Employment practices liability (EPLI)

Affluent individuals often operate their home as a small business because of their unique exposures. You may have a full-time property caretaker, personal assistant, housekeeper, gardener, nanny, chauffeur, private chef, caregiver or bodyguard. You shouldn’t let your guard down, though, even if your domestic staff members feel like an extension of the family. You are at just as much risk of an employment-related lawsuit as any other employer. Unlike corporate employees, domestic staff have access to intimate information about you and your family members, and they could use it against you. Even if you handle all employee interactions appropriately, you can still be liable if one employee behaves inappropriately with another.

Regardless of the outcome, the cost to defend against an employment-related lawsuit is high. Not only do you need to worry about financial costs associated with defending a lawsuit and potentially paying a settlement, but it will take time away from your work and family, compounding an already stressful situation. If handled improperly, the claim could also cause irreparable harm to your reputation.

How you may be at risk

According to the Equal Employment Opportunity Commission (EEOC), during their fiscal year ending Sept. 30, 2019, nearly 54% of the approximately 72,675 workplace discrimination charges they received included retaliation claims. The next top discrimination claims filed were for disability discrimination, racial discrimination and sex discrimination.¹

Consider these scenarios. Could they happen to you?

• A gardener of 10 years is fired without warning. He allegedly overheard his employer’s wife making negative comments about him. He claims he was wrongfully terminated due to discrimination.
• A part-time nanny suddenly quits her job and claims her employer’s husband was making inappropriate comments to her when they were alone in the house. She is filing a lawsuit for sexual harassment.
• A housekeeper of 20 years is replaced by a much younger housekeeper at a cheaper salary. She sues for wrongful termination and age discrimination because she’s had an impeccable work record and was not given a reason she was let go.
• A personal chef sues for back pay, claiming she was expected to be “on call” 24/7 even though her salary was based on a verbal agreement of a 40-hour work week, and she wasn’t ever paid for overtime. She makes malicious comments about her employer on social media, which creates a frenzy that gets picked up by a local TV station and tarnishes the employer’s reputation.

How Nationwide Private Client responds

Nationwide Private Client offers our optional limited employment practices liability (EPLI) coverage,² with limits of $250,000 or $500,000 that can be added to your personal excess liability policy. The optional coverage will pay damages that the policyholder is legally obligated to pay to a residence employee arising out of a wrongful employment act.

Our limited employment practices liability coverage includes employment event fund coverage up to $25,000³ for the reasonable expenses incurred by engaging an employment event management firm to minimize potential loss as a result of an employment event. If applicable, we can help you secure an event management firm of your choice, which could include a professional public relations consulting firm, security consulting firm, media management firm, investigative firm or a law firm. Services could include getting help to mitigate reputational damage by comments a disgruntled employee said to the media, legal advice as soon as they suspect the employee will be filing a claim, or an investigation to help prove that an employee’s damaging claims were false.

If you believe you are implicated in a covered employment liability situation, you should report the claim to your agent and Nationwide Private Client by calling our toll-free number at 1-855-473-6410.

Why it’s important for you

Personal umbrella and homeowners coverage don’t provide proper protection for employment liability claims, as these policies apply only to claims alleging bodily injury or property damage. If you have domestic employees, talk to your agent about adding limited employment practices liability coverage.

Nationwide Private Client offers these added benefits:

• Our limited employment practices liability coverage applies when up to 5 residence employees are on staff at inception date of policy.
• Our personal excess liability policy includes up to $25,000 of employment event fund coverage.
• Our personal excess liability policy includes up to $10,000 (or up to $250,000 with the protection endorsement) of expanded defense coverage for the reasonable expenses incurred to have your attorney consult on a claim we defend.⁴
• A solid personal risk management approach should include conducting background checks before hiring any domestic staff. We provide you with access to Pinkerton, one of our trusted Risk Solutions partners, for background checks at discounted rates.
• Specialized claims service: Our team of problem-solvers is available 24 hours a day, 365 days a year.

Additional resources can be found at pinkerton.com.