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Employment Practices Liability Insurance

If you hire someone who sues the company for sexual harassment or unfair dismissal, even a baseless allegation can cost you.

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What is Employment Practices Liability Insurance good for?

EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated. EPLI provides protection against many kinds of employee lawsuits, including claims of Sexual harassment, Wrongful Dismissal & Discrimination. In today's fast evolving equity, diversity & inclusion hiring, having EPLI coverage is ever more important.

Who is Employment Practices Liability Insurance for?

Every employer who hires employees is vulnerable to claims of bias, discrimination and not adhering to BC's Employment Standards Act (ESA). The law provides minimum standards that employers in BC must follow. For example, there are rules about:

  • hours of work
  • minimum wage
  • vacation pay, holiday pay, and time off from work

It is important to understand that not all jobs are covered by the Act and for some jobs, only parts of the ESA apply. You don't need to be a Canadian citizen or permanent resident, or have a work permit, to be covered by the ESA. The ESA provides minimum workplace standards for most employees in British Columbia. Some professionals are exempt from all or part of the Act. Some sectors and industries are subject to specific employment standards provisions which only apply to them.

Why would I need Employment Practices Liability Insurance?

The harsh reality is that businesses are sued by their employees every day. You might think it only happens to large corporations or in very litigious areas, but the facts and numbers show otherwise.

An employer is nearly three times more likely to be sued by an employee than experience a fire.

Most lawsuits settle, but when they go to trial, employees win verdicts in nearly 70% of the cases. The average employment liability claim is $70,000 for defense and compensation, which is 26% higher than it was three years ago. Small employers account for roughly 40% of all employee lawsuits and administrative charges. You only need one employee or applicant to trigger many employment laws. All of these facts and numbers demonstrate the value of having Employment Practices Liability Insurance (EPLI). But this may be the most important fact:

Commercial insurance policies such as Business owners and General Liability exclude liability for employee lawsuits. Without EPLI, a business is on its own when an employee sues.

An EPLI policy protects a business from lawsuits and administrative actions for discrimination, sexual harassment, wrongful termination, and much more. In addition to this protection, a business can use free loss prevention services to get help on employee issues and avoid future problems.

  • EPLI delivers peace of mind. More popular than ever, EPLI can help protect your business from the effects of a potentially devastating lawsuit.
  • EPLI is worth the investment. EPLI coverage includes legal defense fees and settlement costs or damages – up to your policy’s limit – whether you win, settle, or lose a case
  • No industry is immune from employment-related risks. While businesses in the retail, restaurant, professional services, manufacturing, and healthcare industries encounter employment-related claims, every company, in every industry, is at risk.
  • Knowledge is a small business owner’s best friend. The more you know about best employment practices, the less likely your business will find itself in hot water.

What does Employment Practices Liability Insurance cover?

Employment practices liability insurance, known in the trade as EPL insurance or EPLI, provides coverage to employers (PDF) against claims made by employees alleging: Discrimination (based on sex, race, age or disability, for example) Wrongful termination. Harassment.

What does Employment Practices Liability Insurance not cover?

An employer liability insurance policy excludes protection to its employees like that of libel, quasi-intentional torts. It can be defined as the protection scheme given to employees if they may experience an injury or damage during their work period.

It's important to note that employers' liability insurance and workers' compensation do not cover employers against employee claims alleging discrimination (for example, based on sex, race, age, or disability), wrongful termination, harassment, slander, libel, and other employment-related issues such as failure to promote. The employer would need to purchase a separate type of policy—called employment practices liability insurance (EPLI)—for this kind of coverage.

What does Employment Practices Liability cost?

EPLI costs vary greatly from business to business. On average, annual premiums range from $20 per employee to $100 per employee per year.

The biggest factors that affect the cost of EPLI insurance are:

  • Number of employees
  • Rate of employee turnover
  • Employment procedures
  • Past claims
  • Desired amount of coverage
  • Desired amount of deductible or self-insured retention (SIR)

As expected, the more employees you have, the greater your risk of an employment lawsuit. So, most policies are primarily based on the number of employees your company employs at any given time. The other factors are then considered to form a complete risk profile for underwriting your policy.

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Why buy your Employment Practices Liability insurance from OnePlus?

Easy

We’ve made it easier than ever before to complete the purchase and get coverage. How easy? In just simple clicks you can have your policy!

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Affordable

We know the cost of insurance is a big factor for many, and that's why we keep our rates low and affordable for all. We work harder to earn your business.

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Service

At OnePlus, our specialists are not only committed to give you the best experience digitally, but we are also available 24/7 to help with any concerns!

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Coverage

Getting a policy that does not properly protect you can cause a significant financial loss, it is our job to make sure we serve you the right product based on your need.

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Suggested coverages for Employment Practices Liability Insurance?

Here are some real world examples of claims:

1. Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10

Jurisdiction: All (originating in New Brunswick)

Suspension with pay may constitute “constructive dismissal”

2. Styles v. Alberta Investment Management Company, 2015 ABQB 621

Jurisdiction: Alberta

Employers owe a duty of good faith when determining Long-Term Incentive Plan entitlements post-termination

3. Amberber v. IBM Canada Ltd., 2018 ONCA 571

This one is likely to make most employment lawyers top cases of 2018 lists. We all love a good termination clause case! The law on what makes a valid “without cause” termination clause seems to change like the weather, but Amberber gives us the latest. Bear with us, here is the clause in question:

TERMINATION OF EMPLOYMENT

If you are terminated by IBM other than for cause, IBM will provide you with notice or a separation payment in lieu of notice of termination equal to the greater of (a) one (1) month of your current annual base salary or (b) one week of your current annual base salary, for each completed six months worked from your IBM service reference date to a maximum of twelve (12) months of your annual base salary.

This payment includes any and all termination notice pay, and severance payments you may be entitled to under provincial employment standards legislation and Common Law. Any separation payment will be subject to applicable statutory deductions. In addition, you will be entitled to benefit continuation for the minimum notice period under applicable provincial employment standard legislation.

In the event that the applicable provincial employment standard legislation provides you with superior entitlements upon termination of employment (“statutory entitlements”) than provided for in this offer of employment, IBM shall provide you with your statutory entitlements in substitution for your rights under this offer of employment.

Amberber, an IBM employee with 16 years of service was terminated, in accordance with above language in his contract. He then brought a court case, arguing that the clause was vague and should be deemed unenforceable. The lower court agreed with him. IBM appealed to the Ontario Court of Appeal, who did not.  Justice Gray wrote:   “In my view, there is no ambiguity. As stated by Laskin J.A. in Chilton v. Co-Operators General Insurance Co. (1997), 1997 CanLII 765 (ON CA), 32 O.R. 161 (C.A.), at p. 169, “[t]he court should not strain to create an ambiguity where none exists.”  In my view, the motion judge strained to create an ambiguity where none exists.”

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