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Insurance Talk — Employment Practices Liability Insurance (EPLI)

Insurance Talk — Employment Practices Liability Insurance (EPLI)

Rex and Cheri have the answers. Listen here.


Cheri Martinen – You are listening to Insurance Talk with Cheri Martinen and Rex Lesueur. We’re the father-daughter team from Bancorp Insurance located in beautiful Central Oregon. Bancorp Insurance is a family-run, independent insurance agency. We specialize in helping our neighbors here in Central Oregon with their home and auto as well as companies and businesses throughout the Pacific Northwest. And we also like to help with Medicare and health insurance. But today we’ve got a special story about employee liability. Rex I’m going to let you tell this story because this actually happened to you not that long ago.

Why Do I Need Employment Practices Liability Insurance?

Rex Lesueur – This is new. A lot of businesses buy coverage called employment related practices liability, we shorten it to EPLI. If you’re in the insurance business and you mentioned the initials you’d get it, but we’re going to call it employment practices liability insurance for everybody here.

CM – But if you’re like, what the heck is that? Do I have that? And you go and you see a little thing that says EPLI, then you’re good.

RL – If you don’t have it and you have employees, then we probably should talk. This line of business is getting more and more attention, especially during the pandemic.

CM – There were a lot of layoffs. There were a lot of employers who were trying to keep their employees as much as they could, but then they couldn’t because maybe they couldn’t be open or they couldn’t have employees at the office or whatever it was.

RL – And when an employee gets laid off, that’s when they start thinking about all the things that they were pissed off at the employer for doing. It could be things like just having a toxic workplace. You could be accused of that, even if everybody is all hugs and kisses in the place. It could have been a sexual harassment claim if everybody is really nice and friendly and so on. Somebody touches somebody inappropriately or someone perceives that, or even makes an innuendo. There can be all kinds of situations where an employee will interact with other employees or management, and even third parties where the employee feels that management did not protect them from a situation and it caused them emotional harm.

CM – I think a good example of that is maybe a delivery guy. The front desk person has to deal with that delivery guy, and he’s unsavory and makes a pass at one of your employees every day.

RL – If that employee comes to you and says, “Hey this guy is doing that,” and you tell them to buck up and get over it, then you’re opening yourself up for a lawsuit. What you have to do is you have to talk to the delivery guy next time he’s in, tell him that that’s inappropriate and it won’t be stood for. CM – And then you have to document it on paper in the employee file.

RL – Then if it happens again, you have to take it to the employer of the delivery guy, and ask that it be stopped. And if it still doesn’t stop, the delivery guy will have to come in and talk to you because we cannot have a situation like that if the vendor won’t take care of it. But they typically do.

CM – It could be somebody that’s not even an employee. You could do an interview with someone or talk to them on the phone, and maybe you don’t call them back because it didn’t work out or you’re not hiring anymore.

A Potential Employee Didn’t Get the Job

RL – We had a situation where someone brought up an EPLI case against an employer because they didn’t get the job. They described it as failure to hire. And the reason was that this individual allegedly had a disability, and for people with disabilities you have to give them special consideration for hiring. This was a particularly egregious case because the company ended up not filling the position.

They didn’t hire anybody so it’s impossible to prove a negative. But if you don’t hire anyone then you can’t be accused of not hiring someone because they had a disability. The case went down where the attorney sent the letter, and the attorney for the employer got back to him and said “You’ve got a terrible case” and the guy goes, “Yeah, I do. So I’ll tell you what we’ll do. We’ll settle for $5,000 if you settle within five days, as opposed to $10,000.” So basically it was a shakedown, and that can happen.

More than likely what happens is people sue because of a hostile workplace, sexual harassment, somebody picked on them, or the manager wasn’t very friendly, whatever they can think of. And this happens more when there are more layoffs, and in the pandemic we’ve had more layoffs. It’s been a little bit of a challenge and the price of this kind of insurance is going up, but it becomes more and more necessary as people learn that they can do this and they can get more money.

A Bureau of Labor and Industries Complaint

The case that I wanted to bring to everybody’s attention this time was a situation where an employer got a BOLI complaint. BOLI is the Oregon State Bureau of Labor and Industries. If an employee has a problem with an employer, they can write a complaint and send it to the State of Oregon. The State of Oregon will listen to what the employee has to say. They will send you a letter and ask you as the employer what you have to say, and you have 30 days to get back to them and write them a letter and to explain what’s going on.

In this case, BOLI surprised everybody and basically came back neutral on whether the employee had a complaint or not. That was enough for the employee to basically launch the lawsuit. Well, the employer did have employment-related practices insurance. He turned the claim in once the lawsuit arrived, but the insurance company refused to defend him because when the BOLI complaint came in, he did not advise them of it.

There’s a clause in the policy that says if you have a claim, you have to turn it into the company right away, and you can’t attempt to defend it yourself. It’s kind of nebulous as to whether or not a BOLI complaint is a claim. And it really isn’t, it’s a complaint. But the insurance company felt that because it was a complaint, they should have been advised of it so that they could participate in the defense of the BOLI complaint to help prevent the lawsuit.

So anybody out there who’s listening that has employment-related practices insurance and has a BOLI complaint, tell your EPLI company.

CM – It doesn’t hurt. It’s an email, a quick email, such as “Hey, we got a BOLI complaint. I’m forwarding it to you. This is what’s going on. This is how I’m going to respond,” or, “How do you want me to respond?” RL – Do they want to bring in an attorney? Or do they want to just have you respond? CM – It might be a quick conversation on the phone. They might call you up and say, “Hey, I got this BOLI document. Let’s talk about it. What’s going on?”

Take BOLI Complaints Seriously

RL – If you do get a BOLI complaint as an employer, take them very seriously, really research your answers. I know we had one from an employee a while back and we actually brought it to an attorney and said, “This is what the person is alleging. It’s all nonsense.” Most BOLI complaints, by the way, are nonsense. I don’t know what the percentage is that actually goes in the favor of the employee, but it’s not a high percentage.

CM – You have to remember, the employee can put the complaint in, and then the employer is in charge of providing documentation of those claims not being true. So the employee doesn’t have to show any documentation, but the employer does. It’s kind of tricky.

RL – If you have a sit down with an employee who’s not performing well, don’t just have a quick conversation. Don’t stop them in the hallway or just pull them into your office for a quick conversation. You need to pull the employee file out, document it, write a note, and put it in the file. If you have an issue with an employee and you want them to improve their performance, you’re going to type up a document that says we’ve had a conversation, I’m asking you to improve your performance or change your attitude or whatever we need to have you do. Then you need to document that and put it in the employee’s file. And you need to keep that forever because you need to be able to show that if you had to lay somebody off for cause, that you actually gave them a chance to improve their work, because, big surprise, people will turn in BOLI complaints that are one big, long, continuous lie. And you as the employer have to prove them wrong. And it’s really hard to prove that.

CM – That’s why the EPLI company needs to know about it right from the beginning. They do have special teams of lawyers that their entire job is defending their clients to make sure that they win the lawsuits because the insurance company doesn’t want to pay for it either.

RL – There are law firms where all they do is handle employment-related practices claims. There are literally people who make their living day in and day out by suing businesses for employees. There’s a whole other set of law firms out there who do nothing but defend employers from the guys who are suing them. This is a big, complicated dance, and it’s getting to be a bigger dance all the time. 30 years ago when I bought Bancorp Insurance, we almost never sold this product because no one ever got sued. And now we sell it all the time. It is a very important coverage that needs to be part of the package. You buy workers’ comp. You also buy employment-related practices.

If You Have Employees, You Need EPLI

CM – And if you don’t have it and you have employees, it’s a good time to look at it now.

RL – We’re happy to talk to you about it so give us a call if you have any questions.

CM – 1-800-452-6826. Again, this is Cheri Martinen and Rex Lesueur from Bancorp Insurance. We’re located in beautiful downtown La Pine, Oregon. We help people from all over the Pacific Northwest. Give us a call. Or if you have more questions on this, you can always reach out to us via email at bancorp@bancorpinsurnace.com.

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