As a contractor, construction company, or home services business owner, you face unique challenges in managing your workforce. One often overlooked aspect of risk management is Employment Practices Liability Insurance (EPLI).

EPLI is a type of insurance that covers legal fees and damages resulting from employee claims of wrongful treatment, such as discrimination, harassment, or wrongful termination.

The construction and home services industries have unique characteristics that make EPLI particularly important:

  • Frequent hiring and layoffs due to project-based work
  • Use of seasonal or part-time labor
  • Lack of formal HR departments in smaller companies
  • High potential for third-party interactions (clients, vendors, public)
  • Physically demanding work environments

The Importance of EPLI

EPLI claims are on the rise, with the number of employment-related lawsuits increasing by roughly 400% in the past 20 years. Almost half of all employment-related legal cases are brought against companies with less than 100 employees. The Me Too Movement has further underscored the severity of workplace harassment, discrimination, and abuse cases.

Every business with employees can experience an EPLI claim, regardless of how careful they are or how much they trust their employees and managers.

What Does EPLI Cover?

EPLI typically covers:

  • Wrongful termination
  • Discrimination (based on race, gender, age, and other protected classes)
  • Sexual harassment
  • Retaliation
  • Employment-related defamation
  • Invasion of privacy
  • Failure to promote
  • Deprivation of career opportunity
  • Negligent evaluation
  • Wage and hour violations (often as a limited coverage)

Common EPLI Claims in the Construction Industry

  1. Wrongful termination due to project completion or slowdowns
  2. Discrimination charges during hiring or layoffs
  3. Sexual harassment on job sites
  4. Wage and hour disputes (overtime, breaks, off-the-clock work)
  5. Third-party claims from clients, vendors, or the public

Who Can File an EPLI Claim?

Claims can come from various sources:

  • Current employees
  • Former employees
  • Job applicants
  • Third parties (customers, clients, vendors)
  • Government bodies

Additional Benefits of EPLI

Beyond financial protection, EPLI often provides:

  • Free legal consultations for HR-related issues
  • More freedom to make necessary business decisions
  • Reduced time and stress dealing with frivolous claims

EPLI Coverage Options

  • Standalone EPLI policies
  • EPLI as part of a management liability package
  • Limited EPLI coverage within general liability policies

Consider additional coverages such as:

  • Wage and hour endorsements
  • Third-party coverage

Understanding EPLI Costs

The cost of EPLI insurance varies based on several factors. Insurance companies typically consider:

  1. Number of Employees: More employees generally mean higher premiums due to increased claim risk.
  2. Turnover Rates: Higher turnover rates often correlate with increased wrongful termination claims, leading to higher premiums.
  3. HR Procedures: Strong HR policies and procedures can reduce risks and potentially lower premiums.
  4. Industry: Industries with high customer interaction (like construction and home services) may be considered higher risk.
  5. Coverage Limits: Higher limits result in higher premiums. Most EPLI policy limits range from $100,000 to $1,000,000.
  6. Claims History: Past employment liability claims, typically over the last three years, will affect your premium.
  7. Deductible: A higher deductible can lower your premium, but may result in higher out-of-pocket costs for smaller claims.
  8. Policy Terms: EPLI policy terms can vary significantly between carriers, affecting cost and coverage.

The Cost of Not Having EPLI

Forgoing EPLI or having insufficient coverage can be financially disastrous:

  • The average cost of settling out of court is about $75,000 per lawsuit.
  • Court-awarded damages for employment-related lawsuits average $217,000 per claim.
  • Defense costs can be substantial, regardless of the outcome.

Beyond financial costs, employment-related claims can lead to:

  • Stress and distraction for leadership
  • Damage to business reputation
  • Reduced employee morale and productivity

While EPLI may represent a significant expense, especially for small and medium businesses, it’s a fraction of the potential cost of a discrimination or harassment lawsuit.

Get Help from ContractorNerd

Navigating the complexities of Employment Practices Liability Insurance can be challenging, especially for busy contractors and home services professionals. That’s where ContractorNerd comes in. We specialize in helping contractors, construction companies, and home services businesses find the right insurance coverage to protect their operations.

At ContractorNerd, we understand the unique risks faced by your industry. Our team of experts can:

  • Assess your specific EPLI needs based on your business size, structure, and risk profile
  • Explain the nuances of different EPLI policies and coverage options
  • Help you compare quotes from multiple insurance providers
  • Assist in selecting the most comprehensive and cost-effective EPLI coverage for your business
  • Provide ongoing support and advice as your business grows and changes

Don’t leave your business vulnerable to potentially devastating employment-related claims. Contact ContractorNerd today to ensure you have the right EPLI coverage in place. Our team is ready to help you protect your business, your employees, and your future.

Visit us at contractornerd.com or call our dedicated insurance experts to get started on securing the right EPLI coverage for your construction or home services business. Let ContractorNerd be your partner in risk management and business protection.