Aon  |  Professional Services Practice
Employment Practices Liability

Is it time to reassess your firm's insurance purchasing habits regarding Employment Practice Liability ("EPL")?

Amendments to, and increased enforcement of, state and local laws, changes in the U.S. Supreme Court doctrine, unique trends such as the #MeToo movement, amplified media attention on sexual harassment claims, and increased focus on gender pay disparity. These are just a few notable recent developments that are impacting EPL risk.

Several factors have contributed to an increase in EPL exposure for professional services firms, including:

  • Increased media attention on workplace harassment claims
  • New state, local, and international laws regarding gender pay disparity
  • Aging of the workforce
  • Larger number of law firms specializing in employment-related claims
  • Growing challenges to arbitration agreements
  • Significant changes in the law including the 1991 Civil Rights Act, the Americans with Disabilities Act, Age Discrimination in Employment Act, and Older Workers Benefit Protection Act
  • Merger and Acquisition activity resulting in more employment-related claims

In addition to federal statutes, employees are increasingly filing common law claims which do not have the statutory monetary caps that exist under the federal scheme. These claims can include allegations of defamation; invasion of privacy; negligent misrepresentation; negligent hiring, supervision or retention; intentional infliction of emotional distress; false imprisonment; and/or, workplace bullying.

Employment claims can adversely impact business by damaging a firm's reputation, straining relationships with clients, and mandating change in senior management. Firms' bottom lines are at risk and professional service firms are not immune.

The Insurance Solution

EPL insurance has become increasingly broad in its coverage and yet remains reasonably priced. Policies tend operate on a defined peril, claims-made basis - providing broad definitions of covered acts, and a fair amount of flexibility on the selection of counsel.

These policies typically address allegations such as:

  • Wrongful termination or constructive discharge
  • Sexual and non-sexual harassment
  • Discrimination
  • Employment-related misrepresentation
  • Employment-related negligent hiring, supervision or retention
  • Failure to employ/promote/make partner
  • Employment-related emotional distress
  • Retaliation
  • Invasion or breach of privacy

Additional (and valuable) coverage features can also be added, such as:

  • Certain claims brought by employees, clients, vendors and third parties
  • Discrimination broadly defined to include gender and sexual orientation
  • Harassment (including bullying)
  • Insureds to include the firm, its partners, shareholders, members, directors and officers, and past, present and future full-time and parttime employees
  • Loss to include judgments, settlements, back and front pay, punitive damages where insurable, the multiplied portion of multiplied damages, prejudgment and post-judgment interest
  • Certain defense expenses (including attorneys' fees, expert fees and bond premiums)
  • Prior acts coverage (except for entities acquired after policy inception)
  • Certain defense costs for breach of written employment contract
  • Choice of counsel provisions to include law firm insureds' ability to "self-defend" employment claims
  • Global policy territory
  • Multi-national risk exposures