Employment Practices Liability Insurance

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Handshake for job application

You may be thinking, what is employment practices liability insurance and why is it important? This is one insurance policy that you don’t want to ignore and here’s why:

What Is Employment Practices Liability Insurance (EPLI)?

EPLI will cover you if an employee sues you or files a claim against you for something that happened during their employment with your company.

This insurance deals with emotional distress, deprivation of a career opportunity, wage disputes, breach of contract, sexual harassment, discrimination, invasion of privacy, negligent performance evaluations, failure to promote, and wrongful termination.

EPLI insures directors and officers in the organization and provides reimbursement for the costs of lawsuits, judgments, and settlements. Your legal fees will also be covered whether you win or lose in a lawsuit.

Keep in mind that this insurance will not protect you against punitive damages, civil/criminal fines, bodily harm, and property damage. You can open a separate insurance policy to help you in cases with bodily harm and property damage.

The cost of EPLI will depend on circumstances such as the number of employees you have and how many times an employee has filed lawsuits against your company.

EPLI Claim Example

Illegal background checks are one of the top four common employment liability claims. To avoid seeing this claim against your company, make sure you’re in accordance to state laws regarding background checks.

When using a person’s credit report in background checks, make sure you are complying to the rules of the Federal Trade Commission’s Fair Credit Reporting Act.

This act requires you to notify job applicants that you are requesting a credit report for employment. Before you can use their credit report, you must have written documentation from the job applicant granting you permission to run their credit.

This act also requires you to contact the job applicant if the report shows something that could affect their opportunity to be employed with you. Doing this will allow the prospective employee to challenge or correct any errors/discrepancies that the report shows.

Having EPLI is essential for your business. You don’t want to deal with claims and lawsuits later and not have any insurance coverage.

At Allied Insurance Managers, we believe in making sure you have the right policy for all your insurance needs. We know this policy among others will help you to keep your business running successfully.


Michigan’s Legalization of Marijuana May Affect Workers’ Compensation

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As of December 6, 2018, Michigan became the 10th state to legalize recreational marijuana.

Even though marijuana is now legal for recreational use, there are stipulations to this law that you and your employees need to be aware of:

  1. You cannot drive while under the influence of marijuana
  2. Marijuana cannot be used openly in public
  3. Recreational use is only legal for adults 21 years or older

Here’s where things get tricky.

Marijuana is classified as a Schedule I drug by the Controlled Substance Act.

According to the U.S. Drug Enforcement Administration, “Schedule I drugs, substances, or chemicals are defined as drugs with no currently accepted medical use and a high potential for abuse.”

This means that marijuana is illegal under federal law.

In addition, you can still prohibit its use in your workplace despite the new Michigan law.

According to Michigan Legislature,

This act does not require an employer to permit or accommodate conduct otherwise allowed by this act in any workplace or on the employer’s property. This act does not prohibit an employer from disciplining an employee for violation of a workplace drug policy or for working while under the influence of marihuana. This act does not prevent an employer from refusing to hire, discharging, disciplining, or otherwise taking an adverse employment action against a person with respect to hire, tenure, terms, conditions, or privileges of employment because of that person’s violation of a workplace drug policy or because that person was working while under the influence of marihuana.

How Does This Affect Workers’ Compensation?

Let’s say you have a strict policy in place that prohibits marijuana use while working.

An employee disregards this rule and uses marijuana while working.

Your employee is now under the influence of marijuana while on the job.

As a result, your employee has a workplace accident or injury.

According to Michigan.gov, an employee may not be eligible to receive workers’ compensation, “If the worker is injured as a result of his or her “intentional and willful misconduct,” he or she is not entitled to benefits.”

That’s not all.

Michigan.gov also says that injuries resulting from the employee’s violation of your “clearly announced and regularly enforced” rules eliminate entitlement to workers’ compensation benefits.

It’s important to discuss with your employees and HR team how you would like to address marijuana use. This will help everyone to be on the same page and potentially avoid any lawsuits and claims.

At Allied, we want you and your employees to be aware of new laws that can impact you both.

If you have any questions or concerns about workers’ compensation, feel free to contact us.


Allied Insurance Managers’ blog is provided for informational purposes only. It is not intended to be comprehensive, and is not a substitute for and should not be construed as legal advice. Allied Insurance Managers does not warrant any statements in this blog. Any statutes or laws or coverages cited herein should be read in their entirety. You should direct your legal questions to experienced counsel and specific coverage questions to your insurance carrier or independent agent.





MCCA Announces New Fee Increase

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Cars stopped in a line

The Michigan Catastrophic Claims Association Fund issued a press release explaining their latest fee increase for Personal Injury Protection medical claims.

According to the MCCA website, the MCCA is a nonprofit association that reimburses no-fault auto insurance companies for medical claims that supersedes a PIP policy amount.

As far as the amount is concerned, the MCCA site mentions this: “Currently that amount is $555,000. That means that the insurance company pays the entire claim, but is reimbursed by the MCCA for medical costs over $555,000.”

Starting July 1, 2019 through June 30, 2020, the MCCA will now charge no-fault auto insurance companies $222 per vehicle that is covered under a PIP policy.

As of right now, the MCCA is currently charging no-fault insurance companies $192 per vehicle.

According to the MCCA’s press release, “PIP coverage is mandatory and provides for the payment of unlimited, lifetime medical benefits. The cost of these benefits is reflected in the auto insurance premiums all Michigan policyholders pay.”

You will not be required to pay $222. This is a cost that we will have to pay, but it will likely affect your premium amount.

If you notice a slight increase in your no-fault policy, this will likely be the cause.

Feel free to contact us with any concerns or questions you may have regarding this new fee increase.