Reporting Requirements of EPL Policies
According to the U.S. Equal Employment Opportunity Commission (EEOC), 84,254 workplace discrimination charges were filed with the federal agency nationwide during fiscal year (FY) 2017, securing $398 million for victims in the private sector and state and local government workplaces through voluntary resolutions and litigation. The commission credits the changing economic climate, demographic shifts in the labor force, employees understanding of employment laws and regulations, as well as the EEOCs accessibility to the public, as factors to one of the highest number of charges in the agencys 46-year history.
As the frequency of workplace discrimination charges continues to rise, so does your susceptibility.
When an employee asserts he or she has been hurt by a company employment practice, it's essential to know carrier protocol, as failure to give timely notice could result in a loss of coverage.
Top Three EPL Reporting Tips
- Give timely notice. You must give timely notice of a claim in order for coverage to apply. An EEOC filing is often a claim that must be reported when it comes in.
- Ensure a defense counsel is hired before an answer is due. Many EPL policies assert that timely notice means as soon as practicable, therefore, you should give notice right away so a defense counsel can be put in place before an answer is due.
- Provide Notice of a Potential Claim. Some EPL policies allow an employer to give notice before a claim is made (or suit is filed) of circumstances that could lead to one in the future. A claim made after the policy is over could be covered if it's based on the circumstances the employer reported to the carrier during the policy period. Notice of a Potential Claim is generally a good idea, especially if the employer chooses to change EPL carriers after their current policy expires.
Definition of a Claim
A lawsuit and an EEOC (or other such administrative) filing fall within the definition of a claim in many EPL policies and must be reported as soon as the employer learns about it. In addition to a lawsuit or an EEOC filing, the policy definition of a claim may also include written demand for monetary damages or non-monetary relief. The EPL carrier may find the definition of a claim is met when:
- Employee said, in writing, the employer did something wrong and asks for money or a specific action
- Employee has retained counsel
- Employee threatened suit
- Employee or its counsel asked for a tolling agreement, extending the time for the employee to sue according to the statute of limitations
EPL coverage depends on the prompt reporting of claims. When in doubt, employers should report matters that could constitute a claim as defined in the policy, as well as circumstances the employer reasonably believes could lead to a claim in the future.
View our webinar recording on Assurance University Replay to learn more about EPL insurance and how it can help protect your business from wrongful termination, discrimination or sexual harassment lawsuits.
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