Employee Benefits Liability

What You Need to Know

Common administrative errors covered:

• Enrollment mistakes — failing to enroll eligible employees in health insurance or other benefits
• Communication errors — providing incorrect information about benefits coverage or eligibility
• COBRA violations — failure to provide required continuation coverage notices
• Calculation errors — mistakes in pension or 401(k) contribution amounts

Even if you use a third-party benefits administrator or broker, you can still be held liable for mistakes in enrollment, communication, or record-keeping — as the employer, you're ultimately responsible.

This coverage is typically included in Employment Practices Liability Insurance (EPLI) policies or added as a separate endorsement to your business owner's policy.

Why It Matters for Restaurant Owners

If you offer health insurance, dental, vision, life insurance, disability, or retirement benefits, administrative errors can become costly quickly.

The financial consequences of errors can be severe:

• An enrollment error can leave an employee facing unexpected medical bills, and the employee's damages become your liability
• COBRA violations alone can carry penalties per day per affected individual, accumulating quickly
• Employees are increasingly aware of their rights under ERISA and other benefits laws, making claims more likely when errors occur

Without this coverage, you're personally responsible for defending these claims and paying any damages — legal defense alone can run into the tens of thousands of dollars.