A Game of Tic Tac Toe: Employment Practices Liability

Is your staffing company properly lining up its x’s and o’s when it comes to employment-related issues? Exposure for employment-related claims is on the rise for this industry. What can you do to avoid a loss or cats game?

Employment Practices Liability Insurance (EPLI) is liability insurance that covers damages and associated defense costs arising from wrongful acts in the employment process. The most frequent types of claims that are covered by EPLI are wrongful termination, discrimination, sexual harassment and retaliation, although policies typically cover a variety of other types of inappropriate workplace conduct, such as failure to hire, failure to promote, and deprivation of a career opportunity. EPLI claims are brought primarily through the Equal Employment Opportunity Commission (EEOC), in addition to suits made in state and federal court.

Exposure for employment-related claims is on the rise. According to the 2012-2013 Edition of Jury Award Trends and Statistics, published by Westlaw, even companies with as few as 100 employees can expect to receive a claim once every three years. Numerous factors are contributing to the rise in claims.

The EEOC has made the process to bring a claim easier and the downside to bringing litigation lower than it was in prior years. They’ve also lowered the barriers for bringing class action litigation in addition to filing class action suits of their own accord without naming anyone who’s been harmed by an alleged violation of employment law; they previously focused only on supporting suits brought by specific individuals.

Beyond developments within the EEOC, state and federal court decisions have also contributed to expanding exposure for employers.  Further, additional lawsuits have been filed as employees become more aware of their rights, partially due to media coverage publicizing high-profile cases.

Claims experience for insurance carriers providing EPLI increased accordingly with both the cost of claims and the duration of disputes rising. Carriers also report a rise in claims involving multiple claimants, as well as wage & hour claims made under the Fair Labor Standards Act (FLSA). As a result, EPLI rates have been increasing consistently since 2011. Specific industry segments are seeing larger rate increases than others (the staffing industry is one), as well as specific states, notably California.

In addition to rate increases, EPL insurers are re-underwriting accounts from the perspective of coverages and the level of self-insured retentions offered. Minimum retentions are now typically $25,000 and can be higher depending on the loss experience, type and location of business, and coverage offered. Requests for the insured’s choice of counsel or a sublimit for defense costs for wage & hour claims can result in higher retentions and/or premiums, if those coverages are even available. 



Kerri Quigley is a Vice President at Assurance who specializes in crafting business insurance solutions for staffing companies nationwide. She has a particularly strong client presence in the Northeast and is adept at solving complex insurance and claims-related issues. Over the last decade, Kerri has solidified her expertise by providing in-depth coverage analysis, including the reconstruction of staffing industry products with Philadelphia, AIG, CNA and Hanover Insurance. Kerri earned a Bachelor of Arts degree in Computer Science from the University of California, San Diego. She is a member of the American Staffing Association and New Jersey Staffing Alliance and has also obtained a number of insurance designations, including Chartered Property Casualty Underwriter (CPCU), Associate in Risk Management (ARM) and Associate in Commercial Underwriting (AU), among others.

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