Employment Practice Liability Insurance, commonly referred to as EPLI, provides employers coverage against claims made against them. While EPLI can sometimes be an overlooked coverage option for a medical practice, the reality is, any business that has employees, works with contractors, uses third-party vendors, or interacts with the public at large has EPLI exposure that needs to be covered to prevent a financial loss.
Even if your practice has a Commercial General Liability Policy (CGL), EPLI coverage is normally written as an exclusion for these policies, and any endorsements added under the CGL will offer very little protection. Carriers do not include much coverage for EPLI because most general liability policies only cover bodily injury or property damage. However, EPLI falls into a different category that can be all around harder to define, and consequently, it requires its own specific qualifications for claims and separate limits of insurance.
The following allegations are all potential claims that could be filed under an EPLI policy:
Failure to hire
Failure to promote
Breach of contract
Invasion of privacy
Hostile work environment
Equal pay violation
Third-party claims that occur between an employee and an outside party
EPLI has always been an important component when insuring a medical practice, but recently employment practice claims have been on the rise, making the need for adequate insurance even more urgent. In the last 2 decades, EPLI claims have increased nearly 400%. Even more troubling many of these claims have been brought against smaller businesses, with roughly 41.5% of lawsuits being filed against companies with fewer than 100 employees (Employment Practices Liability Insurance: Start Here | Trusted Choice).
Furthermore, as the number of EPL claims has increased, so have the payouts and general costs associated with these claims. In a study conducted by a leading insurer of EPLI, an average claim that settles before going to court could cost as much as $10,000. However, claims that proceed to litigation could cost anywhere between $50,000 and $70,000 (Facts and Figures: Employment Practices Liability Insurance | Nationwide). Since a majority of EPLI claims come against smaller employers, it’s easy to see how quickly a financial burden of that size could disrupt business.
The increase in EPIL claims is likely due to stricter laws regarding protected classes in the workplace. Protected classes can be based on any of the following criteria, race, religion, national origin, age, sex, sexual orientation, gender identity, pregnancy, citizenship, familial status, disability status, veteran status, and genetic information. As new laws are passed increasing protection for these groups, individuals are gaining a better sense of their rights as cases of EPLI claims enter the public eye. This shift could be leading to a more litigious workforce who are more inclined to make a claim when they feel they have been wronged by their employer.
For medical practices, another important component of EPLI coverage is the protection it provides for third-party claims that come about between your employees and patients. As we have an increase in telehealth services, and more and more individuals are inclined to record conversations, it’s possible some patients will make claims if they feel their physician or other medical provider is discriminating against them based on any of the protected classes criteria.
While most organizations and employees are informed and sensitive enough not to discriminate, all it takes is an allegation or hard feelings from perceived wrongdoing to result in some form of legal action (that you would have to respond to). Having a standalone EPLI policy will provide coverage for legal counsel, legal defense, judgments, and settlements when those instances arise.
If you have questions about a recent interaction you have had in your workplace, you can connect with Professional Risk’s complimentary service, ThinkHR to consult with an HR expert on the matter.
**Please note, speaking with an advisor from ThinkHR does not provide any coverage for a potential claim. Their only purpose is to provide counsel.