Normally, EPLI covers claims made against the company, its directors, officers and all employees. Normally, it covers claims made by employees for employment practice violations, including loss for back and front pay, and compensatory damages. Wage and hour claims and ERISA claims are typically excluded from coverage, although the cost of defense may be covered. Fines and penalties may be excluded, and punitive damages are often prohibited by state law although policies may offer separate coverage to fill in “potential gaps in coverage.”
Employers may come to mediation with the issue as to coverage unresolved. Disputes may include whether timely notice has been given to the insurer of the claim (triggered by the notice of the charge of discrimination, not the filing of a lawsuit), the definition of “employee” under the policy, or whether the policy is a “duty-to-defend” policy or an indemnity policy.
When there is a serious coverage dispute, the employer may have its counsel and the insurer may have its counsel at the mediation, both defending the employer. But the employer may be doing as much negotiating with its insurer as its employee. In these situations, it is very important that all interested parties and counsel appear at the mediation. “Appearing” by phone is not an effective way to be involved. You should know whether your mediator has experience in resolving such disputes.
It is usually helpful to have the adjuster present at the mediation even if there is no dispute between the employer and its insurer, particularly if the retention amount has been reached and the settlement funds are coming in whole or in part from the insurer. Adjusters have typically seen dozens of cases that they will regard as similar to the one being mediated. If the adjuster has the opportunity to meet and talk to the plaintiff and counsel, it can have a big impact on how he or she views this particular case. Plaintiff’s counsel will want to emphasize the difference between this case and other “typical” cases.
