Employment Practices Liability Insurance (EPLI)
Protect your business from costly employee lawsuits—discrimination, harassment, wrongful termination, and more.
Protect Your Business from Employee Lawsuits
Get a customized EPLI quote tailored to your business size and risk profile.
Why EPLI Matters for Every Employer
According to the U.S. Equal Employment Opportunity Commission (EEOC), employees file approximately 70,000+ workplace discrimination charges annually. The average jury verdict in employment cases exceeds $200,000, and defense costs alone can reach $75,000—even when the employer wins. EPLI protects your business from these potentially devastating expenses.
What Is Employment Practices Liability Insurance?
Employment Practices Liability Insurance (EPLI) protects employers against claims made by employees, former employees, and job applicants alleging wrongful employment practices. Unlike Workers' Compensation (which covers workplace injuries), EPLI covers the legal and financial consequences of how you manage employment relationships.
EPLI policies typically cover defense costs, settlements, and judgments arising from covered claims. Most policies operate on a "claims-made" basis, meaning they cover claims made during the policy period, regardless of when the alleged wrongful act occurred (subject to any retroactive date).
Coverage extends to the company, its directors and officers, managers, supervisors, and employees—all of whom can be named personally in employment lawsuits.
Common Claim Types
- •Discrimination (age, race, gender, disability)
- •Sexual harassment
- •Wrongful termination
- •Retaliation claims
- •Failure to promote
- •Hostile work environment
- •Defamation
What EPLI Covers—and What It Doesn't
Typically Covered
- Discrimination Claims
Claims alleging discrimination based on race, color, religion, sex, national origin, age (40+), disability, or genetic information.
- Sexual Harassment
Claims of unwelcome sexual advances, quid pro quo harassment, or hostile work environment based on sex.
- Wrongful Termination
Claims that termination violated employment contracts, public policy, or anti-discrimination laws.
- Retaliation
Claims that adverse action was taken against an employee for protected activity (filing complaints, whistleblowing).
- Failure to Promote/Hire
Claims alleging discriminatory denial of promotion or refusal to hire based on protected characteristics.
- Defense Costs
Attorney fees, court costs, and expert witness fees—often the largest expense even in frivolous claims.
Common Exclusions
- Wage & Hour Violations
Claims under the Fair Labor Standards Act (FLSA) for unpaid overtime, minimum wage violations, or misclassification.
- ERISA Violations
Claims related to employee benefit plans, pension disputes, or 401(k) mismanagement.
- Criminal Acts
Criminal fines, penalties, or claims arising from intentional illegal conduct by the employer.
- Bodily Injury/Property Damage
Physical injuries to employees (covered by Workers' Comp) or damage to property.
- Prior/Pending Claims
Claims known before policy inception or arising from matters already in litigation.
- Punitive Damages (in some states)
Some states prohibit insuring punitive damages. Coverage varies by jurisdiction.
Don't Wait Until You're Sued
Most employment claims are filed against businesses without EPLI coverage. Protect your business today with a policy tailored to your needs.
Who Needs EPLI Coverage?
Any business with employees faces potential employment liability. However, certain factors increase your risk:
High-Risk Situations
- •Frequent hiring and firing (high turnover)
- •Recent layoffs or downsizing
- •No formal HR department
- •Lack of documented policies and procedures
- •Industries with power imbalances (hospitality, entertainment)
- •History of EEOC charges or complaints
Industries with Higher EPLI Claims
- •Healthcare and social services
- •Retail and hospitality
- •Financial services
- •Professional services
- •Manufacturing
- •Nonprofits and education
Small Business Reality: Contrary to popular belief, small businesses face significant EPLI exposure. Without dedicated HR staff, small businesses often lack the documented policies and training that help defend against claims. The EEOC reports that businesses with 15-100 employees receive a disproportionate share of discrimination charges.
Understanding EPLI Costs
EPLI premiums vary significantly based on your business profile. Here's what affects your cost:
Typical Premium Ranges
| Business Size | Annual Premium Range |
|---|---|
| 1-10 employees | $800 - $2,500 |
| 11-25 employees | $2,000 - $5,000 |
| 26-50 employees | $3,500 - $8,000 |
| 51-100 employees | $5,000 - $15,000 |
| 100+ employees | $10,000+ |
*Ranges are estimates. Actual premiums depend on industry, claims history, HR practices, and coverage limits. Contact us for an accurate quote.
Factors That Increase Premiums
- ↑Prior employment claims or EEOC charges
- ↑High employee turnover rate
- ↑High-risk industry classification
- ↑Lack of written HR policies
- ↑No harassment training program
- ↑Higher coverage limits and lower deductibles
Factors That Reduce Premiums
- ↓Clean claims history (3+ years)
- ↓Documented employee handbook
- ↓Regular harassment prevention training
- ↓Formal complaint investigation procedures
- ↓Employment practices legal review
- ↓Higher deductibles (self-insured retention)
What to Do When an EPLI Claim Arises
Prompt action can significantly affect the outcome of an employment claim. Here's what to do:
Notify Your Insurance Carrier Immediately
Report potential claims as soon as you become aware of them—even before formal charges are filed. Late notice can jeopardize coverage.
Preserve All Documentation
Do not alter, delete, or destroy any documents related to the employee or the alleged incident. Implement a litigation hold if necessary.
Avoid Direct Contact
Once a claim is filed, limit direct communication with the claimant. Let your attorney and insurance carrier handle the response.
Cooperate with Investigation
Work closely with the attorney assigned by your insurance carrier. Provide all requested documentation and be available for interviews.
Maintain Confidentiality
Keep claim details confidential. Discussing the case with other employees could lead to additional claims or compromise your defense.
Reducing Your EPLI Risk
The best defense against employment claims is prevention. Implement these best practices to reduce your exposure:
Written Policies
Maintain a comprehensive employee handbook covering harassment prevention, discrimination, complaint procedures, and disciplinary processes. Have all employees sign acknowledgment of receipt.
Regular Training
Conduct annual harassment prevention training for all employees and additional training for managers. Document attendance and training content.
Consistent Enforcement
Apply policies consistently across all employees. Inconsistent enforcement is often cited as evidence of discrimination in employment lawsuits.
Documentation
Document all employment decisions, performance issues, and disciplinary actions. Good documentation is your best defense against wrongful termination claims.
Complaint Procedures
Establish clear procedures for employees to report concerns. Investigate all complaints promptly and document your findings and actions.
Legal Review
Have an employment attorney review your policies, handbook, and termination decisions. The cost of review is minimal compared to defending a lawsuit.
Frequently Asked Questions About EPLI
What does Employment Practices Liability Insurance cover?
EPLI covers claims made by employees, former employees, or job applicants alleging wrongful employment practices. This includes discrimination (based on age, race, gender, disability, religion), sexual harassment, wrongful termination, retaliation, failure to promote, breach of employment contract, and negligent evaluation.
How much does EPLI insurance cost?
EPLI premiums typically range from $800 to $5,000+ annually for small businesses, depending on factors like number of employees, industry, claims history, HR practices, and coverage limits. Businesses with 50+ employees or in high-risk industries may pay significantly more.
Do small businesses need EPLI insurance?
Yes. Small businesses are often more vulnerable to employment lawsuits because they may lack formal HR departments and documented policies. The EEOC reports that businesses with fewer than 100 employees face a disproportionate number of discrimination charges relative to their size.
Does EPLI cover discrimination claims?
Yes, EPLI typically covers claims of discrimination based on protected characteristics including race, color, religion, sex (including pregnancy and sexual orientation), national origin, age (40+), disability, and genetic information. Coverage includes defense costs and settlements or judgments.
What is not covered by EPLI?
EPLI typically excludes intentional illegal acts, criminal fines and penalties, wage and hour violations (FLSA claims), ERISA violations, workers compensation claims, bodily injury, property damage, and claims arising from actions taken before the policy inception date.
Does EPLI cover wrongful termination lawsuits?
Yes, wrongful termination claims are a core coverage of EPLI. This includes claims alleging termination that violated employment contracts, public policy, or anti-discrimination laws. The policy covers legal defense costs, settlements, and judgments up to policy limits.
Related Business Coverage
EPLI is one component of a comprehensive business insurance program. Consider these related coverages:
Directors & Officers Liability
Protects company leadership from claims arising from management decisions.
Workers' Compensation
Mandatory coverage for workplace injuries—separate from EPLI.
General Liability
Covers third-party bodily injury and property damage claims.
Cyber Liability
Protects against data breaches involving employee information.
Important Information
This information is provided for educational purposes only and does not constitute legal or insurance advice. Employment law varies by state and changes frequently. Coverage features, exclusions, and availability may vary by state and insurance carrier.
All coverage is subject to policy terms, conditions, and exclusions. Please review your policy carefully and consult with a licensed insurance professional to determine appropriate coverage for your specific situation.
The Steele Agency is licensed to conduct business in New York State. License information available upon request or at the New York Department of Financial Services website.
Protect Your Business from Employment Lawsuits
Don't let an employee lawsuit threaten your business. Get the EPLI protection you need with expert guidance from Steele Agency.
Our EPLI Services Include:
- ✓ Policy comparison from multiple A-rated carriers
- ✓ Coverage tailored to your industry and risk profile
- ✓ Risk management resources and HR best practices
- ✓ Claims assistance when you need it most
- ✓ Annual policy reviews to ensure adequate protection
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