Protect Your Wash - Employment Practices Liability Coverage
By Daniel Tharp
Every year more and more businesses are finding themselves in court to defend against employment related charges. Even if found innocent of those charges, the legal fees alone can be devastating. The number of charges being filed and settlements being reached has been steadily rising every year.
Employment-practices claims often cost over $100,000 to defend and resolve. In the past 20 years, sexual harassment, discrimination, retaliation, and other “employment practices” claims have grown exponentially. In 2017 the Equal Employment Opportunity Commission (EEOC) filed over 91,000 charges against businesses. The types of charges included allegations of discrimination by race, EPLI is often written as a named-perils policy.sex, national origin, religion, age, disability, and a few others. No employer is immune from employment lawsuits. Every company that has employees has an Employee Practices Liability risk exposure and should be proactively covering its assets to mitigate the potentially catastrophic impact of judgments, settlements, and defense costs associated with employment-related litigation. Moreover, third parties, such as customers and clients, are also frequently seeking legal remedy for alleged discrimination or harassment, posing an additional exposure.
Here are a few examples: • In Grand Rapids, Michigan, a jury awarded $7.9 million to a female employee who worked for Consumers Energy for claims of sexual harassment, hostile work environment. • A jury awarded more than $20 million in a sexual harassment and retaliation suit brought by the Equal Employment Opportunity Commission (EEOC) on behalf of employees of two Florida travel agencies. A federal jury returned a unanimous verdict awarding a total of $20,251,963 to eight former employees who suffered sexual harassment and retaliation. • A car wash chain was sued by the EEOC for “repeatedly refusing to advance qualified African-American employees to management positions”
Most commercial general liability policies, at best, have very limited coverage for claims related to employment practices. The best avenue to protect your wash operations against these types of claims is through the purchase of Employment Practices Liability Insurance (EPLI). EPLI covers companies against claims or lawsuits filed by employees, former employees, and employment candidates regarding their employment relationship with an employer.
Virtually all EPLI insurance is written as a named-perils policy. This means there is a positive coverage grant only for the specific wrongs defined as “wrongful acts” under the policy. If the claim asserted against the employer is not one of the listed named perils, then there is no coverage. So this definition is at the heart of coverage under the EPL policy.
The most common EPL “wrongful acts” are the following: • Discrimination • Harassment • Wrongful termination • Failure to hire/promote • Defamation • Invasion of privacy/ confidentiality • Negligent hiring and supervision • Retaliation and reprisal
In addition, some EPLI policies provide coverage for wage and hour (FLSA) claims. Because of the increasing frequency and severity of wage and hour claims, most employers find this coverage to be an excellent investment.
If there is a covered “wrongful act,” the policy should then be examined to determine if the claim falls within the scope of the exclusions. Most EPLI policies exclude the following: • Fraudulent and criminal acts • Contractual wage claims • Workers compensation and similar laws • ERISA • Bodily injury
Many EPL policies also exclude: • Worker Adjustment and Retraining Notification Act (WARN) claims • Americans with Disabilities Act (ADA) claims • Wage and hour (FLSA) claims • Insurance benefits
Because of the many variations in “exclusion” language, employers should be careful when shopping for EPLI insurance. Talk to your broker, attorney, and/or risk manager. A policy with fewer exclusions may cost a bit more, but may still be a good investment.
Employment-related changes can occur at any time.The take-away here is that these charges and allegations can occur at any time — regardless of how careful you treat employees. Talk to your commercial insurance representative today about a quote for Employment Related Practices Liability Insurance. The minimum limit of liability to consider should be $1,000,000. Premiums will vary based upon the number of employees at your business.
Dan Tharp, CIC, RWCS, is licensed in all states (except Alaska & Hawaii) and is the vice president of sales for The Insurancenter and head of the Car Wash Division. Dan has been assisting business owners protect their operations, customers, and employees for over 25 years. You can contact Dan via e-mail at DTharp@theinsurancenter.com or by calling (800) 444-8675.