It is one of the hottest issues of this news cycle: inappropriate sexual behavior in the workplace. Sports stars, journalists, pastors, actors, directors, producers, government officials and more are being accused on a daily basis of sexual harassment and/or sexual misconduct.
The question is, can you get sexual harassment insurance to protect your business from these claims? The answer is yes.
It’s Called EPLI
Employment Practices Liability Insurance (EPLI) is the type of coverage that protects employers who may find themselves in the midst of sexual harassment allegations, among other things. This coverage is typically purchased as either a stand-alone policy or included with general liability or directors & officers liability packages.
EPLI policies can be written to cover a number of potential problem areas including sexual harassment, sexual discrimination, mental anguish, wrongful termination, negligence, whistleblower retaliation and more.
It’s Pre-Paid Legal
When you read about workplace sexual harassment claims, the legal settlements usually aren’t that large, with many settlements under $100,000. In fact, the Equal Employment Opportunity Commission reports that in Fiscal Year 2016 there were 9,566 claims settled without litigation, resulting in $40,700,000 in claims payments. That’s an average claim payment of just $4,254.65.
What that figure doesn’t take into account are those claims that were litigated. Legal fees can dramatically increase the cost of a sexual harassment claim, as well as increase the amount of time involved in fighting a suit. Litigated claims can often also increase the amount of settlement beyond $100,000, in addition to those legal fees.
EPLI insurers offer legal representation to their policyholders, in addition to indemnity payouts for settlements or judgments. These costs are usually outside the limit, so talk to your broker about how your policy is written.
What It Doesn’t Cover
EPLI covers many things, but there are a few things you should know before purchasing this coverage:
- It typically doesn’t cover company owners or directors. This coverage will extend to cover managers and employees in their actions against subordinates, fellow employees, and customers, but company owners and directors are excluded from coverage.
- This is not a license to commit employment-related acts of harassment or discrimination. Employees and managers should be regularly trained in how to deal appropriately with others.
- Coverage is triggered by legal liability. Actions occurring off work premises during off hours may not be covered.
- Coverage is not retroactive. If you do not have EPLI coverage and you have a lawsuit pending, purchasing coverage will not offer protection for an existing claim.
EPLI Covers More Than One Facet
Many high profile public figures have been fired due to the allegations being leveled against them by other employees. In addition, employees claiming to have been harassed are suing their employers for this harassment. EPLI would offer coverage to the policyholder for not only the wrongful termination suit brought on by the fired employee, but also the hostile workplace/sexual harassment suit brought on by the reporting employee.
These policies are often written on a manuscript basis. It is important to discuss your concerns with your insurance broker to determine what coverage may be right for your business. Hayes Brokers offers a free no-obligation risk management analysis. Call today to schedule an appointment.