TMLT to add employment practices liability coverage to all policies on 2/1/2013

by William Malamon, ABC

A woman claims that her male employer (a physician) made several sexually suggestive comments to her during her six months of employment, and he once tried to trap her in an exam room and “proposition” her.

A physician disciplines an employee who was pregnant at the time. The employee sues, claiming her employer was trying to “force her out” in violation of the Family Medical Leave Act (FMLA).

A physician and nurse have a dispute over the treatment of a patient that turns into a profanity-laden screaming match. The nurse files a lawsuit against the physician for creating a hostile work environment.

The area of law that deals with these kinds of events is referred to as employment practices liability. Typical allegations in employment practices lawsuits include harassment, discrimination, FMLA violations, hostile work environment, and wrongful termination. Employment practices claims are not only embarrassing, but can also be expensive to defend or settle. Insurance that covers these types of claims is called employment practices liability insurance (EPLI).

The good news for TMLT policyholders is that beginning February 1, 2013, EPLI will be added to all policies at no extra charge. Policyholders will begin receiving information about this new coverage as they renew their policies.

EPLI claim statistics

According to the Equal Employment Opportunity Commission (EEOC), approximately 100,000 employment-related claims were filed through them in 2012, totaling $364 million paid to claimants (excluding awards through litigation). Approximately 30,500 discrimination claims were filed with the EEOC and Fair Employment Practices Agencies (FEPA) in 2012.

TMLT’s EPLI coverage

Beginning February 1, 2013, all TMLT policies will include an EPLI endorsement. The endorsement covers several kinds of alleged, wrongful employment practices including:

  • violation of any federal, state, local, or common law, prohibiting any kind of employment-related discrimination;
  • harassment, including any type of sexual or gender harassment as well as racial, religious, sexual orientation, pregnancy, disability, age, or national origin-based harassment and including workplace harassment by non-employees;
  • abusive or hostile work environment;
  • wrongful discharge or termination of employment, whether actual or constructive;
  • breach of an implied employment contract or promissory estoppel (an understanding based on a previous action or statement);
  • breach of an actual or written employment contract as long as another wrongful employment practice is also alleged;
  • wrongful failure or refusal to hire or promote, or wrongful demotion;
  • wrongful failure or refusal to provide equal treatment or opportunities;
  • employment termination, disciplinary action, demotion or other employment decision that violates public policy or the Family Medical Leave Act or similar state or local law;
  • defamation, libel, slander, disparagement, false imprisonment, misrepresentation, malicious prosecution, or invasion of privacy;
  • wrongful failure or refusal to adopt or enforce adequate workplace or employment practices, policies or procedures;
  •  wrongful, excessive or unfair discipline;
  • wrongful infliction of emotional distress, mental anguish, or humiliation;
  • retaliation, including retaliation for exercising protected rights, supporting in any way another’s exercise of protected rights, or threatening or actually reporting wrongful activity of an insured such as violation of any federal, state, or local “whistle blower” law;
  • wrongful deprivation of career opportunity, negligent evaluation or failure to grant tenure;
  • violation of the Uniformed Services Employment and Reemployment Rights Act; or
  • negligent hiring or negligent supervision of others, including wrongful failure to provide adequate training, in connection with training.

Limits of liability are $50,000 per claim (including both defense costs and indemnity payments) with a $5,000 deductible. The yearly aggregate limit is also $50,000.

A claim must be reported to TMLT as soon as practicable, but no later than 60 days from the date the policyholder becomes aware of the claim. Policyholders can also report circumstances they believe might lead to a claim.

What are your thoughts on employment practices issues? Let us know in the comments section.