, sexual orientation or any other status protected by local, state, or federal or common law.
- Employment Harassment includes sexual harassment, unwelcome sexual advances, or requests for sexual favors as a condition of employment, basis for employment decisions, to create an intimidating and hostile work environment. In addition, non-sexual workplace harassment that creates an intimidating and hostile work environment.
- Retaliation against an employee for exercising rights under law, refusing to violate law, or disclosing or threatening to disclose a violation of law.
- Workplace Tort includes employment-related defamation, invasion of privacy, negligent evaluation, wrongful discipline, retention, supervision, hiring, misrepresentation, infliction of emotional distress/mental anguish/humiliation, failure to consistently enforce corporate policies and procedures.
- Wrongful Employment Decision unsubstantiated demotion, denial of tenure, or failure to promote.
- Wrongful Termination unsubstantiated termination, dismissal, discharge, or constructive termination.
Third-party Discrimination/third-party liability
Many of the modern policy forms break out an optional coverage for third-party discrimination or third-party liability. A third party is often defined as someone other than an employee, which can be a customer, vendor, service provider, or other business invitee of the insured. In order to trigger coverage for third-party claims alleging discrimination or sexual harassment, this coverage option must be triggered.
Common EPLI Policy Exclusions for Liability Or Benefits Arising Out Of:
- Employment Retirement Income Security Act (ERISA)
- Consolidated Omnibus Budget Reconciliation Act (COBRA)
- Occupational Safety & Health Laws (OSHA)
- Fair Labor Standards Act
- National Labor Relations Act
- Benefits under Workers’ Compensation, Unemployment Insurance, Disability Insurance or similar local, state, federal, or common law benefit laws
- Racketeer Influenced And Corrupt Organizations Act (RICO)
- Sherman Anti-Trust Act or similar laws
- Punitive or treble damages
- Intentional or criminal acts
- Assumption of contractual liability (ex: indemnification / hold harmless provisions in PEO or employee leasing contracts)
- Costs to modify building under Americans With Disabilities Act
- Employee benefit stock options
- Any employment practices wrongful acts that occurred prior to any “retro date” or “pending or prior date”
- Prior employment practices claims subject to any notice given in any application for coverage
Important EPLI Underwriting Considerations
Some important underwriting considerations for acceptability of a risk or for pricing discounts include recent terminations, turnover rate, layoffs, mergers/acquisitions, salary ranges, incident and loss history, and risk management practices that have been implemented including the existence of an employee handbook.
Contact Sadler Sports Insurance at 800-7622-7370 if you are interested in getting a quote for this important coverage. We have existing programs for local sports and recreation organizations where Employment Practices Liability can be purchased in combination with a Directors & Officers Liability policy for as little as $300.