2021 Insurance Fact Book

Employment Practices Liability Insurance

Following the flood of high-profile sexual harassment lawsuits spurred by the #MeToo movement, there was a dramatic increase in the purchase of employment practices liability insurance (EPLI) since 2017. The coverage was developed in 1990, following the rise in employment-related lawsuits that emerged after the passage of the Americans with Disabilities Act of 1990 and the Civil Rights Act of 1991. The coverage protects businesses from the financial consequences of various types of employment lawsuits such as sexual harassment, job-related discrimination, hostile work environment, wrongful termination and retaliation. Other coverages include invasion of privacy, false imprisonment, breach of contract, emotional distress and wage law violations. The Equal Employment Opportunity Commission reported that 56 percent of the 67,448 charges of workplace discrimination filed cases. (Percentages add up to more than 100 percent because some charges allege more than one type of claim).

In 2021, challenges for the EPLI market resulted from the COVID-19 pandemic. According to Travelers Insurance, increases in layoffs, which began in March 2020 following orders from governments to shut down businesses, resulted in increased EPLI claims. Jackson Lewis has tracked about 2,000 EPLI lawsuits filed that are COVID-19 related. Disability claims are also impacted by the pandemic as employers deny vulnerable workers' requests for extended work from home. Social inflation plays a role as jury awards increased; the number of retaliation claims remains high, and sexual harassment claims were up 68 percent from 2016 to 2019. AMTrust Financial also identified worker classification lawsuits filed by gig workers and lawsuits related to the gender pay gap as additional trends affecting EPLI claims.

Trends In Employment Practices Liability, 2013-2019

 

Year Median (midpoint) award Probability range (1)
2013 $100,000 $15,707 - $251,623
2014 86,250 20,000 - 302,574
2015 83,000 17,839 - 347,498
2016 122,170 25,000 - 447,437
2017 126,000 25,000 - 550,000
2018 190,000 34,193 - 551,121
2019 209,191 58,083 - 636,500
Overall $120,000 $25,000 -$414,150

(1) The middle 50 percent of all awards arranged in ascending order in a sampling, 25 percent above and below the median award. The median represents the midpoint jury award. Half of the awards are above the median and half are below. This helps establish where awards tend to cluster.

Source: Reprinted with permission of Thomson Reuters, Employment Practice Liability: Jury Award Trends and Statistics, 2020 edition.

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Employment Practices Liability Verdicts, By Defendant Type, 2013-2019 (1)

 

(1) Based on plaintiff and defendant verdicts rendered.

Source: Reprinted with permission of Thomson Reuters, Employment Practice Liability: Jury Award Trends And Statistics, 2020 edition.

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