In the world of insurance, there are so many acronyms to keep track of. Today, let’s chat about another one: EPLI (Employment Practices Liability Insurance). More specifically, we’re going to cover the industries that need EPLI as well as answer the question, does your construction business need it? If so, why?
What is EPLI?
Employment Practices Liability Insurance (EPLI) is insurance that “provides coverage to employers against claims made by employees.”
What Does EPLI Coverage Cover?
Employment Practices Liability Insurance (EPLI) policies typically extend coverage to the following:
- Wrongful Termination
- Sexual Harassment
- Wage-Related Claims
- Claims of Unequal or Unfair Pay
- Discrimination Claims (i.e. age, race, gender, sexual orientation)
- Third-Party Claims
According to Amtrust Financial, the below are also common employer missteps that may be covered:
- Failure to Hire or Promote
- Libel, Slander, Defamation of Character, or Invasion of Privacy
- Wrongful Infliction of Emotional Distress
- Wrongful Discipline or Demotion
Why Is EPLI Important?
According to Advisen, only 32 percent of all construction firms with 50 to 200 employees and 20 percent of all firms with fewer than 50 employees have stand-alone EPLI coverage.
This statistic is low and frightening as the costs associated with EPLI claims can be shocking. In fact, EPLI claims can be detrimental to businesses of all sizes and types. EPLI helps protect against many kinds of employee lawsuits which is why it’s important to invest in coverage as a business.
What Industries Need EPLI?
The fact of the matter is that some industries are more susceptible to these types of claims than others. These industries include healthcare, professional services, restaurant, food services, retail, and manufacturing.
An additional industry that should consider EPLI is construction.
Does Your Construction Business Need EPLI?
The answer is most likely ‘yes.’
As Kevin Howard, CRIS, puts it, “Rapid growth and layoffs are unique aspects of the construction industry that can cause the elimination of a specific position and/or termination.”
Furthermore, “with these ebbs and flows, contractors unintentionally open themselves up to wrongful termination cases which can carry into discrimination charges, as well.”
Employees also often introduce post-employment wage and hour claims, which stem from improper overtime and breaks.
Lastly, as Howard notes, “contractors’ work very often involves interaction and exposure to the public. This interaction can lead to comments, inferences, or specific actions that non-employees find offensive. Claims brought by these third parties are difficult to prove when the employer is unable to witness the events first-hand.”
How to Avoid EPLI Claims as an Employer
So how do you avoid expensive EPLI claims against your construction business as an employer?
Most importantly, study and adhere to the guidelines established by the Equal Employment Opportunity Commission (EEOC). Some of these guidelines include:
- Clearly define employment practices and policies
- Schedule training workshops
- Keep your eye on your workplace
- Let workforce know employment practices violations will not be tolerated
- Maintain an “open door” policy
As discussed above, hiring employees carries inherent risks. Because of this, we’ve put together a few tips to help you reduce your risk, specifically when hiring in California.