| Employment Practices Liability
(EPL) Exposures And Coverages
By: Thomas M Kallman
Driven by an explosion of employment related lawsuits,
employment practices liability (EPL) coverage is a new
and needed coverage. Recent legislative and legal changes
have provided significant incentives for employees to
file employment-related claims, and employers should
now possess an increased awareness of employment exposures
and be receptive to coverage recommendations that offer
risk protection.
Over the last several years, litigation related to employee
complaints alleging discrimination, harassment, and
wrongful termination has increased dramatically. These
suits can cost hundreds of thousands, even millions
of dollars. Even an employment related claim without
merit could cost an employer $10,000 - $20,000 to defend.
Consider it reasonable for you to foresee that a claim
may be brought against you if a current or former employee
or an applicant for employment has expressed dissatisfaction
with the employment relationship, or the employment
application process by either making a formal complaint
to a supervisory employee of discrimination, harassment,
or unfair employment practices; threatening to hire
an attorney; asking for a severance package in excess
of what is being offered; complaining of discrimination,
harassment, or unfair treatment, and threatening to
do something about it; or frequent complaining of discrimination,
harassment or unfair treatment.
Monetary remedies available under the laws enforced
by the EEOC are as follows:
lost wages and prejudgment interest; liquidated/double
damages; compensatory damages; and punitive damages.
EPL coverage typically provides coverage for employment
claims from the following areas: Wrongful employment
(hiring or termination); Sexual harassment & Discrimination.
In selecting and pricing risks, underwriters look at
a variety of factors. These include the obvious ones
such as the number of employees and the location of
the risk. Other factors include the industry, employment
practices, loss experience and operating characteristics.
Because of these variables, EPL policies come in a
wide range of types and are offered by a number of different
insurers. Often, the best price, coverage, and service
option may be provided by a smaller specialty insurer.
Comprehensive, competitively priced coverage is available
for all types and sizes of accounts. Coverage can be
provided as either stand-alone EPL coverage or EPL coverage
as an extension to a Directors & Officers Policy.
Many entities do not have coverage now, and need this
coverage. The time to secure a policy is before a problem
occurs, as most insurers underwrite this line very carefully,
taking prior complaints very seriously. In order to
be considered by an insurer, a Company must first establish
a formal employee procedure manual and follow each and
every section in a consistent manner.
EEOC publications are available free of charge from:
U.S. Equal Employment Opportunity Commission
Publications Information Center
P.O. Box 12549
Cincinnati, Ohio 45212-0549
(800) 669-3362 (voice)
(800) 800-3302 (TDD)
(513) 791-2954 (FAX)
Thomas Kallman is President of TMK Risk Management
Inc
DBA Kallman Insurance Agency. PO Box 266736 Weston,
Florida 33326. Phone: 954.389.5897 Fax: 954.389.6661
Website: www.tmkrisk.com Your inquiries are always welcome.
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