Form EP DS 00: Employment-Related Practices Liability Declarations
1. What the form is
The EP DS 00, Employment-Related Practices Liability Declarations, is a foundational document in an Employment-Related Practices Liability (EPLI) insurance policy. It functions as the personalized "cover page" for the associated EPLI Coverage Form (commonly the EP 00 01). The EP DS 00 itemizes the specific commitments and variables of the insurance agreement between the insurer and the named insured. Key details typically found on this form include:
- The Named Insured and their address
- The policy period (inception and expiration dates)
- Limits of Liability (the maximum amount the insurer will pay for covered claims)
- The Retention amount (similar to a deductible, which the insured must pay before the policy responds)
- The Retroactive Date (critical for claims-made policies, defining how far back in time a wrongful act is covered)
- The policy premium
- A list of forms and endorsements that constitute the entire policy
This form essentially tailors the broader terms of the EPLI coverage form to the specific insured entity, making it a crucial reference for understanding the scope of coverage.
2. Classes of business it applies to
The EP DS 00, as part of an EPLI policy, is applicable to virtually any organization that has employees, regardless of size or industry. However, certain sectors face a higher frequency or severity of employment-related claims, making EPLI coverage particularly vital. Examples include:
- Retail: Businesses with diverse workforces and high employee turnover often see claims related to discrimination (age, gender) and wrongful termination. For instance, a clothing store might face a claim if an older, long-term employee is replaced by a younger one without clear, non-discriminatory reasons.
- Restaurants and Hospitality: These industries frequently encounter claims of harassment (sexual or otherwise) and wage & hour disputes (though wage & hour is often excluded or limited). A restaurant could be sued if a manager is accused of creating a hostile work environment through inappropriate comments to staff.
- Healthcare: Medical, dental, and care facilities often deal with claims of wrongful termination, discrimination, and failure to accommodate disabilities. A hospital might face a lawsuit from a nurse alleging they were fired after requesting accommodations for a medical condition.
- Professional Services (e.g., IT, consulting, legal, accounting): These firms can face claims related to failure to promote, discrimination, and retaliation. An accounting firm might be sued by an employee claiming they were repeatedly passed over for promotion based on their gender.
- Manufacturing: Allegations can arise from issues like wrongful discipline, failure to hire, or discrimination based on national origin.
- Non-Profits and Social Services: These organizations are not immune and can face the same array of employment claims as for-profit businesses.
Any employer can be subject to allegations such as wrongful termination, discrimination (based on race, sex, age, disability, etc.), harassment, retaliation, and other employment-related torts.
3. Special considerations
Several important factors must be considered when dealing with the EP DS 00 and the underlying EPLI coverage:
- Claims-Made Basis: EPLI policies are predominantly "claims-made," meaning the policy in force when the claim is first made against the insured and reported to the insurer is the policy that responds. The EP DS 00 will specify if the policy is claims-made.
- Retroactive Date: This date, shown on the declarations, is crucial. It limits coverage to wrongful acts that occurred on or after this specified date. If a company is purchasing EPLI for the first time, securing coverage for "prior acts" (incidents that happened before the policy's inception) is a significant underwriting consideration and may require a specific retroactive date or could be excluded. For example, if a policy incepts on 01/01/2024 with a retroactive date of 01/01/2022, an act occurring in 2021 would not be covered, even if the claim is made in 2024.
- "Duty to Defend" vs. "Reimbursement/Duty to Pay": Policies differ in how defense is handled. "Duty to Defend" policies mean the insurer takes control of the defense and appoints counsel. "Reimbursement" or "Duty to Pay" policies often allow the insured to select counsel (sometimes subject to insurer approval) and the insurer reimburses defense costs. The declarations may not explicitly state this, but it's a key feature of the coverage form it accompanies.
- Consent to Settle (Hammer Clause): Many EPLI policies contain a clause requiring the insurer to obtain the insured's consent before settling a claim. If the insured refuses a settlement offer the insurer deems reasonable, a "hammer clause" might limit the insurer’s liability to the amount of that proposed settlement, plus defense costs incurred up to that point.
- Third-Party Liability: Standard EPLI primarily covers claims brought by employees or applicants. Claims from non-employees (e.g., customers, vendors, clients) alleging discrimination or harassment by an employee typically require a specific endorsement to be covered. If such coverage is added, it should be reflected in the policy and potentially impact limits shown on the declarations. For instance, a retail store might need this if a customer sues, alleging discriminatory treatment by a store employee.
- Continuity of Coverage: When renewing or changing insurers, maintaining continuity of coverage, particularly regarding the retroactive date, is vital to prevent gaps.
4. Key information for agents and underwriters
Agents and underwriters should focus on the following when working with the EP DS 00 and EPLI:
- Risk Assessment & Underwriting: The details on the EP DS 00 (limits, retention, retroactive date) are direct outputs of the underwriting process. Underwriters meticulously assess an applicant's risk profile by examining:
- Industry, employee count, and geographic locations.
- Financial stability and employee turnover rates.
- Existence and quality of human resources policies and procedures, including an employee handbook, formal hiring/firing protocols, and anti-discrimination/harassment training programs. Organizations with robust HR practices generally present a lower risk.
- Prior claims history and any pending litigation. Frequent or severe past claims can significantly impact premium and retentions, or even lead to declination.
- Pricing: Premiums are directly influenced by the limits of liability, the chosen retention/deductible, the industry's inherent risk, the number of employees, the organization's claims history, and the scope of coverage (e.g., whether third-party coverage is included).
- Coverage Gaps Awareness: Agents must highlight potential coverage gaps. Common ones include:
- Wage and hour claims (e.g., disputes over overtime pay or minimum wage) are often excluded, though some limited defense cost coverage may be available via endorsement.
- Claims related to the National Labor Relations Act (NLRA).
- Liability for acts occurring prior to the retroactive date.
- Punitive damages, which may be uninsurable in some states or explicitly excluded.
- Claims by independent contractors unless specifically endorsed.
- Importance of Proactive HR Management: Agents should counsel clients that strong, consistently applied HR practices are the first line of defense against EPLI claims. This includes having up-to-date employee handbooks, conducting regular anti-harassment and anti-discrimination training, documenting performance issues, and handling terminations carefully. Such measures can lead to more favorable underwriting terms.
- Retroactive Date Negotiation: For new buyers or those with coverage lapses, negotiating the most favorable retroactive date is critical. Underwriters will be cautious if a business suddenly seeks coverage, suspecting an undisclosed existing issue.
- Endorsements: The EP DS 00 will list applicable endorsements. Agents should understand how endorsements like EP 01 17 (Liability to Your Customers or Clients for discrimination) or EP 01 20 (Liability to Non-Employees for discrimination or harassment) modify the base EP 00 01 coverage.