Things to Know About EPLI and COVID-19

As Texas prepares for another wave of COVID-19 and employees return to work, employers are concerned with not only accomodating new work schedules and sanitation, but potential claims from employees. Examples of issues that may arise as employees navigate this new normal:

1) Retaliation for taking leave or asking for a reasonable accommodation to work from home;

2) Age and disability discrimination for refusing to accommodate employees who are more at risk for serious complications from the virus;

3) Discrimination or harassment allegations by Asian-American employees;

4) Discrimination or hostile work environment claims based on COVID-19 diagnosis also present new challenges.

These types of claims may be covered by EPLI, which provides coverage for defense costs and damages arising from various employment-related “wrongful acts”.

EPLI insurance policies usually exclude coverage for bodily injury. Therefore, under an EPLI policy, an employer would not have coverage for injuries sustained by employees as a direct result of contracting the virus. You should ask your insurance advisor if you have any questions about employee injury related to COVID. But other common EPLI exclusions that are potentially relevant to COVID-19 related claims include OSHA & FMLA claims, Wage & Hour / FSLA claims, and WARN Act claims to name a few. Let’s take a look at how these exclusions may be effected.

OSHA & FMLA Claims

Almost all EPLI policies exclude claims that arise from OSHA violations (or alleged violations). In such, COVID claims could be subject to exclusion. But what happens if an employee refuses to come to work, insisting they must work from home due to an “unsafe workplace”? Would your EPLI policy provide coverage for “wrongful termination” if that employee is fired? Probably. Most EPLI policies provide a “retaliation” carve back to the OSHA exclusion which specifically carves back claims that allege retaliation (like wrongful termination) with regard to an employee exercising his or her rights under OSHA. Employers should, however, review their policies with their insurance advisor to ensure that their policies do in fact include this carve back.

Similarly, EPLI policies specifically exclude claims alleging FMLA violations. Most policies, do, however, include a carve back for “retaliation” should an employee believe they were retaliated against for exercising their rights under the law.

Wage & Hour / FLSA Claims

It’s a new work environment we’re in. In many cases, employees are effectively setting their own work schedules and work routines. At the same time, many employers are adhering to government guidelines and requiring that employees be tested for COVID-19 before coming into the workplace for any reason…but on who’s time? These situations can prompt compensation disputes. In addition to the fact that there may be considerable uncertainty surrounding compensation during these unique work arrangements, telecommuting can also create challenges in accurately tracking hours worked. EPLI policies can vary a great deal on coverage provided for “wage and hour claims”. The Department Of Labor has recently issued some guidance on FSLA with their online FAQ’s page that addressed some of these concerns.

WARN Act Violations

In an effort to reduce some of the financial hardship from lost revenues and forced closures, many businesses may resort to reductions in workforce and/or facility closures. Employers must be sure that any layoffs and/or job terminations are in compliance with the WARN Act and any similar state laws. While state laws may differ, the WARN act requires companies with 100 employees or more, to provide 60 days of advanced notice to employees affected by mass layoffs (those affecting 50 persons or greater). Failure to provide the required notice can result in WARN act violations which are specifically excluded by EPLI policies.

It’s always best to talk to your insurance advisor if you have any questions arising about the risk your business may face. As more and more employers are opening their doors to employees returning to work, it’s a good idea to schedule some time to talk to your advisor to make sure you insurance coverages are appropriate in the new workplace.