EPLI Archives - Competitive Edge Insurance

Workers’ Compensation and EPLI: Defined

Briefly, before diving in, we want to make sure that readers are familiar with both workers’ compensation and EPLI. Below is an abbreviated definition of each.

Workers’ Compensation Insurance

Workers’ compensation is insurance, paid by an employer. This coverage provides wage replacement and medical benefits to employees who are injured during while working for the insured.

Wages and benefits are provided in exchange for eliminating the employee’s right to file a lawsuit against their employer’s negligence, and can help pay for:

Lost wages

Medical expenses

Rehabilitation costs

And more

Employment Practices Liability Insurance

Employment practices liability insurance (EPLI) “provides coverage to employers against claims made by employees.” 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

For more information, read our EPLI article.

A Background on Workers’ Compensation and EPLI Claims

Over the past two years, the number of both workers’ compensation and EPLI claims have increased. In fact, research from the Equal Employment Opportunity Commission (EEOC) shows that EPLI claims have increased annually since 2003, with 37,632 workplace retaliation claims filed in 2020.

Moreover, as individuals have begun to return to work in person, the number of claims regarding health and safety in the workplace have increased as well. These claims typically include:

Employee concerns about exposure to COVID-19 due to unsafe working conditions, or

Situations where employees allege they were wrongfully denied a request for a workplace accommodation or leave

What Can You Do as a Business Owner?

So, with this rise in claims, what can you do to protect yourself as a business owner? You can prevent workers’ comp and EPLI claims by:

Developing and Distributing an Employee Handbook

Developing and Distributing a Code of Ethics Policy

Implementing a Handbook Auditing Procedure

Prioritizing risk mitigation

Interested in learning more about risk mitigation? Read on in our article “Risk Mitigation: What Is It and How Can You Do It?”

In the world of insurance, there are so many acronyms to keep track of. Today, let’s chat about Employment Practices Liability Insurance (EPLI).

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?

infographic for EPLI: Does Your Construction Business Need It?

WHAT IS EPLI?

Employment Practices Liability Insurance, or EPLI, is insurance that “provides coverage to employers against claims made by employees.”

WHAT DOES EPLI COVERAGE COVER?

Employment Practices Liability Insurance 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% of all construction firms with 50 to 200 employees and 20% 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.

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 for businesses to invest in coverage.

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 and food services
Retail, and
Manufacturing

An additional industry that should consider EPLI is construction. Continue reading to find out why.

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 MINIMIZE EPLI CLAIMS AS AN EMPLOYER

So, how can an employer minimize expensive EPLI claims against their construction business?

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 your 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 on how to reduce your risk when hiring, in California specifically.

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Workers’ Compensation and EPLI Claims Are Rising: What Does This Mean?