1. Forms
2. CL
3. CL-EP-24-17

What the form is

The CL EP 24 17 Non-Monetary Relief Defense Expense Endorsement is an addition to an Employment Practices Liability (EPL) insurance policy. Its primary function is to cover the legal expenses an insured incurs when defending against claims or portions of claims that seek non-monetary relief. Non-monetary relief refers to remedies sought by claimants that are not direct financial compensation, such as court orders requiring an employer to reinstate an employee, implement new workplace policies, provide specific training, or cease certain practices. This endorsement ensures that the costs associated with defending these types of demands are covered, subject to the policy's terms and limits.

Classes of business it applies to

This endorsement is applicable to a wide array of businesses and organizations that have Employment Practices Liability exposure and carry EPL insurance. It is not limited to specific industries but is particularly relevant for employers of all sizes who could face employment-related lawsuits demanding remedies beyond monetary damages. Real-world examples where this endorsement would be beneficial include:

• A technology company sued for alleged discriminatory hiring practices, where the plaintiffs demand a court order to change its hiring processes and diversity training for all managers.
• A manufacturing plant facing a lawsuit from former employees alleging wrongful termination, where the primary demand is reinstatement to their previous positions.
• A public entity, such as a wastewater agency or a local district, sued over employment policies where the claimants seek injunctive relief to alter those policies.
• A retail chain facing a class-action lawsuit alleging failure to accommodate disabled employees, where the suit seeks mandatory workplace modifications and policy changes.

Special considerations

• Potential Gap Coverage: Standard EPL policies may have limitations or exclusions for defense costs specifically related to non-monetary relief. This endorsement is designed to fill that potential gap.
• Definition Clarity: It's crucial to review the specific definitions of "Defense Expenses" and "Non-Monetary Relief" within the endorsement and the main policy to understand the scope of coverage.
• Limits of Liability: Determine if the coverage for these defense expenses is subject to the overall policy aggregate limit, a specific sublimit, or if it erodes the limit available for monetary settlements or judgments.
• Proactive Measures: While this endorsement provides financial protection for defense, it doesn't negate the need for strong HR practices, clear policies, and proactive risk management to prevent such claims from arising.
• Consent to Settle: Understand how the endorsement interacts with any 'consent to settle' provisions in the main EPL policy, especially when the primary demands are non-monetary.

Key information for agents and underwriters

• Pricing: The premium for this endorsement will likely be influenced by factors such as the insured's industry (e.g., litigious environments), employee count, geographic location, prior claims history (especially those involving non-monetary demands), and the robustness of their existing HR policies and procedures.
• Risk Assessment: Underwriters should evaluate the insured's internal dispute resolution mechanisms, management training on employment laws, and history of responding to employee grievances. Businesses with a higher public profile or those in heavily regulated sectors might present a higher risk for claims seeking injunctive relief.
• Coverage Explanation: Agents should clearly explain to clients the value of this endorsement, particularly how it complements the base EPL coverage by addressing the often-significant costs of defending against demands for changes in business practices or employee reinstatement, even if no direct monetary damages are paid for those specific demands.
• Underwriting Guidelines: Insurers may have specific underwriting criteria for offering this endorsement, potentially including a review of the employer's handbook and anti-discrimination/harassment policies. The scope of non-monetary relief covered (e.g., are costs to comply with an injunction covered, or only the defense against it?) should be clearly defined in the insurer's guidelines and the form itself.