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COVID-19 claims against your EPL insurance are on the rise: What you need to know

COVID-19 claims against your EPL insurance are on the rise: What you need to know

DISCLAIMER: Brokers and employers must review their D&O policy for coverage limits and exclusions. This blog includes generalizations about D&O coverages and must not be construed as coverage promises.

Employment practices liability (EPL) lawsuits are rising in today’s COVID-19 work environment. As more employees return to the office, EPL claims including harassment, discrimination, retaliation, negligence, mismanagement of employee benefits, whistleblower, and/or wrongful termination are expected to increase further. 

According to Fisher Phillips, over 4,200 COVID-19 employment-related lawsuits have been filed since early 2020. The most common reason for a lawsuit during this period? Remote Work/Leave Conflicts. 

Small businesses face greater odds of being sued and have the most to lose when employees file COVID-19 related suits. The smaller the employer, the greater the odds they won’t have sufficient resources to defend a claim and be subject to a significant judgment or settlement. 

Small and mid-size business leaders often mistakenly think their general business insurance or General Liability (GL) policy will cover the above-mentioned employment practices liability scenarios. But, unfortunately, they don’t. Only a dedicated EPL policy does.

What does EPL insurance cover and what’s excluded?

While each EPL policy should be tailored to the specific business, everyone should understand some general rules about EPL coverage. Here are a few common COVID-related EPL claims scenarios and their coverage status: 

  • Firing based on retaliation. One employee refused to follow her employer’s coronavirus policies that required her to get a vaccine. As previously mentioned, claims made under OSHA or other safety regulations are excluded from EPL coverage. However, claims of retaliation are not. If an employee makes a retaliation claim, your EPL insurance usually covers it.

  • An employee is not comfortable with returning to work. Perhaps the employee feels that the workplace isn’t maintaining appropriate social distancing or that the company is failing to monitor and enforce health and safety guidelines. Though that person continues to work, they file a lawsuit for mental anguish and emotional distress. Again, pay attention to OSHA and Workers’ compensation guidelines. While “bodily injury” is a case for OSHA, and mental health is covered by the Americans with Disabilities Act (ADA), EPL insurance could cover the costs and the damages from the suit. Why? The legal definition of “emotional anguish” is neither a bodily injury nor a health condition, so, depending on your policy, the employer’s EPL policy may apply.

  • Failure to provide a safe work environment for employees. Today, one of the more prevalent employer allegations is “failure to provide a safe working environment.” While bodily injury is a standard EPL exclusion, COVID has led to a surge in employer negligence and public nuisance-related claims, alleging that an employer failed to provide a safe working environment which led the employee to contract COVID-19, suffering harm or damage. In some cases, the court dismissed these claims, citing OSHA instead. 

Remember, every EPL policy is underwritten for the individual employer. As a broker, you have an opportunity to help your customers examine their policy carefully to see what coverage might be in the event of lawsuits surrounding the ongoing pandemic. Be sure your customers have the right kind of insurance with the right limits. Because, as we’ve seen, unexpected situations might be just around the corner with the next wave or variant of the pandemic.

Protect what matters most with Coalition D&O and EPL

Coalition sits at an ideal intersection of technology, security, and insurance. We launched early access in late 2021 to our executive risk products and with a broker platform that utilizes real-time financial, regulatory, and transactional data to generate bindable D&O and EPL quotes in minutes, creating a seamless quoting experience for brokers. 

This year, we plan to expand access to our executive risk products to the broader brokerage community. If you’re a broker interested in offering our executive risk products to your clients, click here! We’re excited to work with you to bring a new approach to executive risks.