Undocumented Worker Endorsement
May 16, 2021
Does your business employ undocumented workers? Are you sure? The Immigration Reform Act made it detrimental to hire undocumented workers for your business. This act also holds businesses responsible for verifying that all workers have appropriate documentation, which can be difficult.

Many employers think of employees as family, the reality is, employees do not always feel that way. Even when an employer follows the proper hiring procedures, they are not always in compliance with federal regulations because the employees are not always truthful with the information given.

Let us look at an example.
A farm is accused of employing 5 people who are here illegally. The business has the required employment documents for these 5 individuals, but they were filled out falsely by the employees. In this situation, the farm would be responsible for the violation. They could get fined, and the employees deported.
How could the farm have protected themselves?

Employment Practices Liability Insurance (EPLI) is coverage for defense costs and damages related to employment claims alleging wrongful termination, discrimination, workplace harassment, and retaliation, among others.

Employers are subject to federal and state laws that govern their liability to their employees. Some of the laws that have been created to protect employees include Civil Rights Act of 1964, Americans with Disabilities Ace and Family, Medical Leave Act and Immigration Reform and Control Act 1986 (IRCA), and more. These laws provide certain protections to employees such as the right to not be discriminated against in the workplace or the right to equal opportunity employment. 

In the event that employee rights could have been violated, an employee or an organization can sue a business. If a business has Employment Practices Liability Insurance, the business could file an Employment Practices Liability Insurance claim. Some trending Employment Practices Liability Insurance claims include:
  • Covid-19
  • Equal Pay and Wage Laws
  • Age Discrimination
  • Wage and Hour Claims
  • Retaliation Against Employees
  • Sexual Harassment
  • Misclassification of Contractors
  • Undocumented Workers
When it comes to undocumented workers claims, like our example above, while these claims are considered an employment issue, they are not typically covered by your Employment Practices Liability Insurance policy. A business must have a separate coverage called an Undocumented Worker Endorsement added to their Employment Practices Liability Insurance policy in order to have coverage.

Undocumented Worker Endorsement is a specialized coverage designed to handle claims related to undocumented worker claims.

It is important to remember that a lawsuit, even if there are no damages awarded, will still require you to defend yourself. In 2018, 200,000 discrimination inquiries were received by the Equal Employment Opportunity Commission (EEOC) and the average cost to settle out of court was around $75,000 per case. Employment Practices Liability Insurance coverage can help find legal representation and provide financial support should you find yourself in a covered situation.  

In the event of our example from before, Employment Practices Liability Insurance could have helped the farm with the defense coverage and ensured that the business was protected. The coverage could have helped find and fund suitable defense and cover any potential fine up to the coverage limits.

Employment Practices Liability Insurance claims can affect farms and agri-businesses in unique ways. It is important that you work with an insurance partner that understands your business and how these risks could affect your operation. For over 50 years, the team at ASA has been protecting the agriculture industry.

ASA’s focus is on farmers and agribusinesses and we understand the challenges you face every day, including unseen risks like employment practices liability. We have programs and strategies developed specifically for your operation and your needs. Call Agri-Services Agency at 1-877-466-9089 to discuss this coverage and others today!