What is EPLI Coverage?
Employment Practices Liability Insurance is available to protect businesses for both first-party (employment related) and third-party (customer and vendor) lawsuits involving such issues as harassment or discrimination. Third-party liability coverage is generally available by endorsement for additional premium and should be seriously considered by businesses that interact with the public.
Why is it important?
The sole purpose of insurance is to provide you with a form of protection against a possible risk. No company, large or small, is immune to lawsuits. Lawsuits can mean costly legal and attorney fees that can really hit your company’s bottom line. According to SHRM, the average cost for defending and settling employment law cases is $160,000. So how do you protect your business against possible future claims? That’s where Employment Practices Liability Insurance comes in to help mitigate this risk.
The Scary Truth: Real Examples of First-Party EPLI Claims
Sexual Harassment Claim: A family fun center waitress claimed that she was sexually harassed while on the job. The woman filed a lawsuit against the FEC, seeking damages. The woman claimed that her workplace was more like a “locker room” than a family fun center. The business offers restaurant food as well as games, such as laser tag and bowling. During her time as a lead banquet attendee and trainer, an employee allegedly harassed her on multiple occasions which included inappropriate comments and touching.
Racial Discrimination Claim: A former employee is suing an amusement park claiming he was the victim of racial discrimination while he worked there. He is seeking an unspecified amount of compensatory and punitive damages against the owners. He says that he was hired as a human resources manager at the park and was promised a salary of $45,000, which would increase to $50,000 after working 90 days. The lawsuit says that in his position, he had access to the salaries of other co-workers, and discovered that other similar level employees of a different race were paid substantially more. He also claims in the lawsuit that from the start of his employment, he began to have near daily issues regarding race discrimination including the use of inappropriate name calling and other discriminatory acts.
Wrongful Termination Claim: The United States Equal Employment Opportunity Commission filed a lawsuit against an amusement park, after the company terminated an employee based on his intellectual disabilities without attempting to provide any accommodations. According to the legal complaint filed by the EEOC, the employee in question suffered a traumatic brain injury as a child, leading to some mental impairments; however, he was able to work for the park for four years doing maintenance and custodial work. It was only when the company implemented a new computerized timekeeping system that the employee experienced difficulty logging his hours. After noticing her son had not received payment in some time, the employee’s mother contacted the park and questioned the change, asking that they provide some alternative method of logging hours for her son. The company refused her request and later terminated the employee.
Other examples of first-party EPLI lawsuits include “all other” workplace torts which include forms that can provide coverage for various claims alleging actions other than discrimination, harassment, or wrongful termination. Some examples of this could be wrongful discipline, wrongful demotion, failure to grant tenure, etc.
Third-party employment practices liability coverage is needed because coverage for claims by nonemployees is not provided under commercial general liability (CGL) policies or standard first-party EPLI policies. This is because CGL policies exclude coverage for harassment and discrimination—the two causes of action most likely to be alleged in claims by third parties.
Real Example of a Third-Party EPLI Claim:
A disabled teenager and his parents filed a lawsuit against an amusement park when the teen was told he wasn’t permitted on all but two rides because of the park’s new ridership rules. His suit claimed that the amusement park violated state and federal anti-discrimination laws for barring him from the rides, including some he’d ridden before. The park countered that it is bound under their state’s law to follow ridership guidelines mandated by its ride manufacturers.
What can you do as an employer?
As a business owner, you have to shoulder some of the responsibility and not rely solely on your EPLI coverage. Make sure to do your due diligence like having employee orientation, periodic trainings about harassment and discrimination, and have a written policy in place that is practiced. This could even result in a lower third-party employment practices liability quote depending on the insurance carrier. There is no right price for the wrong coverage, which is why there is always value in discussing your family entertainment or amusement insurance needs with our team at SafePark USA!