A property manager in Aventura calls the security company that staffs her building on a Tuesday afternoon. She wants one of the guards off her lobby post by the weekend. She does not say much about why, only that a resident complained about his attitude and she would rather not discuss it. The company has a contract worth protecting, so the guard is moved to a different site on Friday. Over the next month his hours drop, and six weeks later he is let go after a late arrival. In the spring the company receives a charge of discrimination. It alleges that the whole sequence, from the removal to the termination, was based on his age and national origin, and it points out that no one at the company ever asked the client what actually happened.
Most security company owners think first about assault and battery, general liability and workers’ compensation, because those coverages respond to incidents on a post. Employment practices liability insurance, usually called EPLI, answers a different question. It protects the company against claims brought by its own employees and job applicants, and for a business that makes as many employment decisions as a guard company does, it deserves more attention than it usually gets.
Why Security Companies Generate Employment Claims
Few businesses hire, reassign, discipline and terminate people as often as a security agency. Guards move between client sites as contracts start and end. Posts disappear when a client cuts back. Officers are pulled from assignments after a complaint or an incident, and schedules shift whenever a client changes its hours. Each of those moves is an employment decision, and each one can become the basis of a claim if the employee believes the real reason was something the law prohibits.
The workforce itself adds to the exposure. Many agencies employ large numbers of hourly officers, a mix of full-time and part-time staff, and supervisors who are spread across several sites. Turnover is high, and so is the number of applicants the company screens and rejects. A rejected applicant can bring a discrimination claim just as a current employee can.
When the Client Drives the Decision
The Aventura scenario shows a pattern that is common in contract security. A client asks for a guard to be removed, and the security company complies to protect the account. The client’s reasons may be legitimate, vague or, in some cases, based on something the law does not allow. If the security company acts on the request without documenting a legitimate business reason of its own, it can end up defending a claim about a decision it did not really make.
The practical lesson is to treat client removal requests as the start of a process rather than the end of one. Asking the client for the specific conduct at issue, writing it down, and deciding independently how to respond puts the company in a much stronger position if the decision is challenged later.
Third-Party Coverage Matters for Guard Companies
Standard EPLI covers claims by employees and applicants. Many policies also offer third-party coverage, which responds when someone who is not an employee, such as a client’s tenant, a resident or a visitor, accuses the company’s officers of harassment or discrimination. Security officers interact with the public all day, often in tense situations, and allegations that an officer treated someone differently because of race, disability or another protected characteristic are a real possibility.
Third-party coverage is not automatic, and it is not always available for every security class. Whether a policy includes it, and how broadly, is one of the most important questions to ask when comparing EPLI options for a guard company.
Wage and Hour Claims Usually Fall Outside the Policy
Claims for unpaid overtime, off-the-clock work, missed meal breaks or misclassification of employees as independent contractors are a major concern in the security industry, where long shifts and split schedules are common. Most EPLI policies exclude wage and hour claims, or provide only a small amount of defense cost coverage for them. That means the best protection against these claims is sound payroll practice: accurate timekeeping, correct overtime calculation, and careful classification of anyone the company pays on a 1099.
Owners should not assume that buying EPLI solves a wage and hour problem. It usually does not.
EPLI and Workers’ Compensation Do Different Jobs
Workers’ compensation pays for injuries an employee suffers on the job, such as a guard hurt while removing a trespasser or injured in a fall on patrol. EPLI responds to claims about how the company treated the employee, such as wrongful termination, discrimination, harassment or retaliation. A single situation can involve both. An officer who is injured, files a workers’ compensation claim and is then terminated may allege that the termination was retaliation for the claim. The injury belongs to the workers’ compensation policy, and the retaliation allegation belongs to EPLI. Our guide to workers’ compensation for security guard companies covers the injury side.
Policy Mechanics Worth Understanding
EPLI is almost always written on a claims-made basis, which means the policy in force when the claim is made is the one that responds, subject to any retroactive date. Changing carriers without attention to that date can leave older employment decisions uncovered. Most EPLI policies also include defense costs within the limit, so a long, contested defense reduces the amount available to pay a settlement or judgment.
Many policies also contain a consent-to-settle provision, sometimes with a clause that limits what the insurer pays if the company refuses a settlement the insurer recommends. Reading those provisions before a claim arrives avoids surprises later. Our EPLI guide explains these terms in more detail.
Documentation When Managers Are Not on Site
Security companies supervise officers who work at locations the owner may rarely visit. That distance makes documentation more important. Written post orders, signed acknowledgments of the employee handbook, records of training, and notes from every disciplinary conversation all help show that a decision was based on conduct rather than on a protected characteristic. Clear policies on harassment reporting, and proof that complaints were investigated, are often the difference between a claim that is dismissed early and one that drags on.
Many EPLI carriers also provide access to employment law hotlines and handbook templates. For a small agency without an in-house human resources department, those resources can be as valuable as the coverage itself.
Size Does Not Determine Exposure
A ten-officer agency can face the same kind of claim as a company with several hundred employees, and the cost of defending it can be serious relative to the smaller company’s revenue. Federal and state anti-discrimination laws apply at different employee counts, and claims can also arise under laws that apply to nearly every employer. A small company should not assume it is too small to be sued by a former employee.
Worth Confirming With Your Agent
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Whether your EPLI policy includes third-party coverage for claims by residents, tenants and visitors
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How the policy treats wage and hour claims and whether any defense cost coverage applies
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The retroactive date and what happens to it if you change carriers
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Whether defense costs are inside the limit and how much that leaves for settlements
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The consent-to-settle wording and any related penalty clause
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What human resources resources the carrier provides with the policy
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How your process for client removal requests is documented
This article is general information and is not legal advice.
Talk to Prestige Insurance Group
Prestige Insurance Group works with security guard companies across Florida, and we place EPLI alongside the liability, workers’ compensation and bond coverage these agencies need. If you want to know whether your current EPLI policy fits how your company actually operates, or you do not carry it yet, we can review your situation and compare options from specialty markets.
Call the office nearest you. Se habla español.
Orlando: 407-993-2331
Miami: 305-969-8776
Stuart: 772-247-3788
Prestige Insurance Group, License L057894
