You survived the business lockdown, the virus, and the recession. Can you survive lawsuits from your own employees?

As we approach 2021, employers who persevered through the trials of the governmental business shutdowns are anxious to turn the page, and to return workers into a safe and profitable workplace. An often underappreciated part of an employer’s commercial insurance program – Employer Practices Liability Insurance – will be tested in new and unanticipated ways as a result of the Coronavirus pandemic. Now more than ever is the right time to understand your current coverage, and to contemplate endorsements and higher limits to strengthen what policies are in place now.

Employer Practices Liability Insurance (EPLI) typically defends against claims of employment law or practice violation that typically include discrimination, harassment, breach of contract, retaliation, failure to promote, wrongful termination, unsafe workplace, and financial impairment.  Employers should not find it surprising that this is an evolving field of law and the list of possible employee grievances continues to expand.

According to Philadelphia Insurance Company, a provider of quality standalone EPLI coverage, common examples of employee allegations that lead to claims include:

• Age Discrimination – an older worker terminated for poor sales performance without documentation results in a $540,000 claim.
• Wrongful termination – an executive removed for allegations of sexual harassment counters with evidence of wrongful termination and use of the allegations as a pretext for the dismissal.
• Retaliation – an Executive Assistant is terminated for divulging confidential information, but in response brings suit that firing was the result of retaliation for ongoing sexual harassment. Defense costs exceed $150,000.
• Disability Discrimination – An employee out on medical leave for treatment has the position replaced by a healthy worker. The resultant suit and settlement costs greater than $100,000

As a result of the pandemic, the risk to employers has risen exponentially.  New threats emerge every day: Ever-changing CDC guidelines make rules like quarantining and self-isolation confusing and difficult to enforce consistently; Performance reviews become treacherous for employees mandated to work-from-home in comparison to coworkers performing similar job functions work in office; Overlapping and excessive family medical leave rules become ripe opportunities for employee complaints.

What’s an employer to do? First, contact your agent for an immediate review of the current EPLI coverage in force.  Seek standalone coverage over endorsements adding coverage to existing business owners policies.  Budget for EPLI spending as a valuable and necessary business protection tool.  But most importantly, every employer must use this moment to become better educated on how their insurance coverage will respond, and where the gaps in coverage exist.