Before purchasing EPLI, you’ll need to know a few things.
For example, does the policy cover claims made by people
outside your company? Consider paying more to ensure that
it includes complaints made by third parties, especially in
the retail and restaurant industries—such as an accusation
by a customer of sexual harassment by a waiter. “I would
certainly recommend third-party coverage if the business is
open to the public,” says Todd Aidman, a Tampa, Fla.-based
lawyer specializing in labor and employment issues at law
Standard EPLI policies generally don’t include wage and
hour claims, like allegations of shortchanging employees on
tips or failing to pay for time spent putting on protective clothing, says Jim Blinn, executive vice president of client solutions
at Advisen, an insurance data and services provider. Other
types of claims that typically are excluded relate to the Worker
Adjustment and Retraining Notifcation Act, COBRA, the
National Labor Relations Act, the Occupational Safety and
Health Act, and the Americans with Disabilities Act.
The key parameters of coverage―what limit, at what cost
and how much you must pay before it kicks in—vary signifcantly by employer size. Boundary Bay Brewery spends
more than $6,000 per year for a policy that will pay up to
$2 million annually against employment law claims. But
before that coverage takes efect, the brewery is responsible
for a $15,000 retention, which is efectively a deductible.
That’s a pretty typical policy for a business of its size.
From spring 2016 through spring 2018, the median EPLI
limit for employers with less than $25 million in revenues
was $1 million in coverage, according to Advisen. The median annual premium was $4,900 a year, and the median
retention was $10,000.
At the other end of the spectrum, for companies with $5
billion or more in revenues, the median limit purchased was
$30 million, the median premium was $255,000 and the
median retention was $1 million.
While executives at large employers buy coverage to protect against big litigation proceedings, like class-action suits,
Blinn says, they often pay the costs of relatively minor employment disputes themselves.
�;Discrimination based on certain prohibited
categories, such as age, race and sex.
�;Failure to promote.
�;Defamation or libel.
�;Invasion of privacy.
such as making promises and representations to potential employees that turn out to
‘A company can do everything right to follow
best practices and policies, but that doesn’t stop
employees from filing lawsuits. And the cost of
defending against those claims and paying them
can be very expensive.’
DANNA HEWICK, SHRM-SCP