Sexual Harassment Claims: The Coverage Restaurants Overlook

Harassment is the employment risk restaurants are most exposed to and least prepared for — because the policy that covers it isn’t the one most owners think of first.

Sexual-harassment claims are the restaurant industry’s signature employment risk, and standard general liability doesn’t cover them. Employment practices liability insurance (EPLI) pays defense and settlement costs for harassment, discrimination, and wrongful-termination claims. Because much restaurant harassment comes from customers, add third-party harassment coverage by endorsement — the base policy often won’t respond.

Why restaurants are the highest-risk industry

This isn’t a hunch. Analyzing EEOC charge data, the Center for American Progress found accommodation and food services filed more sexual-harassment charges than any other industry — about 14.2% of all charges nationwide. The drivers are structural: a young, largely female, tipped workforce that depends on customers for income, plus alcohol and late hours.

What EPLI covers — and the customer gap

Employment practices liability insurance covers defense costs, settlements, and judgments for employment claims from current, former, and prospective staff. But there’s a catch specific to hospitality:

• •Employee-versus-employer claims — harassment, discrimination, wrongful termination, retaliation — are the core of EPLI.
• •Customer-on-staff harassment — common in restaurants — may not be covered unless you add a third-party harassment endorsement.
• •Wage-and-hour claims — a restaurant’s biggest employment exposure — are frequently excluded or capped, and must be added deliberately.

How to protect your staff and your business

• •Carry EPLI sized to your headcount and turnover.
• •Add the third-party harassment endorsement so guest conduct is covered.
• •Confirm whether wage-and-hour is included, sub-limited, or excluded — in writing.
• •Pair coverage with a written anti-harassment policy and manager training; insurers reward it.

Not sure whether your policy includes third-party harassment? Get a quote and a licensed agent will check the endorsement and the wage-and-hour terms for you.