2021 Employment Practices Liability Insurance Trends

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As with any industry of business, employee lawsuits are bound to happen. However, how employers prepare, and address employment practices liability lawsuits is integral to surviving such lawsuits. In certain circumstances, such as a global public health crisis like COVID-19, many businesses are even more vulnerable to employment practice liability lawsuits. Here are some of the common COVID-19–related employment practices liability insurance (EPLI) claims and some tips for employers to prevent EPLI claims.

What Is EPLI?

EPLI protects businesses from employee claims that employee legal rights have been violated. This insurance covers employee lawsuits, such as sexual harassment, discrimination, wrongful termination, breach of employment contract, and mismanagement of employee benefit plans to name a few. EPLI costs depend on the type of business, number of employees, and risk factors (e.g., previous lawsuits against your company).

Common COVID-19 EPLI Claims

  • Workplace Health and Safety

Many workplace health and safety claims have been filed under the Occupational Safety and Health Act (OSHA) and state equivalents, oftentimes citing an unsafe workplace resulting in illness and/or death related to COVID-19, or employer negligence in proactively reducing COVID-19 exposure in the workplace.

  • Leave

The Families First Coronavirus Response Act (FFCRA), which includes the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act, requires employers with 500 or fewer employees to provide employees expanded paid family and medical leave, and emergency paid sick leave. The FFCRA expressly incorporates current Family and Medical Leave Act (FMLA) and Fair Labor Standards Act (FLSA) provisions, which means that employers who do not implement the FFCRA guidance and honor employees’ expanded leave or refuse to pay employees on covered leave will likely face a lawsuit to recover employees’ damages (i.e., lost wages).

  • Wage and Hour

Work from home and other financial adjustments have coerced many employers to restructure their workforce to current business demands.  Changing compensation or work arrangements can impact an employee’s classification status, which in turn can lead to an FLSA claim.

  • Discrimination

Federal and state laws, like the Equal Employment Opportunity Commission, provide employees protection from protected class discrimination. Under these protections, laid-off and furloughed employees have been bringing discrimination claims challenging the reason for such adverse employment action. Another claim under discrimination has been based on employers failing to provide reasonable accommodations for employees with bona fide disability related to COVID-19, such as denying an employee’s request to work remotely.

  • Retaliation

It is unlawful for employers to retaliate against employees who [exercise their protected legal rights or oppose unlawful employer actions] under most federal and state laws. Some examples of COVID-19–related retaliation claims include refusal to work under unsafe conditions, exposure to COVID-19 in the workplace, and wrongfully denying a leave request.

  • Wrongful Termination

Due to the financial and economic hardships COVID-19 has created, wrongful termination claims have increased as well. Commonly, reasons for terminations are challenged, such as resulting from complaints about lack of personal protective equipment or reporting a coworker who reported to work despite COVID-19 symptoms.

  • Disclosure of Confidential Information

Per the Centers for Disease Control and Prevention guidelines, employers are permitted to conduct employee temperature screenings, as well as contact tracing for any COVID-19 exposure in the workplace, but are also required to store employee medical information separate from the employee’s personnel file to maintain employee privacy of any COVID-19–related documentation.

Employer Tips to Prevent EPLI Claims

  • Create an EPLI scorecard. Creating an EPLI scorecard can help a business identify, assess, and address any potential risks for employment practice liabilities. For example, the EPLI scorecard may evaluate HR practices, as well as business operations and history, to determine where any shortcomings may exist in current systems. Here is a sample EPLI scorecard you may use as reference to develop your own.
  • Document everything. To effectively defend your actions in any type of employment practice liability lawsuit, the best practice is to document everything. For example, to prepare for a potential retaliation claim, document your reason behind all employment decisions. For wrongful termination claims, employers should have a proper process for addressing employee complaints, including maintaining meticulous records of the complains, the investigation process, and the final reason for termination.
  • Establish clear policies and provide proper training, if needed. Sometimes legislation changes that may impact employment practice liabilities for organizations. For example, to prevent leave claims, employers may need to train their managers and supervisors on updated employment laws and company policies to ensure they fully understand leave provisions and processes.
  • Seek help from an industry expert. When in doubt, seek guidance from an industry expert. If you’re seeing an uptick in certain claims, looking to implement proper training for employees, or simply need help managing and mitigating risks, seek out an experienced professional for help. They know industry best practices and are likely going to have additional tools and resources to support you.

Some EPLI policies require evidence of desirable employment practices and policies, such as sexual harassment, disability and accommodations, equal opportunity, termination, performance evaluations, leaves of absence, and employee privacy policies are in place to reduce organizational risks. However, the risk management strategy should occur well before a lawsuit is filed. Understandings and mitigating risks are no small feat for any business. Let the human resources team at Human Capital help you review, update, and manage your employee handbook, train your employees on best practices, and ensure you have all the tools and resources to support appropriate employment practices.


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