Thursday, March 20, 2014

The Truth About Employment Practices Liability

Did you know 3 out of 5 employers are sued by former employees? From 2001 to 2011, the occurrence of EPL discrimination cases nationwide rose 123%. Private companies are more likely to have an Employment Practices claim rather than a General Liability or property claim.  For reference, a company with $1 million in sales and 50 employees can get an EPLI policy for about $7,000 a year.

One of the most common mistakes small companies make is not making this investment and protecting themselves with Employment Practices Liability Insurance. Over 40% of all employment claims are brought against firms with less than 100 employees. Many Federal and State employment laws apply to employers of all sizes. The median award for EPL claims is over $325,000, this is one risk employers cannot afford to not protect themselves against. 

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Despite what many people assume; Employee Practices Liability is NOT covered in other insurance policies such as General Liability. At Apogee Insurance Group, we offer a wide range of EPLI markets and brokers with years of EPL expertise. To understand exactly what kind of protection we can offer, take a look at five of the most common types of EPL claims and examples.


Just this month, a Houston manufacturer violated federal law by enforcing a retirement policy they thought to be reasonable. The policy, which required employees to retire at the age of 70, was put under legal scrutiny when an employee was let go on his 70th birthday. This policy violated the Age Discrimination in Employment Act and employees rights to compete fairly in the workplace regardless of age. Discrimination applies to any protected group of individuals including, and not limited to, disability, race, religion, sex, national origin, pregnancy and even “genetic information.” Gender and age discrimination claims are particularly on the rise.

Wrongful Termination

An employee was recently awarded $3.5 million by a federal jury after he was wrongfully terminated for reporting illegal conduct. When the employee suspected a fellow project manager of fraud; he decided to write a letter to the company's CEO. When the project manager in question heard about the letter, he threatened to lay the employee off. The following week, the whistle-blower was let go and told he was terminated to save money. The corporation had the right idea by encouraging employees to step forward when they suspected dishonest practices. However, one poor decision by a dishonest employee resulted in a crippling lawsuit.

Sexual Harassment

In February of this year, JPMorgan shelled out $1.5 million for a sexual harassment lawsuit. The money was divided among 16 female employees who worked at the bank’s call centers and endured sexually charged behavior and comments from supervisory staff. Sexual harassment education is important in maintaining a safe work environment, but sometimes all it takes is one ill advised comment to bring your company to court.

Wage and Hour Violations

In one of the most high profile EPL cases in the country, the Federal Court settled a $35 million lawsuit against Walmart in July of 2009 on behalf of workers who alleged they were deprived of meal and rest breaks and forced to work off the clock at Walmart stores. This particular case not only was a huge financial loss but also permanently damaged Walmart’s reputation.

Emotional Distress

In 2007, a woman who worked in a bank had an encounter with a bank robber. The robber was armed with a weapon created an extremely traumatic situation for the employee. In the months following the incident, the employee suffered from PTSD including symptoms of anxiety, irritability, sleeplessness and panic attacks. Supervisors at the bank made the situation worse for her by bringing up the incident on a consistent basis and teasing her for her PTSD symptoms. She was eventually compensated for months of emotional distress.

EPL claims can happen to anyone. Don’t let employers go unprotected, fill out an EPLI application today.