Exclusively from Foa & Son
Employment Practices Liability (EPL) insurance is an important part of any employer’s insurance program. As employment laws and regulations become ever more complex, regulators ever more aggressive and employees ever more litigious, it’s necessary coverage.
The typical EPL policy will define a laundry list of types of employment related practices and claims it will cover, much like the old “named perils” property policies we used to see instead of the “all risk” policies that are common today. For most reputable insurance companies writing these policies that list of covered EPL named perils has grown longer over the years. Here’s the key point, though: these policies are all about employment related risk. They will cover past, present and future employees, including job applicants (potential future employees), but an employment relationship in some form is necessary for coverage to apply.
But suppose you face a claim of discrimination or harassment from someone who is not in an employment relationship with you. Take a few examples:
• Vendors, suppliers, contractors and service people may be in and out of your premises and interacting with your staff and employees on a regular basis;
• The same for customers. Your employees may routinely interact with customers; they may also do work for or make deliveries to customers at their homes or places of business;
• Temporary or leased employees may also be present. In such cases there is an employment relationship, but not with you.
These are all potential third party EPL exposures, usually not covered by an unendorsed EPL policy. Some policies may have an expanded definition of “employee” that will include leased or temporary employees, and some (even fewer) may even go as far as to include independent contractors, but you can’t rely on that unless you actually read your policy to see what it covers. For anyone else, customers, vendors, service people and so forth, there is no way to find an employment relationship, so no coverage is available for any claims that might come from them.
Most underwriters offer a solution. They’ll endorse “Third Party EPL Coverage” onto your policy, usually for a very nominal charge. The major difference between the way this coverage operates from any other EPL claim is that the list of covered types of claims is generally pared down substantially. Most common by far is to just find coverage for claims of discrimination and harassment. That’s not a major negative, since those two items encompass the large majority of all claims that might come from unrelated third parties. Otherwise, the coverage operates just as it would for any other EPL claim.
If you are in a business in which your employees are routinely interacting with members of the public, and most especially if you are in a retail or service business, Third Party EPL coverage is important for you. Lawsuits alleging discrimination or harassment continue to increase. It’s worth having this coverage to turn to, even if only to cover the cost of defense.