Businesses must be prepared to address workplace misconduct promptly to avoid reputational damage, financial loss, and potential legal consequences. Employment Practices Liability Insurance (EPLI) offers vital protection against lawsuits arising from alleged or actual mistreatment of employees. It covers defense costs and potential settlements for claims such as discrimination, wrongful termination, harassment, and other employment-related issues. Few scenarios are more alarming than facing employee lawsuits without robust EPLI in place. To understand the importance of this coverage, consider these real-world examples of EPLI claims:
Common EPLI Claims
The U.S. Equal Employment Opportunity Commission (EEOC) receives approximately 80,000 job discrimination complaints annually, primarily targeting small and mid-sized employers. In Fiscal Year 2022, the EEOC secured over $513 million in monetary benefits for victims of discrimination.
Common EPL claims include allegations of discrimination, harassment, failure to hire or promote, and wrongful termination based on factors such as:
- Age
- Gender
- Race
- National origin
- Disability
- Religion
- Pregnancy
Additionally, employees may file suit for retaliation against employers who have previously claimed discrimination or disclosed illegal activity. In Fiscal Year 2020, retaliation was the most frequently cited claim in EEOC charges, accounting for 55.8% of all cases.
Case Examples
- Age Discrimination: In 2021, a 64-year-old job applicant at United Precision Products was denied employment after being asked his age during an interview. The EEOC filed suit on the applicant’s behalf, and United Precision agreed to a $60,000 settlement.
- Sexual Discrimination: In 2022, video game publisher Activision Blizzard reached an $18 million settlement with the EEOC to resolve claims of sexual harassment, battery, and discrimination.
- Racial Discrimination: A Black former employee at Tesla sued the company in 2023, alleging racial harassment and failure to address his complaints. A federal jury ordered Tesla to pay $3.2 million in damages.
- Disability Discrimination: In 2019, Walmart faced an EEOC lawsuit on behalf of a job applicant with a congenital amputation. Walmart allegedly refused to allow her to take a physical assessment without an assistive device she did not need.
- Religious Discrimination: A dishwasher at Park Hotels & Resort claimed she was terminated due to her religious obligations preventing her from working on Sundays. In 2019, a federal court ordered the company to pay $21.5 million in punitive damages, which was later reduced to $300,000 on appeal.
- Retaliation: A former FedEx employee sued the company in 2022, alleging racial discrimination and retaliation after reporting harassment to human resources. A jury awarded the employee $365 million in damages.
The Importance of EPLI Insurance
While businesses may strive to avoid violating employees’ rights, mistakes can happen. Even well-intentioned actions can lead to costly legal battles. EPLI Insurance provides essential protection against the financial risks associated with employment-related lawsuits.
The average cost of employment lawsuits resulting in a defense and settlement payment is $160,000. Without EPLI coverage, companies could face additional out-of-pocket costs of $110,000 or more, according to Hiscox Insurance.
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