Some employers purchase employment practices liability insurance (EPLI) for employment law claims. Depending on the policy, EPLI may provide protection for employee lawsuits, such as claims of discrimination, wrongful termination, breach of contract, and some protected leave claims. Not all labor and employment claims are covered by EPLI. It also may cover the cost of a judgment obtained or settlement reached in the lawsuit along with some of the legal costs of defending the lawsuit, after a certain retention or deductible is met.
However, should employers have to sacrifice their preferred law firm in order to make use of their EPLI? Many EPLI policies limit the employer to a pre-approved list of law firms designated in the policy when deciding which law firm to hire to defend the lawsuit. This pre-approved list may not, however, include the employer’s law firm of choice. Therefore, when employers obtain EPLI and wish to be able to hire a specific law firm, employers should speak with their insurance agent or broker to ensure that their preferred law firm is pre-approved to be able to represent them under the EPLI policy. Other items also are subject to negotiation, such as the retention or deductible amount, as well as the amount of attorneys’ fees that would be covered for defense. It is important to get this preapproval in advance of the policy going into effect.
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