Topic Thread

Topic: Employment Practices Liability Insurance 

1.  Employment Practices Liability Insurance

Posted 10-05-2017 11:39
While discussing our insurance renewal with our broker, he mentioned this type of coverage that I had never heard of to that point. He sent me some materials on it and it looks like it basically covers legal defense when a terminated employee files suit. Reading up on it a little more, it would appear that the alternative defense is good HR policy. He mentioned he carries it and he has an office of 6 employees.

I'm interested to know if anyone else carries this type of coverage. Maybe it's just a litigious California thing?

Sean Rafter CPA
Watkins Landmark Construction
Carlsbad CA
(858) 259-1240

2.  RE: Employment Practices Liability Insurance

Posted 10-06-2017 07:00
It will actually cover quite a bit more than that specific situation.  At a past employer this type of policy covered a benefit administration error that could have represented hundreds of thousands in liability.  (Someone was put on our health insurance that should not have been and we didn't discover it until they had a major claim.  The health insurance company sought reimbursement from the employer.) The small policy premium was well worth it.

Kit Gleason
Sioux Falls SD
(605) 321-5495

3.  RE: Employment Practices Liability Insurance

Posted 10-06-2017 07:49
​EPLI is becoming more common these days.  I am a labor and employment attorney and our clients, both big and small, often purchase it.  We see EPLI a lot more now than we did 5-10 years ago.  Good HR practices help a lot, but sometimes there is no way to avoid an employment lawsuit.  Certainly may be worth exploring further with your broker.

Martin Heller
Fisher Phillips, LLP
Atlanta GA
(404) 240-4416

4.  RE: Employment Practices Liability Insurance

Posted 10-09-2017 09:22
​Actually that is not Employement Practices but Fiduciary Liability for that scenario.  However most companies buy both of these coverages after they experience and issue or claim.  Many always thought that Employment Practices Liability was more in the "white" collar businesses but any company can be brought into that type of suit.  More examples:  didn't hire or promote someone due to race, ethnicity, gender, tattoos, piercings, religion, age, to name a few.

Hope that helps and if you need any guidance on this, your insurance agent should be able to help you but should be presenting this to you as a risk management tool.  If not, you need a more experienced agent.

Karen Mummert AAI
E.K. McConkey & Company
York PA
(717) 755-9266

5.  RE: Employment Practices Liability Insurance

Posted 10-10-2017 08:20
In this case it was the Employment Practices Liability that paid the claim.  The company had not purchased a Fiduciary Liability policy.  Not that it hadn't been suggested or recommended.

Kit Gleason
Sioux Falls SD
(605) 321-5495

6.  RE: Employment Practices Liability Insurance

Posted 10-06-2017 08:17

Hi Sean,


We carry the coverage and unfortunately needed to use it a few years ago.    Regardless of how strong your policies are, if an employee files a suit, you have to defend and that's where the policy is priceless.


Bonnie A. Teffeteller, CCIFP
717-238-7709 x6 phone
717-238-8150 fax



7.  RE: Employment Practices Liability Insurance

Posted 10-06-2017 08:31
Let me put it to you this way. We are a law firm and handle employer side employment law claims and we have EPLI.  NY is just as litigious as CA.

Thomas Tripodianos JD
Welby, Brady & Greenblatt, LLP
White Plains NY
(855) 740-2860

8.  RE: Employment Practices Liability Insurance

Posted 10-06-2017 10:47
We just purchased this type of policy within the past year.  What prompted us was a friendly competitor had an union employee threatening to sue for wrongful termination.  It was a bogus lawsuit, but they spent money in legal fees to make it go away.  With the EPL policy, would have had to pay a lot less on the legal fees.   I truly get the impression it is worth having in our litigious society and we're in the Chicago area.

Eileen Moran
Moran Electrical Contracting
Alsip IL
(708) 597-9011

9.  RE: Employment Practices Liability Insurance

Posted 10-06-2017 13:14

We carry this insurance (and yes, being in California is a definite incentive).  We try to follow all of the laws correctly and rely on the advice of a professional H/R consulting firm for everything out of the ordinary.  However, with  so many areas of exposure and given the litigious nature of employees/lawyers in this state, we feel insured protection is necessary.  We have 30 employees.


Thank You,


Greg Belanger


West Fork Construction, Inc.

6050 Warehouse Way

Sacramento, CA  95826

916.452.8197  x11


10.  RE: Employment Practices Liability Insurance

Posted 10-06-2017 15:39

Yes your broker was correct to talk to you about it. We have A LOT of construction clients and we tell all of them to buy it. That being said, less than 1/2 actually go through with purchasing it even though it is relatively cheap.

Some of the most common ways it helps you is if you get sued for wrongful termination, retaliation or sexual harassment. Even with proper employment practices in place and regardless of if you win or lose the case, you could easily have a fortune in court costs. Your company size, record and employment practices could all influence your premiums.

Hope this helps! Glad your broker brought it up!


Kenneth Hallacy MBA
Risk & Business Development Manager
IMA, Inc.- Largest employee-owned insurance brokerage in the U.S.A

11.  RE: Employment Practices Liability Insurance

Posted 10-09-2017 12:22
We purchased this coverage for the first time on our insurance renewal this year.  The premium was inexpensive and coming from a law firm environment I know how quickly legal fees can add up even for a bogus nuisance claim.  Hopefully, we never have to make a claim but its there if we do.  We have 70 employees in DC area.

Susan Early
Accounting Manager
Orion Management, LLC
DC Metro Area

12.  RE: Employment Practices Liability Insurance

Posted 10-10-2017 11:43
Edited by Nate Weaver 10-10-2017 11:44

I'm on the Construction Team here at Gallagher where nearly 100% of our clients are construction companies.  Roughly 25 years ago, EPLI coverage was new and not many construction companies were buying it which is similar to how Cyber Liability coverage is being treated today.  Now, I would say roughly 90% of our construction clients purchase EPLI coverage.

One of the biggest features of the EPLI coverage is that it will cover the cost to defend or settle claims up to the policy limits.  A strong HR policy doesn't prevent you from getting sued.  Also, keep in mind that plaintiffs have many avenues for discounted or free legal counsel.  This would include attorneys working on a percentage or even government agencies.  Here in Minnesota we have the Department of Human Rights that will assist people in making a claim and even act as a "neutral enforcement agency" helping to negotiate settlements for labor disputes.
According to the International Risk Management Institute, the average plaintiff's verdict in these type of suits is over $250,000, with 15% of all verdicts topping $1,000,000.  Even if you're "successful" in defending against a claim defense costs can reach $50,000 - $100,000 pretty easily.  For these reasons, we strongly recommend EPLI coverage to our construction clients as a part of a well rounded risk management program.

Nate Weaver, AFSB
Account Executive - Construction Practice
Arthur J. Gallagher & Co.
Bloomington MN
(952) 358-7518

13.  RE: Employment Practices Liability Insurance

Posted 10-11-2017 09:56
We bought EPLI coverage several years ago, even though we wondered if it was worth it. Our agent convinced us that employment practices were becoming the lawsuit of choice. Last year we received a claim filed by an attorney with a history of filing petty claims against non-union construction firms in our area. It was a claim for travel time payment for one of our apprentice electricians, even though we have a very liberal travel time payment. EPLI kicked in to defend. I recommend that coverage.

PS - We also engaged a local attorney (at our cost) that knew the plaintiff's attorney and how he played the game. That was a great help in closing the case quickly rather than let the plaintiff's attorney drag it out and run up a bill. Ended up costing less than $20K.

Gary Garber
Garber Electrical Contractors
Englewood OH

14.  RE: Employment Practices Liability Insurance

Posted 10-13-2017 07:59
This is a very lively discussion.

Some things to consider.

EPLI is a manuscripted coverage.  This means the forms are not standard forms and the insurance companies can author them however they wish.  This gives you, the buyer both vertical (limits) and horizontal (scope of coverage) options.

The Yugo (millennials ask your parents what a Yugo is or Google it) plan will provide basic coverage for 1st party hiring and HR situations, employee discrimination, hiring, firing, sexual harassment, etc.

Getting to the Ferrari plan can include options such as
  • Wage and hour sublimits- defense only (yes you still have to pay the wronged employee(s) out of your pocket).
  • Duty to defend or duty to pay (for those that want to keep your reputation and not just settle)
  • Punitive damages (may not be available in all states due to laws)
  • Prior acts coverage 
  • Defense against a government agency
  • Free hotline to an HR attorney for advice
  • Third party coverage.

Do not discount the last bullet point, especially if you are the GC.  I have seen landmark awards on the last one.
In PA 2 contractors were smacked hard for putting a noose on a beam at a construction site.
Contractor for a large cable company was accused of exposing themselves in front of a woman in her home.
Cat calls or derogatory remarks to a female construction worker or engineer on the jobsite (do you build apartment buildings and have leasing agents coming on site during the final phases of construction)?????  Leasing agents are often younger females.
Remarks about the ethnicity of another trade on site.... get your head out of the sand, construction is one of the most group diverse of employees in the country.

3rd party coverage is going to be expensive......  would you send your loaded dump truck down the road without insurance if you were legally able to???
At the very least, go through the application process.
Here is a hint about insurance applications that you all glaze over when filling them out.  They are YOUR GUIDE to best practices even if you don't buy the coverage.

Final note of correction.....  EBL coverage pays for benefit issues and is attached to the general liability policy for a small amount of money.

Ronald Hicks CIC, CRIS, CRM
Vice President
Hicks Risk Managment Consulting
Mt Laurel NJ
(609) 314-4182