148: Should I Buy EPLI?

It doesn’t matter if you are guilty or not, an employment discrimination claim is going to cost you. EPLI stands for Employment Practices Liability Insurance. The free report available on our website, smallbizbrainiac.com, called “8 Steps to Lowering Your Employer Liability”, is all about buying EPLI insurance. The very process of preparing the complete the application will put you in a great position. So go get a copy of that report. What is EPLI? EPLI protects you, your company, its directors, officers and both current and former employees from claims and lawsuits filed by….well, your current and former employees as well as employment candidates. Some policies will also cover claims made by third-parties, like customers, clients and vendors. It covers the cost of defending you against claims or lawsuits related to your employment practices. It will also pay any judgment entered against you. At least up to the limits of the policy. It’s important to understand that the defense costs apply to the limit. So, if the policy limit is $500,000 and the legal costs are $200,000 that leaves $300,000 to pay settlements and judgments. EPLI covers you against employment discrimination claims, sexual harassment claims, wrongful termination claims and violations of the Family Medical Leave Act and other mandatory leave violations. It usually does not cover you against wage and hour claims or violations of the National Labor Relations Act. For example, if your terminate someone after they complain about sexual harassment, and they sue for retaliatory discharge, your EPLI insurance will pay the defense costs and any settlement or judgment amounts. On the other hand, let’s say you misclassify an employee as salary exempt and you don’t pay them overtime. Your EPLI policy will not cover a claim for backpay. It won’t pay for bodily injury or property damage or intentional or dishonest acts either. Not all policies are the same so it’s important to understand what you’re getting. Notice of Right to Sue: If an employee wants to sue you for discrimination on the basis of race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age, disability, genetic information, or retaliation, they have to file a complaint with the Equal Employment Opportunity Commission, or EEOC, first. After the EEOC has investigated the complaint, they may issue a Notice of Right to Sue. After that, your employee has 90 days to file a lawsuit. If your employee wants to file a lawsuit before the EEOC has completed their investigation, they may ask for a Notice of Right-to-Sue. If more than 180 days have passed from the filing, then the EEOC is required to give them the notice. If it’s been less than 180 days, they won’t issue the notice unless they’ll be unable to finish their investigation within 180 days. Employees don’t need a Notice of Right to Sue if they’re suing for age discrimination, but they still have to file a complaint with the EEOC, and must wait 60 days before suing. If they want to file a claim under the Equal Pay Act, they don’t have file a complaint with the EEOC. Instead, they can head straight to court, but they must file with 2 years. If the discrimination was willful, then they have 3 years to file. There were 91,503 discrimination charges processed by the EEOC in fiscal year 2016. They resolved 97,443 charges and collected over $482 million. So, they were able to gain some ground on their case backlog. Almost 46% of charges included retaliation claims. After that, the most popular are race, disability and sex...