Lawsuits filed by employees against current, former, and even prospective employers for claims of discrimination, sexual harassment, wrongful termination, and other employment-related incidents have been on the rise for decades. No company in South Carolina, large or small, is immune from these types of accusations and lawsuits.

How can you protect your business? Employment practices liability insurance (EPLI) helps protect against the risk of employment-related lawsuits where your other South Carolina business insurance policies may exclude coverage.

A South Carolina independent insurance agent can help you learn more about how to get EPLI coverage.

What Is Employment Practices Liability Insurance?

Employment practices liability insurance in South Carolina provides protection for business owners against claims and lawsuits that are brought against a business, its officers or directors, or its employees and managers for discrimination, wrongful termination, sexual harassment, and other employment-related allegations.

There are over 418,000 small businesses in South Carolina, employing nearly 795,000 people. Your company’s small size or limited number of employees does not make it immune from employment-related lawsuits. Every employer faces the risk of being a target of legal action from past, present, and prospective employees. Even if the claims are groundless or fraudulent, defending against them will be very expensive.

Employment practices liability insurance in South Carolina is needed as soon as you hire employees. An EPLI policy will reimburse your company for the costs of defending a lawsuit in court and for judgments and settlements you have to pay to the claimant. It will cover legal costs whether you win or lose.

Startups and fast-growing companies are especially vulnerable to employment-related claims. These companies may not yet have developed procedures for hiring, firing, and disciplining employees—leaving them open to mistakes and potential lawsuits.

What’s more, your other business insurance policies (e.g., general liability insurance, errors and omissions insurance) typically exclude or significantly limit coverage for employment-related claims. If you’re sued for discrimination, you could have a serious gap in insurance coverage to help you pay your legal bills.

What Does Employment Practices Liability Insurance in South Carolina Cover?

EPLI in South Carolina generally covers the following types of claims filed against your business:

What Doesn't Employment Practices Liability Insurance in South Carolina Cover?

Employment practices liability insurance in South Carolina typically excludes certain types of claims and expenses. These include:

• Penalties and civil fines, punitive damages, criminal fines, and unpaid wages
• Any claims of bodily injury or property damage. These may be covered under your general liability insurance or your worker's compensation insurance
• Intentional acts or dishonest wrongdoing.
• Claims related to unemployment benefits, or claims covered by South Carolina worker's compensation insurance. It also excludes coverage for claims related to federal employment laws, including the Consolidated Omnibus Reconciliation Act (COBRA), the Employee Retirement Income Security Act (ERISA), and others
• Any action that occurred outside of the US

Employers Liability Insurance vs. Employment Practices Liability Insurance 

You may think that employers liability insurance and employment practices liability insurance are interchangeable terms. In fact, these are two distinct and different types of business insurance coverage that you can purchase in South Carolina.

EPLI protects employers from employment-related lawsuits related to things like discrimination, harassment, and wrongful termination.

Employers liability insurance protects employers from lawsuits related to workplace injuries. While most employers in South Carolina are required to have worker's compensation insurance to pay for employees’ expenses after a work-related injury, employer’s liability insurance offers additional protection in this area.

When a worker is injured on the job, worker's compensation insurance covers their medical expenses and lost wages. However, the employee may feel that the compensation they received was not adequate. Or the employee may seek additional punitive compensation above and beyond the worker's compensation benefits.

Employers liability insurance pays legal expenses related to these types of claims, and helps employers recover from frivolous and false claims. What’s more, employers liability insurance comes into play when an employee pursues a work-related injury claim against a third party, who in turn may sue the employer.

What Is Employment Practices Liability Insurance Third-Party Coverage?

Third-party employment practices liability insurance in South Carolina refers to claims made by non-employees, usually customers, clients, vendors, or suppliers, who allege that an employee engaged in wrongful conduct, typically sexual harassment or discrimination.

Standard EPLI policies only provide coverage for lawsuits brought by employees or prospective employees. What’s more, most commercial general liability policies specifically exclude coverage for harassment and discrimination. You have a significant gap in coverage if one of your employees is accused of engaging in this type of behavior.

Employment practices liability third-party coverage protects against claims made against your business by customers, clients, vendors, and suppliers for acts of discrimination and harassment including:

Discrimination based on:

• Race
• Religion
• Sex
• Age
• National origin
• Disability
• Pregnancy
• Sexual orientation
• Harassment

Third-party EPLI is important coverage for any South Carolina business that regularly deals with customers. Firms that interact with clients, suppliers, or vendors may also benefit from this coverage.

What Does Employment Practices Liability Insurance Cost in South Carolina?

The cost of employment practices liability insurance in South Carolina is based on many factors that are unique to your business. Your costs will be based on:

Your insurance company might want to ensure that you have adequate employment procedures in place before offering coverage, typically in increments of $1 million in liability coverage or more.

How Can a South Carolina Independent Insurance Agent Help?

Employment practices liability insurance is essential protection for your business against claims brought by past, current, or even prospective employees. Even with the best intentions and most comprehensive non-discrimination procedures, you or a well-meaning employee can make a mistake or simply be the target of a disgruntled person.

You can find out more about EPLI in South Carolina by engaging a local independent insurance agent. Independent agents can get quotes from multiple insurance companies so you can find the coverage that is best for your unique South Carolina business. And your agent can help you find policies for all of your business insurance needs.

Contact a South Carolina independent insurance agent today.