Protecting Your Leadership: D&O Insurance and Employment Practices Liability


Directors and Officers (D&O) insurance is a crucial shield for businesses, safeguarding leaders from personal liability in lawsuits alleging mismanagement. But what happens when claims extend beyond financial decisions and delve into sensitive areas like workplace practices? That is where understanding add-on coverages under D&O becomes critical. 

Today, let’s analyze a real-world scenario from the lens of one such add on coverage – Employment Practices Liability Insurance (EPLI).

Case Study: Gender Discrimination at Google

In a landmark case, a group of female employees sued Google, alleging systemic gender discrimination. The lawsuit claimed unequal pay and biased promotion practices, favoring male employees. 

Google had to eventually settle the case for a hefty $118 million. 118 million USD. That ofcourse raises the question about potential liability for the company’s board.

EPLI coverage under D & O

While the base D&O policy (typically referred to as Side A coverage) protects individual directors and officers from personal financial losses, EPLI broadens the scope. It covers the company (Side B coverage) for claims like:

  • Wrongful termination: Firing employees without proper justification.
  • Discrimination: Unequal treatment based on factors like gender, race, or religion.
  • Sexual harassment: Creating a hostile work environment through inappropriate behavior.
  • Retaliation: Punishing employees for reporting discrimination or harassment.

The EPLI section could also provide legal defense costs for the board members facing potential accusations of negligence in overseeing workplace practices.

Benefits of Adding EPLI Coverage

Adding EPLI to your D&O policy offers several advantages:

  • Enhanced Protection: It broadens the scope of D&O insurance, safeguarding your company and leadership from a wider range of employment-related lawsuits.
  • Peace of Mind: Knowing your directors and officers are covered for EPLI claims fosters a sense of security and allows them to make decisions with greater confidence.
  • Attracting & Retaining Talent: A robust D&O policy with EPLI coverage demonstrates your commitment to fair treatment, potentially attracting and retaining top talent.

Should you opt for EPLI coverage?

If you’re unsure whether EPLI coverage is right for your company, consult your insurance broker. They can assess your specific risks and recommend the most suitable D&O policy with appropriate add-ons. Remember, even the most ethical workplaces can face EPLI claims. Don’t leave your leadership and company exposed – ensure you have the right D&O coverage in place.

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Susheel Agarwal