2021: Employment Practices Liability Insurance Rates Climb

employment practices liability insurance

Racial discrimination, gender equity, me too, BLM, and COVID are drivers

2020 trends continue to reflect a new level of hysteria in the employment practices liability insurance (EPLI) market for employers from various factors. From racial discrimination to gender inequality, employers constantly face a great deal of risk. AmWINS Brokerage vice president, Jordan Kurkowski, says that 2020 “has been a whammy of layoffs, severance packages, and furloughs.”

Naturally, the COVID-19 pandemic did not help the situation. With a COVID vaccine and the potential mandates that come with it, employers will need to juggle a host of new employee concerns. Employers face the decision of whether or not they can make people come back to work or get vaccines and the related employment practice liability risks that may follow.

Should employers require COVID vaccinations to reduce liability?

As the COVID vaccine becomes more readily available, the web grows deeper. Now, business owners must decide if they are to mandate vaccinations for employees. Or perhaps, employers should merely encourage their workers to get vaccinated. Issues can arise if an employee refuses. According to the Equal Employment Opportunity Commission (EEOC), certain employees may be lawfully excluded from the workplace if they decline the choice to receive vaccination because of sincere religious beliefs or because of a disability. However, this is only if “reasonable accommodation” is not possible.

Regardless, EEOC doctrines do not account for all federal laws that might relate to the circumstances. Furthermore, employers may not even want to require vaccination. Given the astronomical increase in employment practices liability claims, employers should think twice before choosing one or the other.

Employers are currently at a much higher risk of accommodation failure. That number continues to rise with a projected increase in vaccine-related claims for religious and disability discrimination. Many employers can also expect claims regarding OSHA-related standards. An employer could violate OSHA standards if an employee complains of an unhealthy and unclean work environment. Failure to maintain a safe workplace is an infringement under the general clause of OSHA. Are these claims covered under an EPLI policy? It may all depend on the policy itself.

Best ways to reasonably accommodate employees from an employment practices liability standpoint

So how does a business adequately accommodate its employees’ needs during the pandemic? They can start by mandating masks for anyone ready to return to work. But is that enough? The question still arises of what to do about those unwilling or unable to get a vaccine and providing reasonable accommodations. Rachel Ziolkowski Ullrich is a Labor & Employment Law attorney. She says employers have spent the last year “making accommodations–masking, social distancing, hand-washing, and working from home.” But employees may insist that the only reasonable accommodation is to continue to work from home.

How to protect your employees and your business

There is legal safety in following governmental health guidelines on the issue of whether it can mandate vaccines. Should the final government guidance be to mandate the vaccine, and if employers do not comply, then the liability risk shifts to concerns over the safety of other workers.

How can employers protect themselves? “Start looking at your accommodations policy and start training your employees liability protection forms - sadler insuranceand your managers on how to handle accommodations,” says Ullrich. Have prepared consent forms for all employees to sign. Make sure the forms are in the employee’s primary spoken language. Incentives are a great way to encourage employees to get a COVID vaccination. Consider offering a paid day off where the employee would not only have time to get the vaccine but also a small financial benefit.

EPLI rates and retentions rising

Depending on the type of business, EPLI rates may increase anywhere from 10% to 50%. Hospitality and healthcare are seeing even greater spikes. Also, states like New York, Texas, Illinois, and Florida are seeing significant insurance claim problems. Some underwriters are radically increasing retentions (AKA deductibles) and, in some cases, leaving the state.

Just two years ago, many EPLI accounts had very low premiums and zero retentions. The market now requires retention rates of $10,000 to $25,000 for many employers, and the number keeps climbing. 

Kurkowski suspects the culmination of the #MeToo movement, Black Lives Matter protests, and the COVID-19 pandemic sentblack lives matter protests the directors and officers liability market spiraling out of control. Kurkowski notes that EPLI packaged with D&O is the “hardest piece to write right now in the management liability package.”

COVID driven D&O claims will impact terms for employment practices liability insurance

In 2021, expect to see bankruptcies resulting in lawsuits for managerial negligence against directors and officers. Also, layoffs due to the same financial factors will prompt EPLI claims. We are not seeing a full market exit from EPLI carriers but rather particular classes of business, says Kurkowski. Before offering coverage terms, EPL underwriters want to have a better idea of a company’s financial stability. Therefore, it is likely that D&O will remain relevant when it comes to underwriting since many EPLI policy bundles include D&O.

Despite increases, businesses still need EPLI coverage now more than ever

The latest combination of risk factors necessitates the purchase of EPLI for small businesses. If you are interested in receiving a quote, please complete the Get A Quote form and a representative will be in touch.



Andrea Wells. Employment Practices in the Age of Covid. Insurance Journal. January 11, 2021.


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