​Why NJ CPA Firms Can't Afford to Skip EPLI Coverage
As a Certified Public Accountant CPA firm, you’re already balancing a lot—regulatory rules, client expectations, and financial details. Just like your malpractice coverage, workers compensation, or cyber liability, EPLI coverage adds another layer of protection for your business. But have you considered how Employment Practices Liability Insurance (EPLI) can protect your firm from unexpected employment-related claims? While it might not be at the top of your mind, EPLI is essential for safeguarding your business against potential legal issues. Let's dive into why CPA firms in New Jersey and New York City need EPLI coverage, what it covers, and how to find the best policy for your needs.
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​At The Overmyer Insurance Agency, we're here to help you protect your business and find the right insurance coverage for your needs. Let's learn more about the importance of EPLI coverage.
Understanding Employment Practices Liability Insurance (EPLI) Coverage
EPLI covers claims made by employees against employers regarding wrongful acts during the employment process.
These wrongful acts can include:
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Discrimination (based on race, gender, age, etc.)
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Wrongful termination
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Sexual harassment
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Retaliation
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Failure to promote
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Breach of employment contract
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Emotional distress
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Wage and hour law violations
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Given the current employment environment's litigious nature, EPLI coverage is a prudent measure for any business, especially for CPA firms that manage sensitive financial information and operate under strict regulatory frameworks.
The Growing Importance of EPLI for CPA Firms
Increased Employment-Related Claims
Employment-related claims have been on the rise. According to the Equal Employment Opportunity Commission (EEOC), nearly 100,000 charges of workplace discrimination are filed each year. With their diverse workforce and client interactions, CPA firms are not immune to these claims. The cost of defending against a lawsuit, even if the claim is unfounded, can be substantial. EPLI helps mitigate these costs by covering legal defense expenses and settlements or judgments.
Regulatory Compliance
CPA firms must comply with many federal and state employment laws, including the Americans with Disabilities Act (ADA), the Family and Medical Leave Act (FMLA), and various anti-discrimination laws. Failure to comply can result in costly lawsuits. EPLI covers these potential compliance-related claims, protecting your firm against unforeseen legal expenses.
Protecting Your Firm’s Reputation
In the age of social media and instant news, even a single employment-related lawsuit can damage your firm's reputation. EPLI coverage can help manage and mitigate these risks by providing the financial resources needed to defend against claims and settle disputes quickly and confidentially.
Why Economic Downturns Increase the Risk of EPLI Claims for CPA’s
A CPA may be concerned about Employment Practices Liability Insurance (EPLI) claims due to several economic factors impacting businesses:
Economic Downturns and Layoffs: During economic downturns, companies may be forced to lay off employees, which can lead to a rise in wrongful termination claims. Employees may also bring claims of discrimination, retaliation, or harassment as they may perceive their layoffs as unjust.
Increased Financial Pressures: Companies facing financial difficulties may cut corners in areas such as human resources and compliance training. This can lead to increased mistakes or oversights in managing employment practices, resulting in more EPLI claims.
Heightened Employee Stress: Economic uncertainty can create a stressful work environment. Stressed employees may be more likely to file claims related to hostile work environments or other employment practice issues.
Changes in Employment Laws: Economic conditions often prompt changes in employment laws and regulations. Companies may struggle to keep up with these changes, inadvertently violating new laws and regulations, leading to more claims.
Remote Work Challenges: The shift to remote work due to economic conditions, such as the COVID-19 pandemic, has introduced new challenges in managing employees. Issues like inadequate remote work policies, monitoring, and communication can lead to EPLI claims.
Litigation Costs: In a tight economy, both employers and employees may be more motivated to pursue litigation to recover perceived losses, making EPLI claims more common and costly.
How to Choose the Best EPLI Coverage for Your CPA Firm
Choosing the right EPLI coverage or your CPA firm is critical. Here's how The Overmyer Insurance Agency can help you determine the best coverage for your firm and protect your business:
Assess The Risks For Your NJ CPA Firm
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The first step in choosing the right EPLI policy is to assess your firm's specific risks. Consider factors such as the size of your firm, the nature of your workforce, your firm’s employment practices, and your history of employment-related claims. Our expert team at The Overmyer Insurance Agency will conduct a thorough risk assessment to determine the appropriate level of coverage for your firm.
Understand CPA EPLI Policy Features
EPLI policies can vary significantly in terms of coverage and exclusions. Key features to look for in a policy include:
Broad Definition of Wrongful Acts: Ensure the policy covers a wide range of wrongful acts, including discrimination, harassment, retaliation, and wrongful termination for claims that can be brought against your firm.
Defense Costs: Look for policies that cover attorney defense costs, even if the claim is groundless or fraudulent.
Third-Party Liability Coverage: This extends coverage to claims made by clients or other third parties, which can be crucial for CPA firms interacting with clients regularly.
Prior Acts Coverage: This covers wrongful acts that occurred before the policy was in place, as long as the claim is made during the policy period. This is also known as a retroactive date.
Settlements and Judgments: Ensure the policy covers settlements and judgments, including punitive damages for employment practices where permissible by law.
Our agency will explain these features in detail, helping you understand the nuances of the coverage and how they apply to your firm's specific needs.
Compare EPLI Quotes & Insurance Carriers
Work with The Overmyer Insurance Agency to obtain and compare quotes from multiple insurers and carriers we partner with. We specialize in providing tailored EPLI policies for CPA firms in NJ and NYC, ensuring your firm has the most competitive coverage and premium options.
Evaluate the Insurer’s Reputation
Choose an insurer with a strong reputation for handling EPLI claims. Look for insurers with high ratings from independent rating agencies, such as AM Best, and positive reviews from other CPA firms. We only work with top-rated insurers (A-rated or better) to ensure our clients receive reliable and reputable coverage.
Common EPLI Claims Faced by NJ CPA Firms
Discrimination Claims
Discrimination claims can arise from perceived unfair treatment based on race, gender, age, disability, or other protected characteristics. For example, an employee might claim they were passed over for a promotion due to age discrimination.
Harassment Claims
Harassment claims, including sexual harassment, are another common issue. These claims can stem from inappropriate behavior by colleagues or supervisors and can lead to significant legal and reputational damage if not handled properly.
Wrongful Termination Claims
Employees who believe they were wrongfully terminated may file claims against your firm. These claims can be based on allegations of discrimination, retaliation, or breach of contract.
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Retaliation Claims
Retaliation claims occur when an employee alleges they were punished for engaging in legally protected activities, such as reporting discrimination or harassment.
Failure to Promote Claims
Employees who feel they were unfairly passed over for promotions may file claims alleging discrimination or other wrongful acts.
FAQ About EPLI Coverage for CPA Firms
What does EPLI cover?
EPLI covers claims made by employees regarding wrongful acts such as discrimination, harassment, wrongful termination, and retaliation. It typically covers legal defense costs, settlements, and judgments.
Why do CPA firms need EPLI?
CPA firms need EPLI to protect against the financial risks of employment-related claims. These claims can be costly to defend and settle, even if they are groundless. EPLI provides financial protection and peace of mind. Like your firm's malpractice, cyber liability, or workers compensation coverage, EPLI coverage adds another layer of protection for your business.
How much does EPLI cost?
The cost of EPLI varies depending on factors such as your firm's size, the nature of your workforce, your firm's employment practices, and your claims history. Working with an experienced insurance agent like the Overmyer Insurance Agency can help you obtain competitive quotes from the companies we partner with.
How can I reduce the risk of employment-related claims?
Strong employment practices, such as regular training on discrimination and harassment, clear policies and procedures, and a robust complaint resolution process, can help reduce the risk of employment-related claims.
What should I look for in an EPLI policy?
Look for policies with a broad definition of wrongful acts, coverage for defense costs, third-party coverage, prior acts coverage, and coverage for settlements and judgments. Working with an experienced insurance agent can help you find the right policy for your needs.
The Bottom Line
Employment Practices Liability Insurance (EPLI) is an essential component of risk management for CPA firms. It provides protection against the financial and reputational risks of employment-related claims. By understanding your firm's specific risks, choosing the right policy and coverage features, and working with a reputable insurer, you can ensure your firm is well-protected.
We are here to help. At The Overmyer Insurance Agency, we specialize in providing customized EPLI policies for CPA firms in NJ and NYC. Our expert team is dedicated to helping you navigate the complexities of EPLI coverage and ensuring you get the best protection for your firm. Contact us today to learn more and get a personalized insurance quote.
Contact The Overmyer Insurance Agency
Phone: 908-476-8685
Email: support@oianow.com
Address: 2 South Ave E, Cranford, NJ 07016
Website: oianow.com