Employment practices liability insurance protects your home care business from common claims and lawsuits brought by your employees. The number of lawsuits in the industry is rising and the cost to defend yourself against a claim can be substantial. Now more than ever it’s important to make sure your business is protected.

Even though employment practices liability insurance coverage (often shortened to EPLI) is an important risk management tool for businesses with employees, the benefits of coverage aren’t always clear. A quick anatomy lesson on EPLI can help business owners understand what it is, what it does and how it works.

By taking a closer examination of EPLI, you will gain important knowledge about:

  • Why EPLI matters in the current home care industry
  • How coverage protects you and your business
  • how to get the best price on coverage to protect your company.

The Heart of EPLI

The heart of EPLI is the benefit that it provides to your home care business. Workers are the key to the success of your home care business. However, workers also present a risk. Lawsuits in the health care industry are common.

Laws around fair treatment of employees in the workplace are complex and include numerous statutes such as:

  • Title VII of the Civil Rights Act of 1964
  • Equal Pay Act of 1963
  • Age Discrimination in Employment Act of 1967
  • Equal Employment Opportunity Act of 1972
  • Immigration Reform and Control Act of 1986
  • Americans with Disabilities Act of 1990

Even with the best of intentions, it’s possible to make a mistake that results in a claim. Workers in the industry have won six- and seven-figure settlements for claims of:

  • Discrimination based on gender, age and other protected characteristics
  • Being passed over for promotion and career advancement opportunities
  • Denial of accommodation for pregnancy and other health conditions
  • Hostile work environment due to nicknames, jokes and mistreatment

A claim with drawn-out litigation, a big settlement or significant publicity could do major damage and threaten the future of your business. EPLI is coverage designed to protect this core vulnerability of your business.

The Brain of EPLI

The brain of EPLI is the method that it uses to protect you. A lot of thought goes into the design of coverage to help protect your business from the most common claims and reduce the overall risks you face.

Your EPLI policy is designed to protect against the threat of specific claims that may be brought against the business. These include:

  • Discrimination—Such as claims of discrimination based on age, sex, family status, pregnancy, religion, national origin or disability status brought over hiring, firing or during the course of employment.
  • Wrongful Termination—Such as claims resulting from an employee being terminated due to layoff, policy violation or performance alleging discrimination based on age, race, religion, disability, pregnancy, hostile work environment, harassment, FMLA violations, or retaliation for pay disputes, whistleblowing, or worker’s compensation claims.
  • Sexual Harassment—Such as claims of sexual harassment and other hostile workplace behaviors alleging inappropriate comments, questions, requests or physical interactions by supervisors, employees or other third parties.
  • Invasion of Privacy—Such as claims of the violation of a reasonable expectation to a right to privacy, including lawfully protected policies as well as claims of deception, secretive or intrusive monitoring, intrusion into a worker’s private life, or violation of confidentiality.
  • Wage and Hour Law—Such as claims for back wages, bonuses, pay discrepancies, employee misclassifications and denied overtime that may be brought individually or as part of a class action lawsuit over work contracts, job roles, job duties, pay scales and time sheets.
  • Breach of Contract—Such as claims alleging failure to meet the agreed terms of employment such as promised pay, benefits, workload, or withholding of necessary resources, including cases of oral or implied contracts.

EPLI is designed specifically to cover the costs associated with the claims made against you, including the cost of defending against allegations in court, regardless of whether you win or lose the case, as well as any judgements or settlements that may result.

The Guts of EPLI

The guts of EPLI are the factors considered when build your policy. Insurance policies have many internal workings designed to carefully manage the risk of insuring your business. Your insurer offers EPLI policies that take a number of factors into account to determine the cost of your premium and level of coverage.

Here are a few factors that home care business owners should be aware of:

    • Number of employees—The number of employees on your policy is key. Much of the risk of an EPLI policy depends on how many employees need to be covered. The more employees you have, the greater the risk of a claim and the higher your premium.


    • Rate of turnover—The rate of turnover at your business is another top factor. Businesses with higher rates of turnover can present a greater risk for wrongful termination and other key claims. Therefore the premium may be higher.


    • Policies and procedures—The way human resources are managed at your business can impact the rate you pay for an EPLI policy. Having HR policies and procedures designed to prevent, address and correct employment issues can lower your premium.


    • Risk by industry—The risk level of your industry can also has an effect. Home care businesses face an elevated level of risk, along with retail, hospitality and professional services businesses. Due to a higher level of claims, premiums are often higher too.


    • History of claims—The history of EPLI claims at your business is another factor. Companies with EPLI claims made in the last three years may face higher premiums due to an increased risk. Those with a clear history will likely pay less for coverage.


    • Policy limits—The limits you choose for your policy will impact your premium. Higher limits mean the safety of more insurance, but can come at the cost of a higher premium. With the cost of many claims reaching six figures, a higher limit is advisable.


    • Policy deductible—The deductible you choose for your policy plays a role in your premium. A lower deductible transfers more risk to the insurer and results in a higher premium for the policyholder, but too high a deductible may leave you underinsured.


    • Terms of the policy—The terms of your policy also play a role in the cost of your insurance. Narrow coverage offers less protection for a lower-cost premium, but may leave you exposed to excessive risk. Broad coverage protection is recommended.


    While not all the factors affecting the inner workings of your policy or your premium are within your control, some of them are.

  • You can lower your premium by choosing policy terms, limits and deductibles that cover your exposures without going overboard.
  • You can also lower your premium and minimize your risk of a claim by implementing the right policies and procedures and reducing unnecessary turnover.

The anatomy of EPLI works together to help protect your home care business from risk and reduce the frequency and severity of claims.

With EPLI coverage from Lockton Home Care, you and your business are protected from employment practices claims. You’ll be covered in the event a potential, current or former employee files a claim against you or your business.

Protect your practice with EPL coverage from Lockton Affinity today. To learn more, visit our website or call (800) 723-9624.