Employment Practices Liability Insurance, Third Party Coverage and the Legend of Thai Toni

If you work in the restaurant or hospitality industry here in South Florida, you have probably heard the famous story of Thai Toni.  To summarize, Thai Toni was a popular Thai restaurant on Miami Beach in the 90’s. One evening in 1999, an African-American couple had dinner at the restaurant. When their check came, they were surprised to see that there was a 15% gratuity included in their bill. When the couple asked the manager why the tip was automatically included, they were told that it was because of their race.

Here are some links to read the whole story if you’d like:



Not surprisingly, this created a lot of negative press as well as litigation and fines for Thai Toni and its management team. Unfortunately, business owners can’t always control what their employees do or say. What happens, then, when an employee acts in a way that brings allegations of discrimination?  Employment Practices Liability Insurance and a Third Party Coverage endorsement is a type of insurance created to cover this exposure.

What is Employment Practices Liability Insurance (EPLI) and Third Party Coverage?

EPLI is a type of management liability insurance coverage that would respond to claims or lawsuits alleging things like:

• Hostile work environment
• Sexual harassment
• Discriminatory hiring and firing (or failure to hire)
• Whistleblower retaliation
• Unpaid overtime

If you or your company has ever dealt with Equal Employment Opportunity Commission (EEOC) then you are familiar with the types of issues that EPLI insurance would cover. If an employee wants to sue their company for discrimination, they first need to file a complaint with the EEOC.

There is a lot of litigation going on right now in this area and EPLI is important coverage to have. However, just buying EPLI would not have helped Thai Toni because the alleged discrimination involved a member of the public. That’s where Third Party coverage comes in.

“Third Party” basically means anyone who is not management or an employee at the company. Third Party coverage is added to the EPLI policy by endorsement, and would cover claims  of discrimination or sexual harassment brought by vendors, clients or members of the public.
For example, a vendor accuses one of your employees of sexually harassing them. Or, a prospective customer claims that your salesperson wouldn’t sell to them because of their race.

I insure a banquet hall that doesn’t actually have any employees. The hall is run by a charitable organization and volunteers. We write EPLI for them, just to get Third Party coverage, because they are interacting with the public on a daily basis.

As a business owner, you can’t watch all of your employees all of the time. The owner of Thai Toni may be the most upright, open-minded person you have ever met. However, the manager on duty that night, made an unfortunate decision, and owners can’t look over their employees’ shoulders all the time.

If you currently have EPLI, find out how much it would cost to get Third Party coverage. If you don’t have EPLI, let’s get you a quote, including Third Party coverage.

If you have any other questions, e-mail me at pyanan@wwfins.com or call me at 786-454-8383.

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