Employment practices liability is an area of

United States labor law United States labor law sets the rights and duties for employees, labor unions, and employers in the United States. Labor law's basic aim is to remedy the "inequality of bargaining power" between employees and employers, especially employers "orga ...

that deals with

wrongful termination In law, wrongful dismissal, also called wrongful termination or wrongful discharge, is a situation in which an employee's contract of employment has been terminated by the employer, where the termination breaches one or more terms of the contra ...

, sexual harassment, discrimination,

invasion of privacy The right to privacy is an element of various legal traditions that intends to restrain governmental and private actions that threaten the privacy of individuals. Over 150 national constitutions mention the right to privacy. On 10 December 1948 ...

false imprisonment False imprisonment or unlawful imprisonment occurs when a person intentionally restricts another person’s movement within any area without legal authority, justification, or the restrained person's permission. Actual physical restraint is n ...

breach of contract Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other par ...

emotional distress In medicine, distress is an aversive state in which a person is unable to completely adapt to stressors and their resulting stress and shows maladaptive behaviors. It can be evident in the presence of various phenomena, such as inappropriate soc ...

, and

wage A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as ''minimum wage'', '' prevailing wage'', and ''yearly bonuses,'' and remun ...

and hour law violations. It may be categorized as a form of professional liability. Employment practices

liability insurance Liability insurance (also called third-party insurance) is a part of the general insurance system of risk financing to protect the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims and protects the in ...

(EPL) is sold as a type of management liability insurance, which is related to

professional liability insurance Professional liability insurance (PLI), also called professional indemnity insurance (PII) but more commonly known as errors & omissions (E&O) in the US, is a form of liability insurance which helps protect professional advice-, consulting, and ser ...

. Most commonly, employment practices liability deals with laws and protections brought under

Title VII The Civil Rights Act of 1964 () is a landmark civil rights and labor law in the United States that outlaws discrimination based on race, color, religion, sex, and national origin. It prohibits unequal application of voter registration requ ...

of the

Civil Rights Act of 1964 The Civil Rights Act of 1964 () is a landmark civil rights and labor law in the United States that outlaws discrimination based on race, color, religion, sex, and national origin. It prohibits unequal application of voter registration req ...

, the ADA (

Americans with Disabilities Act The Americans with Disabilities Act of 1990 or ADA () is a civil rights law that prohibits discrimination based on disability. It affords similar protections against discrimination to Americans with disabilities as the Civil Rights Act of 19 ...

) of 1990, the

Civil Rights Act of 1991 The Civil Rights Act of 1991 is a United States labor law, passed in response to United States Supreme Court decisions that limited the rights of employees who had sued their employers for discrimination. The Act represented the first effort since ...

, ADEA ( Age Discrimination in Employment Act) of 1967, and

Family and Medical Leave Act The Family and Medical Leave Act of 1993 (FMLA) is a United States labor law requiring covered employers to provide employees with job-protected, unpaid leave for qualified medical and family reasons. The FMLA was a major part of President Bill C ...

(FMLA). The

Equal Employment Opportunity Commission The U.S. Equal Employment Opportunity Commission (EEOC) is a federal agency that was established via the Civil Rights Act of 1964 to administer and enforce civil rights laws against workplace discrimination. The EEOC investigates discrimination ...

(EEOC) interprets and enforces these laws. The EEOC recognizes eleven types of employment practices discrimination: age, disability, equal pay/compensation, genetic information, national origin, pregnancy, race/color, religion, retaliation, sex, and sexual harassment. Analysis of annual claims totals suggests that EPL claims rates correspond to unemployment rates: from 2007 to 2008, total claims in the U.S. jumped 13% as mass layoffs increased by roughly a third. In 2012, charges of retaliation, race, and sex discrimination (including harassment and pregnancy) were the most common types of discrimination that prompted EPL filings.

EPL insurance

A growing product on the

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

markets is employment practices

(EPL), a type of

policy Policy is a deliberate system of guidelines to guide decisions and achieve rational outcomes. A policy is a statement of intent and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an orga ...

that business owners can buy to protect their organizations against employee suits for rights protected under acts above. More recently, with the expansion of

privacy law Privacy law is the body of law that deals with the regulating, storing, and using of personally identifiable information, personal healthcare information, and financial information of individuals, which can be collected by governments, public o ...

(s), employee privacy concerns have come to the fore as private employee data is stored electronically. This is not always covered under an EPL policy, but the insurance industry has responded by offering cyber liability and network security policies. Importantly, there are both federal and state statutes that govern an employer's liability to its employees. Laws also differ from state to state; e.g., California, is often considered a pro-employee state when it comes to employers' liability. Like most kinds of

, EPL insurance policies operate on a claims-made basis. This means that policyholders can only receive insurance benefits if they are covered both at the time of the discrimination incident that triggered the claim and at the time when the claim is filed.

References

Public liability United States labor case law {{business-stub