Employment practices liability insurance (EPLI) is an insurance product that provides protection to employers against claims made by employees. The coverage generally includes cases based on wrongful termination of employment; discrimination based on sex, race, age, disability, etc.; sexual harassment; emotional distress, and other similar types of claims. The current recession has created an increased demand in employer practices liability insurance driving up rates.
The recession officially started in December of 2007, but there were severe economic problems at least a year prior to that time. According to statistics by the Equal Employment Opportunities Commission (EEOC), the number of discrimination claims rose in 2008 by 15 percent as compared to 2007. The trend is generally seen as employees lashing out at former employers as a tight job market prevents them from getting alternate employment in a timely manner.
Because of the large number of layoffs and cuts in salary, many employees and former employees become disgruntled and seek legal remedy. In many cases, cuts were made very suddenly because of the sudden collapse of financial and other markets. According to estimates by the EEOC, the number of discrimination claims is expected to rise sharply again in 2009.
The large increase in claims is believed responsible for the rise in employers that are purchasing EPLI policies. Many California businesses have not realized they can protect themselves from lawsuits arising out of wrongful termination claims by purchasing an EPLI policy. The minimum premium for EPL coverage starts at $1,000 and with the average
Employment practices liability claim running in excess of $250,000 this coverage seems like an easy way for California businesses to protect themselves.
Furthermore, there are many federal, state and local laws that employees or former employees are using to file suit against employers. The Worker Adjustment Retraining and Notification (WARN) Act is an example of legislation that is currently used in claims against employers. The law requires employers to provide warning to employees before layoffs, and large employers are required to provide two months worth of salary and benefits.
In order to have the broadest possible coverage against such types of claims in an environment of layoffs and pay cuts, employers have been turning to employer practices liability insurance. However, many carriers have been reporting losses are they are increasing costs in order to protect themselves in an increasingly litigious employer liability environment. Although some reports indicate that the overall economic recession may be ending, the jobs recession may last much longer supporting the demand for EPLI coverage and the upward pressure on rates for this type of insurance.
Employment Practices liability insurance quotes can be obtained online and if you work with a great insurance broker, ahem, like myself you will get a competitive analysis of market.
