EPL CORNER

EMPLOYMENT-RELATED PRACTICES EXCLUSION IN BUSINESSOWNERS POLICY BARS COVERAGE FOR BIPA SUIT 

Am. Family Mut. Ins. Co. S.I. v. Caremel Inc., No. 1:20-cv-00637 (N.D. Ill. Jan. 7, 2022)

A fast-food chain operator with multiple locations in Illinois was sued in a putative class action by one of its employees for allegedly violating the Illinois Biometric Information Privacy Act (“BIPA”) in collecting his and other employees' fingerprints to track work hours without their consent. 

The employer provided notice of the BIPA suit to its insurer under its businessowner’s policy, but the insurer denied coverage, asserting the policy's employment-related practices exclusion, among others, barred coverage. The insurer also asked the court to decree it had no duty to defend its insured in the BIPA action. 


The employer argued the insurer interpreted the employment-related practices exclusion too broadly, asserting it was only intended to apply to “practices directed at individual employees.” Since all employees were required to scan their fingerprints, the employer contended the exclusion was inapplicable. 


The court, however, disagreed with the employer and held that the fingerprint scanning requirement applied to employees individually. Furthermore, the judge found that all employees suffered risk of individual injuries as a result of their employer’s failure to adhere to the statutory procedures of BIPA. Accordingly, the court concluded that the alleged BIPA violations involved the type of employment practices that were intended to be barred by the exclusion.