1. Employment Practices Liability: An Overview1

2. Did you know …
An employer is more likely to have an EPL Claim than a General Liability or Property loss.
Fewer than 25% of employers currently carry EPL.
There are over 25 million small businesses in the US with under 500 employees and not publicly traded (Source: )
Three out of five employers are sued by former employees every year (Source: Society of Human Resource Managers)
General Liability policies do not cover EPL or can be endorsed with watered-down coverage at low limits.

3. MYTHS OF EPL
MYTH #1
EPL was created by the Insurance Companies to create new premium sources.
MYTH #2
The exposure is no higher today than it was in the past.
MYTH #3
Employees are already protected under other insurance policies.
MYTH #4
Internal Risk Management is adequate to protect my business.
MYTH #5
EPL premiums are too high and the underwriting process too time consuming.

4. EEOC INVESTIGATIONS What An Employer Should Know
The average time it takes to process an EEOC investigation is …
229 days
(longer if there is a delay in responding to information requests) to get a determination.
Think of the defense costs as well as the cost of the time of the people involved!!

5. EPL CLAIM TRENDS
Over 40% of EPL claims are brought against private employers with under 100 employees (Source: SHRM)
Most litigious states: CA, NJ, IL, TX, FL and NY. (Source: Insurance Journal)
Employment practices liability claims represent 30% of all civil litigation in the United States today. (Source: Bickmore Risk Services)
550 EPL lawsuits are filed every day (Source: Insurance Journal)
67% of discrimination cases settled by jury verdict are in the plaintiff’s favor
The average cost to defend an EPL claim is $150,000. (Source: Insurance Journal)
The median jury award is $250,000 plus 19% of all cases had punitive damages assessed.
Median punitive award = $259,000 (

6. EXPOSURES - FEDERAL LAWS
Fair Labor Standards Act of 1938 (FLSA)
Administered by the Department of Labor’s Wage and Hour Division
Equal Pay Act of 1963 (EPA)
Title VII to the Civil Rights Act of 1964
Executive Order of 1965
Age Discrimination in Employment Act of 1967 (ADEA)
Americans with Disabilities Act of 1990 (ADA)
Americans with Disabilities Act Amendments Act of 2008 (ADAAA)
Family and Medical Leave Act of 1993
Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA)
Employment Non-Discrimination Act (proposed) – 2007 (ENDA)
Genetic Information Non-Discrimination Act of 2008 (GINA)

7. EXPOSURES - FEDERAL LAWS
The BIG ONE for Employment Practices insurers …
Civil Rights Act of 1991
Amended Title VII
Allows for …
a jury trial
punitive damages
damages for mental anguish and emotional distress
In 1992, the first stand-alone EPL policies
hit the marketplace.

8. EPL COVERAGE FEATURES Covered Perils
Discrimination
Harassment
Wrongful Termination
Retaliation
Expanded Definitions of “Wrongful Employment Act” generally all revolve around these four perils
Violations of FLSA, FMLA and USERRA and similar federal, state and local statutes 8

9. EPL COVERAGE FEATURES Definition of “Insured”
The Organization
Its subsidiaries
“any entity which, on or before the date of the inception of this Policy, is more than 50% owned by the Parent Organization, either directly or indirectly through one or more of its Subsidiaries”
Automatic coverage for acquisitions –up to 25% of employee count at policy inception
Affiliates? Joint ventures?
Employees – full time, part time, temporary, seasonal
Leased employees
Independent contractors/1099 employees

10. EPL COVERAGE FEATURES Definition of “Claim”
Written demand
An oral threat leads to a “notice of circumstance”
Demand for monetary damages or non-monetary relief
Civil proceedings
Arbitration proceedings but not any labor or grievance arbitration under a collective bargaining agreement
Administrative or regulatory proceedings with the EEOC or similar federal, state or local agency
Office of Federal Contract Compliance Programs (OFCCP) – audit, Notice of Violation, Order to Show Cause

11. EPL COVERAGE FEATURES Fair Labor Standards Act (FLSA)
$100,000 sub-limit for defense costs and loss
Defense Costs Outside the Limit of Liability
$500,000 limit or more; under 200 employees
Duty to Defend
Panel counsel requirement
100% allocation of defense costs
Consent to Settlement Provision – “75/25 Hammer Clause”
Third Party Discrimination and Harassment – 10% additional premium
Full Prior Acts
Punitive Damages where insurable – “most favorable venue”
Extended Reporting Period (ERP): year options built in
Notice of Claim or Circumstance as soon as practicable but no later than 60 days after expiration of the policy
Non-cancelable by the insurer, except for non-payment of premium
Three year installment option available on most accounts

12. EPL COVERAGE FEATURES Common Exclusions
Bodily injury/property damage
Coverage “carve back” for mental anguish, emotional distress, libel, slander, defamation, humiliation and invasion of privacy resulting from a “Wrongful Employment Act”
Fraud or dishonesty – except for vicarious liability of the entity
ERISA-related claims – except for Retaliation
Statutory obligations – except for Retaliation
(e.g. workers compensation, disability benefits, unemployment)
Strikes/lockouts/unionization – except for Retaliation
Prior and pending litigation
Claims noticed to prior carrier
Modification of real property (ADA accessibility) – Defense Costs coverage only
Breach of Express Employment Contract – Defense Costs coverage only

13. IS EPL INSURANCE ALONE ENOUGH? PeopleSystems
FREE risk management tools are a part of the policy.
Human Resource consulting services available via toll free numbers (8:00am to 7:30pm, Eastern) and online.
Sample HR Policies
Anti-Discrimination/Anti-Harassment
Electronic Communications
Employment-At-Will
HR News Center and recent employment law changes
HR Resource Manual and Employment Forms
EPL is just one part of a
total risk management plan for every employer.

14. Thank you for your business!14