Employer Practice Liability Insurance – EPLI

What is employer practice liability insurance? It provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. It covers your firm, including its Directors and Officers.

Usually the next comment after I explain the coverage to a client is, “I hire everyone and we wouldn’t do anything stupid like that.” Their probably right, but would you fire someone if they posted online negative comments about your business and you? Most likely, yes. This was just the case in a recent EPLI claim. This is one example, but there are many other reasons EPLI is a good idea.

1) Employers who also do all the hiring usually don’t have procedures implemented for hiring, firing, and disciplining employees.

2) Even interviews you didn’t hire can sue.

3) As a company grows you cannot monitor all employees.

See below article from IRMI.com:

Did you hear about the recent case involving an ambulance company that fired an employee because she used Facebook to criticize her boss and post derogatory comments about the company? In her wrongful termination suit, she asserted that her conduct was protected under the Constitution, and terminating her based on this activity was illegal. Fearing a jury would agree, the employer settled rather than incur more defense costs and the possibility of losing.

I’m all for free speech, but this seems a little ridiculous. While the employee has the free speech right to talk about her employer, the employer also should have the right to terminate its relationship with the person who does so. This case shows just how far the boundaries of employment liability have been stretched and underscores the need for even the smallest firms to buy employment practices liability (EPL) insurance. Even when an employer ultimately prevails, the defense costs are usually quite substantial.

What do you think? Shouldn’t making disparaging comments about an employer’s business in a public forum be an offense for which an employee may be terminated? What ridiculous EPL claims have you encountered? Do you agree that all companies should purchase EPL insurance?

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2011

International Risk Management Institute, Inc.

p: (512) 649-8191

f: (512) 535-0495

info@pap-ins.com

12600 Hill Country Blvd. Suite R-275
Austin, TX 78738