A type of claim in which an employee alleges that an employer has breached the
terms of an agreement governing the terms of employment, of which there are two
basic types: (1) a written employment contract and (2) an implied contract of
employment.
Virtually no employment practices liability insurance (EPLI) policies cover
indemnity payments (i.e., settlements and judgments) involving breach of a
written employment contract, and only a handful cover the defense costs
pertaining to such claims.
EPLI policies do, however, cover both the defense and indemnity costs generated
by claims alleging breach of an implied contract of employment. Such claims
typically state that an implied contract of employment was established by a
letter offering employment, language appearing in an employee handbook, or
statements made by a manager/supervisor or as a result of an employee's
tenure with a company.