Employment Practices Liability Insurance

February 26, 2020

Employment practices liability insurance (EPLI) provides coverage for allegations made by employees, former employees, job candidates, customers and vendors related to your business’s employment practices. Often these allegations result in litigation, with costs quickly adding up into hundreds of thousands of dollars. Whether you run an established company or are starting a small business, it’s important to have the right insurance coverage to help protect you.

EPLI provides protection against many types of employee lawsuits. Some of the most common categories include:

• Discrimination based on age, race, gender, religion, national origin and other factors
• Sexual and other forms of employee harassment
• Wrongful termination or discipline
• Retaliation
• Breach of employment contract (i.e., oral, written or implied, including employment handbooks and personnel manuals)
• Failure to employ or promote
• Defamation
• Mismanagement of employee benefit plans
• Privacy violations, including employee medical information governed by the Health Insurance Portability and Accountability Act (HIPAA)
• Violations of the Family and Medical Leave Act

The scope of potential employment practices liability is broad. EPLI claims can involve:

• Things that happen (or are alleged to have happened) to your current employees (such as harassment from a colleague or superior).
• Acts by your employees toward a vendor or customer. For example, decisions made by an employee of a property management company could lead to tenant discrimination claims against your business.
• Allegations from former employees or seasonal employees (such as an allegation of wrongful termination).
• Claims made by candidates who sought employment with you but were not hired. 

The cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors (such as whether your company has ever been sued over employment practices in the past). It’s important to talk with a knowledgeable agent to discuss your specific situation and the need for EPLI coverage. 

An EPLI policy will reimburse your company for the costs of defending a lawsuit in court, for judgments and for settlements. Remember that EPLI covers your legal costs, whether your company wins or loses the suit.