EPLI coverage mitigates your financial exposure to harassment and other employment related claims, but do you know how to use it? Don’t be the reason your EPLI claim gets denied.
We invest in Employment Practices Liability Insurance (EPLI) policies to mitigate risk and reduce the costs associated with certain employment-related claims and litigation. EPLI policies are a relatively new insurance offering and have become increasingly popular because of the rising volume and costs of employment practices litigation and the employment practices exclusions added to many other insurance policies. A common misconception by business operators is such claims are covered under their Workers’ Compensation Policies.
I am not an insurance broker and I’m not trying to sell you a new EPLI Policy. Why am I interested in your EPLI coverage? As a HR Business Partner, I am an advocate of EPLI Policies. I have worked for companies that have benefited from the coverage when million-dollar claims hit. I have heard the horror stories about the denial of high claims because a Company did not comply with policy provisions. I am genuinely concerned too many organizations and clients invest in these policies and will not reap the benefits due to technicalities and failure to follow the rules outlined in the policy. Most employers do not intentionally break the policy “rules”; I believe they simply do not realize they are accountable to these provisions. Don’t make that mistake.
When faced with a claim, do the relevant people in your organization know the policy requirements and timelines for notification to your carrier? Like with any insurance policy, failure to comply with these rules could justify claims payment denial.
We’ve all seen the news of late. Daily, high-ranking business people, celebrities and politicians are accused of sexual misconduct and discrimination. I believe most business owners want to do the right thing by creating healthy and safe work-environments. I also think it’s time companies take a hard, comprehensive look to evaluate the gap between ideal and reality. Now is the time to conduct thorough assessments of your employment practices and fix the gaps. It’s also time to make sure you are ready to handle a claim when it surfaces.
In this current climate, claims of harassment, discrimination, hostile work environment, retaliation claims are going to skyrocket. Are you ready? Are you prepared to manage the communications between the claimant, attorneys, operations managers, and the EPLI Insurance Provider? If not, are you prepared to have 100% exposure to the financial liability of the claim? (Attorneys fees, court costs, settlements, labor costs, etc.) What is your process?
I encourage you make it a priority to review your EPLI Policy. Policies can be very different and nuanced, but here are some high-hitting points to evaluate to help you get ready:
What is the definition of a claim? What triggers coverage and your duty to notify the insurance carrier of the situation? For example, an employee reported harassment to her direct manager 3 months ago. Last month, the employee approached Human Resources with a similar complaint. The employee resigned today. In 3 months you get an official EEOC charge. When does your policy direct you to report this “claim”? A typical response is upon receipt of the EEOC charge. Unfortunately, I have heard about claims denied because the carrier was to be put on notice upon first notification, in this case, 3 months ago when the member of management was notified. If this claim has merit, the claim would be denied by the carrier, and the Company would be on the hook for the settlement, fees, etc. even though they were investing in EPLI Coverage.
What is the process to file a claim? Who do we notify? What is required?
Can you work with your competent local labor attorney? Maybe. But, like with health insurance, often EPLI policies align with a network of attorneys. I caution you to verify your attorney of choice is contracted with this network; in fact, this may impact your initial policy selection decision. Working with an unapproved legal provider could increase your cost for your issue.
I cannot stress enough the importance of understanding and communicating the provisions of your EPLI policy to all relevant people in your organization who engage in your decision making and claims evaluation process.
Propel HR Solutions has the experience to work with you to keep you protected. Our flexibility allows us to fit your needs whether it be project-based or on-going retention and proactive HR Support. Contact me directly for your complimentary HR Assessment. firstname.lastname@example.org PEOPLE. PURPOSE. PERFORMANCE.
Tracy Gniewek, SPHR, SHRM-SCP
Owner, HR Strategist, Propel HR Solutions