Employment Practices Liability Coverage

What is Employment Practices Liability Coverage?

Employment Practices Liability (EPL) coverage is designed to protect employers from claims of discrimination, harassment, wrongful termination, and other employment-related issues. EPL coverage typically includes both defense costs and indemnity for covered claims, which can help protect your ministry from financial losses and damage to your reputation.

For Christian ministries, EPL coverage is especially important because of your unique employment needs and faith-based practices. These practices can sometimes create employment-related risks and exposures that are not covered by standard EPL policies.

Examples of these faith-based practices include:

• Making hiring or termination decisions based on your religious preferences.
• Requiring new hires to sign a statement of faith.
• Ensuring that staff adhere to certain moral and ethical standards.

Faith-based employment can create unique risk exposures. That’s why its important to review your EPL policy with a specialist who understands these risk exposures, as well as your First Amendment protections as a religious employer.

A specialist broker or insurance carrier can help you design an EPL policy that specifically addresses your ministry’s needs and provides adequate protection against potential claims.

Review the Terms of Reporting a Claim

Like many professional coverages, Employment Practices Liability coverage is often written on a ‘claims-made’ basis rather than an ‘occurrence basis’. While occurrence based coverage allows the policyholder to report a claim indefinitely after the policy period, claims-made coverage adds additional reporting criteria including a time-limit on when a claim can actually be reported.

Many ministries purchase claims-made coverage for the cost savings, however expired coverage can create severe financial exposure. For example, many claims do not come to light until years after the policy period has ended. Additionally, we have seen legislatures repeatedly extend the statute of limitations on old court cases, allowing plaintiffs to sue ministries for claims from decades prior.

Much of this risk can be mitigated by switching your coverage to ChurchWest. Not only do we offer EPL coverage on an occurrence basis, but we also can provide you retroactive coverage to insure against any gaps created by your expired claims made policies.

What are common EPL claims?

These are a few EPL scenarios that we see ministries face. While every situation is unique, these scenarios help illustrate the types of employment-related risks that EPL coverage can protect against.

• During a job interview, your day care center illegally asks an applicant whether she and her husband have any children. The woman says she has a 2-year-old child and is currently pregnant. The director advises the woman he will not hire her for the position because of her pregnancy. The woman files a lawsuit claiming pregnancy discrimination.
• The music minister at your church is fired after rumors begin circulating that he is using church funds for personal expenses. No one conducts an investigation, and nothing is proven. The church sends an email to members to explain his firing and includes statements that the music minister stole from the church and could not be trusted with children. The music minister files a lawsuit for wrongful termination.
• The mission director for your denominational headquarters retires. The current manager of missions, a woman, applies for the promotion. The headquarters’ HR administrator hires a man with less experience. When the woman questions why the man was hired, the administrator says that the man “gets along better with the guys,” and “a young lady in her position should be thrilled that she’s advanced this far.” The woman files a discrimination complaint with the EEOC.
• Your Christian camp employs a 60-year-old man to care for the campgrounds. The employee injures his knee while working and files a workers’ compensation claim. After being off work for six weeks, he is authorized to return to work with no restrictions. While the employee is off work, the camp hires a younger man to fill in. The camp now believes that the original caretaker is too old to do the job. The camp advises the employee that he must retire. He refuses and is fired. The caretaker then files a lawsuit claiming retaliatory discharge and age discrimination.

Next Steps

In summary, Employment Practices Liability coverage provides vital protection for your ministry against claims of discrimination, harassment, and other employment-related issues.

Worried about the cost? A ChurchWest Ministry Insurance Advisor can bundle your tailored EPL coverage with other ministry specific coverages as part of a comprehensive insurance package. By bundling your coverage with ChurchWest, you can get the best protection at the most affordable price.

Click the “Get a Quote” button at the top of this screen to contact your local advisor, or explore our other coverage pages to learn more about guarding your ministry’s finances.