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What is Employment Practices Liability Insurance?

Businesses which employ workers are generally required to follow several federal and state laws that govern the employer-employee relationship. Should employers violate any of these laws, they might be sued by the impacted employee(s). Employment practices liability insurance policies help protect Massachusetts businesses from certain covered lawsuits that employees might file.

Employment practices liability policies are highly specialized commercial liability insurance policies. Their unique coverages often offer protection against a number of employment-related liability claims.

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What Kinds of Incidents Does EPLI Cover?

As is true with most kinds of insurance policies, the exact incidents that EPLI policies cover can vary. What any particular policy covers is determined by that policy’s documentation.

Depending on a policy’s particular documentation, it might cover incidents like the following:

  • A hiring manager declines to hire a female applicant after learning that she’s pregnant
  • A manager runs background checks on job applicants without notifying them in advance
  • A male and a female employee hold comparable positions but aren’t comparably paid
  • An intern ought to have been paid for work performed but never was
  • A manager fires an elderly employee after making remarks about their age

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Employment Practices Liability Insurance Massachusetts

What Kinds of Massachusetts Businesses Need EPLI?

Most Massachusetts businesses that employ workers should consider getting an EPLI policy. While businesses that have thousands of employees probably are at greater risk of facing a major employment-related lawsuit, having just a single employee often exposes a business to potential risks. Additionally, small businesses that have just one employee frequently are ill-positioned to fight a lengthy liability suit.

When Should Businesses Get EPLI?

Robust EPLI policies sometimes offer coverage for claims related to hiring practices and other pre-employment actions. Policies will frequently only cover issues that occur once a policy is in effect, though. Therefore, businesses are often best protected if they get EPLI before beginning any official hiring activity. This includes posting open positions, reviewing resumes, scheduling interviews and making hiring decision.

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Do Businesses Need EPLI If They Follow Employment Laws?

Following all applicable federal and state employment laws certainly may reduce a business’ likelihood of being named in an employment-related liability lawsuit. Employees can, however, file a lawsuit even if there is no actual wrongdoing.

Because businesses may be named in a lawsuit even if they don’t do anything wrong, EPLI is a protection that even law-abiding businesses might benefit from. Like other kinds of liability policies, an EPLI policy will typically help pay for covered legal defense fees regardless of whether a business is found liable or absolved of responsibility.

Do Businesses with Workers Compensation Insurance Still Need EPLI?

Workers compensation insurance shouldn’t be confused with EPLI coverage. Workers compensation policies normally insure against work-related injuries and illnesses that employees suffer on the job. EPLI policies typically cover other employment-related issues, more akin to the incidents listed above that may be covered.

Employment Practices Liability Insurance Massachusetts

How Are EPLI Policies’ Premiums Determined?

Insurance companies consider many different factors when setting EPLI policies’ premiums. Some of the items they might consider include:

  • How many employees a business has
  • How much the insured business is worth
  • What industry the insured business operates in
  • What the insured business’ hiring and firing practices are
  • Whether the insured business has a history of insurance claims

How many employees a business has is often has the biggest impact on a policy’s premiums.

How Can Massachusetts Businesses Get Employment Practices Liability Insurance?

For help finding an employment practices liability policy that will offer robust protections for your Massachusetts business, contact the EPLI specialists at Haberman Insurance Group. Our insurance agents are familiar with the nuances of this type of insurance, and they’ll work with you to find a policy that matches your business’ needs. Because we’re an independent agency, our agents are free to offer you the best policy no matter what insurance company underwrites it.

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