Whether you own a large company or a family-run business, if you have employees, you may spend much of your time trying to keep them happy. Because you have seen the recent events involving accusations of misconduct that have ruined the careers of numerous successful people, you have decided it is wise to carry insurance in case your company should face similar allegations.
If you have purchased an Employment Practices Liability Coverage policy, you would be wise to read it carefully and understand exactly what it covers and what it excludes. Some policies may have terms that are confusing, and you don’t want to discover your policy does not cover you when it is too late.
What is in your policy?
If an employee claims to have suffered damages due to discrimination, retaliation, harassment, wrongful termination or other violations of employee rights, you may quickly find the cost of defending yourself or settling the matter getting out of control. Having EPL insurance means your insurer will cover certain expenses as long as your policy specifically names those acts.
Your policy may also include an obligation for your insurer to defend you, which means the insurer may choose your attorney and control your defense strategy. Without this clause, you can build your own defense with your own legal advocate. As with most insurance policies, yours may have specific exclusions, those claims the policy will not cover, which it would behoove you to know about. Some common exclusions include:
- Money you may owe for breaching a contract or other contractual liability
- Any liability related to a strike or labor dispute
- Cases related to violations of the Occupational Safety and Health Act, the Employee Retirement Income Security Act or other federal or California laws
- Obligations you face because of a workers’ compensation claim
- Damages arising from criminal acts, such as fraud or sexual assault
Many employers are finding heir insurers are denying their claims after accusations of sexual harassment because of an exclusion involving criminal acts. However, if you or an employee are facing these allegations, your insurer may have to defend you until a court convicts you of a crime.
Reach out for guidance
If you carry Employment Practices Liability and your insurer has denied what you believe is a valid claim, you have options. Obtaining the assistance of a skilled attorney may provide you with information you need for deciding how best to proceed in seeking the coverage your policy promises.