• From the Vault

Employment Practices Liability: Keeping Your Bank Protected

May 29, 2018

Community banks already have much to contend with in keeping up with building safety and security, phishing schemes, cyber issues and managing compliance standards. Improper and unpredictable employee behavior is an additional challenge that when not managed correctly, can cause issues in the bank that could harm employee productivity and could negatively impact the financials of the bank. 

Employment practices liability (EPL) claims can include allegations of discrimination, wrongful termination, harassment and a host of other charges. This article will examine tactics you can employ in your bank to help protect your bank from these types of claims.

Policies and Procedures

Documenting the type of behavior that is unacceptable is a must-do for any organization, regardless of its size. Policies and procedures should be written with the current law in mind, and include how to report a complaint, documenting and investigating the complaint, as well as repercussions for those who violate the expected behavior standards. Copies of the policy should be shared with all employees upon hire, and reviewed at least annually with all employees. They should also be periodically reviewed to ensure they are kept current with any new or changing laws. If you are unsure about how to draft or obtain policies and procedures, consider contacting your state banking association. Many times they will have template policies that are compliant with your state laws, and can be customized for your specific needs.

Open Door Policy

A well-defined “open door policy” is critical to have in place. Employees need to feel comfortable approaching managers or others at the bank to discuss allegations of unacceptable behavior. Confidential communication must be welcomed without any fear of retaliation.


Even the best policies, procedures and work environments cannot prevent all employment practices issues. Plaintiff attorneys are becoming more aggressive, and defense costs are becoming larger as well. With this in mind, now would be a good time to review your existing EPL insurance coverage and limits with your insurance broker.

They will be able to provide you with a peer analysis of your coverage against similar sized banks across the country. Lastly, be conversant as to what your EPL policy may require if you receive a demand letter, a charge of discrimination or other employment-related issue. If a lawsuit is filed, be sure to promptly notify your broker and your insurance company.


EPL claims can occur whether your bank employs 5 or 500 employees. Maintaining good policies and procedures plus having an open door policy can help prevent EPL issues, while EPL Insurance should stand with you when preventative measures are not enough.



This article is provided for general informational purposes only and does not constitute and is not intended to take the place of legal or risk management advice. Readers should consult their own counsel or other representatives for any such advice. Any and all third party websites or sources referred to herein are for informational purposes only and are not affiliated with or endorsed by OneBeacon Insurance Group. OneBeacon Insurance Group hereby disclaims any and all liability arising out of the information contained herein.