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• What Is Illinois Employment Practices Liability Insurance? 
• What Does Employment Practices Liability Insurance Cover in Illinois?
• What Doesn't Employment Practices Liability Insurance Cover?
• How Does Employers Liability Insurance Differ from Employment Practices Liability in Illinois?
• What Are Examples of Employment Practices Liability Claims?
• How Much Does Employment Practices Liability Cost in Illinois?
• How an Illinois Independent Insurance Agent Can Help You

Terms like discrimination, wrongful acts, unlawful termination are becoming more common in the business world, which is why your company needs to be protected against employee-related claims. Any employer can make a mistake or have a moment of poor judgment. The best way to ensure that you don't go out of business by being sued by an employee is to have an employment practices liability insurance policy in place.

Fortunately, an Illinois independent agent is an expert on EPLI insurance and can help you find the protection your business needs. But first, let's learn more about this essential business insurance policy.

What Is Illinois Employment Practices Liability Insurance? 

Employment practices liability insurance (EPLI) is a type of business liability insurance that pays for defense and any damages for claims related to discrimination, sexual harassment, equal employment issues, and other wrongful acts. Employment practices liability is purchased by a company to protect themselves against claims that might be made by employees. 

There are 1,200,000 small businesses in Illinois, and 2.5 million people are employed by those businesses, which means that an EPLI policy is crucial to protect your business. What's more, your other business policies (such as general liability insurance and errors and omissions insurance) will provide limited to no coverage for employment-related claims. This means  that if you are sued by an employee for a wrongful act or discrimination, you'll be paying completely out of pocket to settle that claim.

What Does Employment Practices Liability Insurance Cover in Illinois?

Employment practices liability insurance can be very valuable coverage for businesses. The biggest thing it pays for is defense costs and legal fees, which can get hefty in these types of cases. In addition to discrimination, sexual harassment claims, and equal employment claims, insurance expert Paul Martin says, "Employment practices liability insurance will pay for accusations related to race, sex, religion and more, as well as wrongful terminations." It will also cover claims related to:

• Defamation
• Invasion of privacy
• Failure to promote
• Deprivation of a career opportunity
• Negligent evaluations

Just as important as what employment practices liability insurance covers is who it covers in a company. The policies provide coverage for directors and officers, management personnel, and employees as insureds.

Why you should consider purchasing employment practices liability insurance

Take a look at a breakdown of 2019 workplace discrimination charges received by the U.S. Equal Employment Opportunity Commission (EEOC) 

What Doesn't Employment Practices Liability Insurance Cover?

Employment practices liability insurance provides coverage for claims related to most wrongful acts, but Martin points out that it will not cover any claims related to fraud. It also won't cover a claim that is proven to be intentional wrongdoing. The importance of this exclusion is that it's common for discrimination claims to include intentional misconduct. If it's determined that an employer intentionally mistreated or discriminated against an employee, the EPLI policy may not cover the claim. It also will not cover prior acts if it's determined that the employer had any knowledge of the alleged wrongful act. 

The following claims will also be excluded from an EPLI policy:

• Penalties and civil fines, punitive damages, criminal fines, and unpaid wages
• Bodily injury and property damage claims
• Unemployment-related claims
• The Consolidated Omnibus Budget Reconciliation Act (COBRA), the Employee Retirement Income Security Act (ERISA), and others

An Illinois independent insurance agent can help you understand what is and isn't covered in an EPLI policy and which risks your company faces.

How Does Employers Liability Insurance Differ from Employment Practices Liability in Illinois?

According to Martin, employers liability insurance is usually tied in to a workers' compensation policy and works differently than an EPLI policy.

In order to understand employers liability insurance, we first need to understand Illinois workers' compensation. The state requires workers' compensation that responds to employee injuries on the job, whether from an accident or occupational illness. Workers' compensation provides a set of benefits that the employee gets regardless of who is at fault for the accident. Under workers' compensation, an employee cannot sue the employer for additional coverage. However, in some scenarios, workers' compensation won't cover the incident, and the employee can, in fact, sue the employer for punitive damages. That is where employers liability insurance steps in. 

An example would be an employee who works for a ladder company. They are fixing something in the shop while standing on one of the ladders produced by the company they work for. They fall and break their leg. That employee might be able to sue the company for creating a faulty product that caused them to break their leg, even though they are employed by that company.

Another example of where a company can be sued is if a fatality is involved. Martin says the employer could be shown to be grossly negligent and that they put their employee in harm's way, which lead to their death. The surviving spouse or children can sue the employer, and employers liability insurance would respond. 

What Are Examples of Employment Practices Liability Claims?

Unfortunately, employment practices liability claims arise every day in businesses. Take a look at a few examples of scenarios that could result in an EPLI claim. 

• A schoolteacher claims that derogatory remarks were made about them in the school board group bulletin that is accessible to all teachers and school board members. They sue the school district for defamation and distress.
• An employee is injured and files a workers' compensation claim, and the next day they are laid off by their employer. The employee sues for wrongful termination. 
• A female employee who works in an office with males is the constant subject of inappropriate jokes and questions pertaining to her personal life. The she sues for sexual harassment.

These are just a few examples of EPLI scenarios. All companies are vulnerable to employee-related claims. Whether you're a large or small business, if your company does not have proper procedures in place for employee behavior, you're leaving your employees open to making mistakes. 

How Much Does Employment Practices Liability Cost in Illinois?

Employment practices liability insurance premiums vary depending on your company and many other factors that are unique to your business. An independent insurance agent can help you determine your costs, but they will be based on: 

• The size of your business
• Number of employees
• Any past claims related to employee behavior
• Your policies related to hiring and firing

How an Illinois Independent Insurance Agent Can Help You

Every business is exposed to employee-related claims on a daily basis. Employment practices liability insurance is essential protection for your business against claims from future, current, or past employees. In Illinois, an independent insurance agent can help you learn more about EPLI policies and how they can benefit your business. They can shop multiple carriers and pull a variety of quotes so that you have a well-rounded idea of your coverage options and price. 

If you are faced with an EPLI claim, your insurance agent can help you navigate the claims process and understand the protection that your plan offers.