Glossary
Employment practices liability, defined
The legal exposure an employer carries for how it hires, manages, disciplines and dismisses people: allegations of discrimination, harassment, retaliation, wrongful termination, defamation, and failure to accommodate.
In practice
It arises from federal and state civil rights statutes and from common-law claims, and it attaches to the company, its owners and its supervisors personally. A charge usually starts at a state or federal agency and may proceed to court. Small employers are exposed from their first hire under some state statutes and at a modest headcount under federal ones; the thresholds vary and change. General liability policies exclude it, and workers compensation covers injury, not treatment. The costs are defense, settlement, and the time of the owner and managers. Written handbooks, documented reviews, consistent discipline and training reduce it; EPLI transfers what is left.
A worked example
Suppose a retail chain's store manager fires a cashier a week after she reports harassment by a co-worker, and she files a retaliation charge. Even with a defensible reason, the employer spends $30,000 on counsel before the charge is dismissed, and would have spent more at trial. With an EPLI policy the carrier pays that above a $5,000 deductible. Hypothetical.
Applies to: Retail Business InsuranceBusiness Owners Policy (BOP)