EPLI insurance protects law firms.

What is EPLI insurance?

EPLI insurance covers law firms against claims by workers that their legal rights as employees of the firm have been violated.

The number of lawsuits filed by employees against their employers has been rising. While most suits are filed against large corporations, no company is immune to such lawsuits. Recognizing that smaller companies now need this kind of protection, some insurers provide this coverage to endorse their Businessowners Policy (BOP). An endorsement changes the terms and conditions of the policy. Other companies offer EPLI as stand-alone coverage.

EPLI protects against many kinds of employee lawsuits, including claims of:

  • Sexual harassment
  • Discrimination
  • Wrongful termination
  • Breach of employment contract
  • Negligent evaluation
  • Failure to employ or promote
  • Wrongful discipline
  • Deprivation of career opportunity
  • Wrongful infliction of emotional distress
  • Mismanagement of employee benefit plans

The cost of EPLI coverage depends on your type of firm. The number of employees you have and various risk factors, such as whether your company has been sued over employment practices in the past. The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements. The policy covers legal costs, whether your company wins or loses the suit. Policies typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies, such as worker’s compensation, are excluded from EPLI policies.

To prevent employee lawsuits, educate your managers and employees so that you minimize problems in the first place:

  • Create effective hiring and screening programs to avoid discrimination in hiring.
  • Post corporate policies throughout the workplace and place them in employee handbooks, so policies are clear to everyone.
  • Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Ensure supervisors know where the company stands on what behaviors are not permissible.
  • Document everything that occurs and the steps your company takes to prevent and solve employee disputes.

Attorneys sitting in an office.

EPLI Insurance Overview

Did you know that studies show that 1 out every 10 law firms will face some employee-related litigation?  Because of this, we recommend that all firms purchase Employment Practice Liability Insurance (EPLI).  EPLI Insurance protects your firm from the following types of claims scenarios:

  • Sexual Harassment
  • Wrongful Termination
  • Age Discrimination
  • Racial Discrimination
  • Religious Discrimination
  • Disability Discrimination
  • Sexual Discrimination
  • Hostile Working Environment
  • Breach of Contract/Misrepresentation
  • Harassment & Emotional Distress

More important than the coverage provided for the scenarios above is that your EPLI policy will also pay for the defense costs associated with defending you in the claim.  In fact, the defense costs can easily cost as much, if not more, than the claim payment itself.

Claims Scenarios

Here are a few claims scenarios that have happened to law firms where EPLI Insurance was involved:

Sexual Harassment: Repeated comments made by an office manager resulted in a $350,000 payout to three former employees alleging sexual harassment.

Wrongful Termination:  A human resources director was advised to terminate an investigation of allegations of sexual harassment by a partner.  She was subsequently terminated from her position and was paid $300,000 in her wrongful termination suit.

Age Discrimination: A 62-year-old teacher successfully sued her employer for age discrimination because the law firm failed to document the employee’s poor performance properly. The representative won over $100,000 in the suit.

Disability Discrimination: When a law firm told a disabled job applicant that they had no openings for persons in wheelchairs, they found themselves with a $3.5M jury verdict.

If you would like to learn more about obtaining an EPLI policy for your firm, please feel free to give our office a call.