EPLI insurance in New York

Stronger regulations require stronger coverage

New York State and New York City have taken aggressive steps with mandatory regulations to implement stronger protections against workplace harassment after last year’s tsunami of claims, which means new training, revised procedures, and increased urgency for Employment Practices Liability Insurance (EPLI). Not having it puts you one questionable incident or ill-placed joke away from a ruinous lawsuit, as the NYC chefs and restaurants in the headlines attest to.

What is EPLI Insurance?

Employment Practices Liability Insurance covers your business against claims by workers that their legal rights as employees of the company have been violated. Though most of today’s headlines are sexual harassment cases, employment practice liability risks can also include age or race discrimination, wrongful termination, failure to promote, even wrongful infliction of emotional distress. As the number of EPLI claims being filed increases, having EPLI can make the difference between a bump in the road or the end of your business.
In 2018, the Equal Employment Opportunity Commission assisted U.S. employees in receiving over $505 million in compensation from discrimination charges. They also won over 90% of cases against employers in the same year.

What kinds of businesses need EPLI?

The short answer: anyone who has employees. You’re at risk from the day you interview a prospect: if you choose not to hire, he or she could allege discrimination.

Though most suits are filed against large corporations and they generally have substantial policies and procedures in place, the rising number of claims means no company is safe. Small and new companies are exceptionally vulnerable, especially if you don’t have an employee handbook or an HR/Legal department to handle these issues. Often complaints are highest where wages are lowest: 42 percent of women in the restaurant business say they’ve experienced sexual harassment. If the past, chefs, in particular, have been given a long leash when it comes to behavior as long as they keep the dining room full, but that is no longer the case. High-risk industries include:

  • Restaurants/Food industry
  • Retail
  • Science/Tech
  • Entertainment
  • Legal
  • Healthcare
  • Manufacturing

Typical harassment risks include:

  • Quid pro quo situations – promotions promised or denied based on a supervisor’s demand for sexual favors
  • Hostile work environment – including inappropriate jokes or photographs, suggestive comments
  • Social media – used as a conduit to harassment

Why do I need an EPLI Policy?

It’s not required by law in any state. But it’s the smart move and your first line of defense in a sexual harassment case. Many business owners turn it down because they feel they ‘play by the rules.’ But even the most careful employer, best training, and most comprehensive employee handbook does not account for human nature. Even if you’re innocent, the costs of defending yourself can be catastrophic. Plus, the stigma of being named in a lawsuit and resulting negative press can be enough to permanently damage your brand.

Most claims don't end up in court, but for those that do, the median judgment is approximately $200,000 in addition to the cost of defense. About 25% of cases result in a judgment of $500,000 or more.

How EPLI helps your business

Even the best of intentions and training can fall short. EPLI protects your business and your assets should someone decide you have discriminated against them or violated any of the many employee protection laws. You cannot discriminate against:

  • Age (over 40)
  • Color
  • Disability
  • Genetic information
  • National origin
  • Race
  • Religion
  • Sex (including pregnancy)

It is also illegal to retaliate against a person if they complain about discrimination, file a charge, or participate in an employment discrimination investigation or lawsuit. Federal laws apply to companies with 15 or more employees, newer city and state regulations and effective dates vary. HCP can help you navigate through them and recommend a suitable coverage level. Visit the EEOC website for details on all the employment protection laws.