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Employment Practice Liability Insurance

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Employment practice liability insurance provided by Cowell James Forge Insurance Group.

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The number of harassment claims has been on a constant rise. But it largely correlates with broader changes in society. Transgender and LGTB communities encounter harassment and discrimination in the workplace.

Workplace discrimination can be due to:

  • Ethnicity
  • Disability- both mental and physical
  • Gender
  • Pregnancy
  • National Origin, Race or Color
  • Age


On the other side, employee lawsuits are also on the rise. Even when you’re in the right, you might get drained financially by the legal fees. That’s why having employment practices liability insurance is imperative.

Employment Practices Liability Insurance Claims

The EPL policies are formulated to cover the costs of defending your organization against settlements, judgments, and settlements. And if the act committed was not illegal, the insurance company will cover the legal fees regardless of the lawsuit’s outcome.

A quality policy should cover the following claims:

Failure to Promote

An employer has the right to the promotion of the employee. However, some decisions can be based as illegal or discriminatory. With this, you can get a case of failure to promote.

The employee can file a lawsuit due to some form of discrimination and obtain financial compensation in the form of lost benefits, lost wages, punitive damages, and emotional distress damages.


According to the EEOC, there were 11,283 sexual harassment cases in 2019. While there are several harassment claims an employee can file against your company, sexual cases are the most prevalent.

Sexual harassment involves unwanted sexual advances both verbally and physically. It can be coworkers or management requesting sexual favors in exchange for promotions. To some extent, employees underreport these cases due to fear of losing their jobs or simply don’t know when this illegal harassment crosses the line.

The two types of sexual harassment include:

  • Hostile work environment- It occurs when the employee gets subjected to verbal or physical harassment that’s so pervasive to disrupt their working condition.
  • Quid pro quo – This is where a supervisor or manager requests sexual favors in a tangible job action. For instance, “I’ll fire you if you don’t sleep with me.”


Unwanted touching of genitals, kissing, rape, invited messages, and butt slapping are clear signs of sexual harassment.


The retaliation claim is where the employees allege being discriminated against or harassed against speaking out about specific issues happening at the workplace. In short, it’s a punishment for being vocal.

In most cases, retaliation claims are often related to demotions, unfair dismissal, failure to promote, or a pay cut. All these acts have nothing to do with an employee’s performance. However, a successful retaliation claim should prove three distinct elements:

  • That an employee suffered adverse action like termination, negative evaluation, and change in shift or job assignment.
  • That employee can prove corporate misconduct.
  • Causal connection between the protected activity and adverse action


The employee often files retaliation claims if they can shed light on something the company did not want to be known.

Mismanagement of worker’s benefits

The company’s employees can sue if there is mismanagement of benefits such as healthcare and retirement plans. It’s recommended to have fiduciary liability coverage for these cases.


Workplace discriminations come in various styles. It can be due to national origin, age, color, race, equal pay, pregnancy, and genetic information.

Wrongful termination

In this case, employees believe they were terminated unlawfully. It means they lost their jobs for reasons not related to their performance or productivity. It can be due to sexual harassment.

When terminating an employee, ensure there is a breach of the employment contract in a way.

Employees rarely win wrongful termination claims, but they can hurt your finances.

What’s Not Covered by Employment Practices Insurance Coverage Policy

If your company is sued due to illegal action, the employment practices liability coverage will not cover your costs. There are, however, claims and losses the EPL policy does not cover, including:

  • Criminal fines
  • Penalties
  • Claims related to workers’ compensation
  • Civil fins
  • Unpaid wages
  • Claims related to unemployment benefits


Save Yourself A Lot of Headaches by Hiring a Reliable Insurance Agency

While there is no foolproof way to prevent employee-related lawsuits, you can adopt some strategies to minimize the risks of employment claims as a business.

Do not let the efforts of building a successful company go down the drain. Protect the interests of your business against employment lawsuits.

We are an independent agency, ready to help you find the best employment practices insurance coverage. Call us today to evaluate your needs and get a free quote.

Employment Practice Liability Insurance - Woman Getting Hired for Her First Job

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