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Understanding Employment Practice Liability Insurance (EPLI)

EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated.

The number of lawsuits filed by employees against their employers has been rising. Even small businesses are just as vulnerable as larger corporations. Some insurance carriers provide this coverage as an endorsement to their existing commercial policy. Other companies offer EPLI as a stand-alone coverage.

EPLI provides protection against many kinds of employee lawsuits.


The following list are common types of lawsuits:

·         Sexual harassment

·         Discrimination

·         Wrongful termination

·         Breach of employment contract

·         Negligent evaluation

·         Failure to employ or promote

·         Wrongful discipline

·         Deprivation of career opportunity

·         Wrongful infliction of emotional distress

·         Mismanagement of employee benefit plans


The cost of EPLI coverage depends on the type of business, the number of employees and various risk factors such as whether the company has been sued over employment practices in the past.


EPLI will reimburse the covered company against the costs of defending a lawsuit in court and for judgments and settlements.  It covers legal costs, whether the company wins or loses the suit. Policies also typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies such as workers compensation are excluded from EPLI policies.


To prevent employee lawsuits, Create effective hiring and screening programs to avoid discrimination in hiring.

·         Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.

·         Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Make sure supervisors know where the company stands on what behaviors are not permissible.

·         Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.