Pub. 14 2015-2016 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 17 new jersey auto retailer W W W . N J C A R . O R G disturbing trends, it is estimated that less than one-fourth of all eligible dealerships purchase EPLI because they mistakenly believe that their business owner policies, workers’ compensation, general liability, and professional liability insurance cover employment-related exposures. EPLI will provide your dealership with protection from many kinds of employee lawsuits, including claims of sexual ha- rassment, discrimination, whistleblowing, wrongful termination, failure to hire or promote, retaliation, breach of employ- ment contract and violations of the Family Medical Leave Act or other leave laws. EPLI will reimburse your dealership for the costs of defending a lawsuit in court, and for judgments and settlements within policy limits. It may cost upwards of $100,000 to defend against a single plain- tiff harassment case. If a case goes to trial, it can cost three times that amount to defend. Moreover, if a dealership is un- successful at trial, a plaintiff may receive payment of his or her attorney’s fees, and upwards of $1,000,000 in pre-judgement. Furthermore, expenses incurred in de- fending a claim under an EPLI policy are usually subject to a self-insured retention (or deductible). Once the retention is ex- hausted, EPLI covers damages resulting from an insured’s employment practices, including settlements, judgments, back pay and front pay awards, pre-judgment and post-judgment interest, experts and attorneys’ fees and costs. EPLI polices typically exclude coverage for wages, salaries, benefits or expenses of the in- sured; punitive damages (unless coverage is permitted by applicable state law); fines, penalties, or taxes; amounts due under an express employment contract; stock options and deferred compensation; and injunctive relief (e.g., reinstatement and providing accommodations to employees in the workplace). EPLI coverage can be purchased with limits ranging from $1 to $25 million, with annual premiums typically ranging from $2,000 to $4,000 for businesses with 5 to 20 employees. Policy limits and premium ranges are determined by the size of your business, the number of employees, and any prior claims filed against the dealer- ship. EPLI is commonly written either on a stand-alone basis or as a rider for all of the common employer’s policies, including directors and officers, employ- ers liability, and comprehensive general liability. Dealerships also typically have a choice between two different types of EPLI policies: occurrence and claims- made. An occurrence policy obligates the insurance company to pay for claims aris- ing out of occurrences during the policy period, regardless of when the claim is reported to the dealership. A claims-made policy protects an insured against claims or incidents that are reported while the policy is in force. EPLI is one of many important ways a dealership can safeguard its business and mitigate risk, and should be considered part of a dealership’s overall insurance protection plan. According to industry experts, the EPLI premium rates are not showing signs of hardening in 2015. A pro-active preventive approach also goes far in mitigating a dealership’s ex- posure to employment-related claims. Auditing internal personnel policies with experienced legal counsel is the first line of defense against employment-related claims to ensure a culture with zero tol- erance for discrimination, harassment, retaliation and other illegal activities. Mandatory anti-discrimination policies and training for managers and employees, timely and effective response to employee complaints, and thorough documentation of policies, procedures, and actions are among the many ways that dealerships can reduce employment-related risk and exhibit good faith in preventing workplace discrimination. The cost is minimal com- pared to the cost of defending against a charge brought by the EEOC, the NJDCR, or worse, the cost of defending a lawsuit. Dina M. Mastellone is the Director of Genova Burns LLC’s Human Resource Training & Audit Programs Practice Group and is Counsel in the firm’s Employment Litigation Practice Group. Gillian A. Cooper is an Associate in the firm’s Newark office and is a member of the Employment Law & Litigation Practice Group. They can be reached at 973-533-0777 and via e-mail at dmastellone@ genovaburns.com or gcooper@genovaburns.com. EPLI will provide your dealership with protection from many kinds of employee lawsuits, including claims of sexual harassment, discrimination, whistleblowing, wrongful termination, failure to hire or promote, retaliation, breach of employment contract and violations of the Family Medical Leave Act or other leave laws.