EPLI Claims on the Rise

As COVID-19 vaccination rates increase and transmission rates of the virus decrease, employment practices liability insurance (EPLI) claims involving retaliation are expected to continue to increase as employees return to the workplace. Data from the Equal Employment Opportunity Commission (EEOC) shows that EPLI claims alleging retaliation have increased every year since 2003, with 37,632 workplace retaliation claims filed in 2020. The claims are typically filed in conjunction with discrimination or wrongful termination allegations.

The EEOC anticipates a rise in whistleblower claims from employees bringing forward concerns about health and safety in the workplace. Such claims may include employees concerned about exposure to COVID-19 due to unsafe working conditions or situations where employees allege they were wrongfully denied a request for leave or workplace accommodation.

Possible scenarios that could trigger EPLI policies include:

  • A returning employee alleges they contracted COVID-19 at the office due to inadequate workplace policies and practices on behalf of the employer.
  • An employer fails to provide legally required personal protective equipment, resulting in an increased risk of exposure to COVID-19.
  • An employer violates privacy protections under the Americans with Disabilities Act by disclosing employee COVID-19 positive statuses. 
  • Allegations claim that management failed to provide safe work conditions or take reasonable steps to clean and disinfect office surfaces.

As more workers take COVID-19-related employment legal actions, businesses are looking to their employment practices liability insurance (EPLI) policies for coverage. However, the shift in the market has resulted in higher policy retentions, premium increases and new exclusions specific to COVID-19 exposures, and EPL insurers have started scaling back coverage. 

EPLI policies are designed to cover legally obligated employer losses related to discrimination, harassment, retaliation and wrongful employment decisions. Most EPLI coverage relates to employer misconduct, such as:

  • Employer status claims—Wrongful termination, demotion, evaluation or failure to promote an employee could lead to employer status claims.
  • Discrimination claims—EPLI coverage may be triggered if an employee asserts that their employer discriminated against them as a member of a protected class or that a supervisor engaged in harassment.
  • Privacy rights claims—Defamation or employee privacy rights violations, such as unlawful disclosures of an employee’s confidential medical or financial information, may result in privacy rights claims.
  • Negligence claims—If an employer was negligent in failing to adopt or implement employment-related policies and procedures, employees might file negligence claims.

The cost to defend and settle retaliation lawsuits has increased considerably in recent years, and the EEOC doesn’t anticipate that trend slowing down. With more workers bringing forth COVID-19-related legal actions, businesses are eager to purchase EPLI policies. However, the shift in the market has resulted in higher policy retentions, premium increases and new exclusions specific to COVID-19 exposures, and EPL insurers have started scaling back coverage.

Businesses can be proactive in mitigating EPL claims by:

  • Distributing an employee handbook—The handbook should contain the company’s equal employment opportunity policy and provide employees with steps for reporting discrimination or harassment.
  • Developing a code of ethics policy—Avoid ethical violations by developing and implementing a code of ethics and sharing it with all employees. This can help reduce an employer’s exposure to punitive damages.
  • Instituting handbook auditing procedures—Keep the handbook up to date on the latest law changes by having an audit procedure in place.

As employees return to the office, employers should review their EPL coverage and take proper precautions to avoid EPL claims. For more information on EPLI, contact us today.