What is employment practices liability insurance?

By Allstate

Last updated: January 2024

Employment practices liability insurance (EPLI) is a type of business insurance coverage which may cover legal costs in situations where your business is sued by an employee or contractor. EPLI helps protect your business against the following types of lawsuits:

  • Discrimination
  • Sexual harassment
  • Retaliation/adverse actions
  • Wrongful termination
  • Denial of a career opportunity
  • Violations of the Family and Medical Leave Act (FMLA)

Typically offered as an optional add-on coverage to your existing business owners policy, EPLI's coverage options can vary. It's important to check with your insurer to understand the choices tailored for your business.

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Who is covered under EPLI?

EPLI typically covers claims brought against you or your business's management personnel (and sometimes extended to other employees).

This overage might include lawsuits against your business filed by the following groups may be covered:

  • Employees
  • Former employees
  • Employment candidates
  • Temporary/seasonal employees
  • Leased employees
  • Independent contractors
  • Vendors

What isn't covered under EPLI?

It’s important to note that EPLI does not protect you or your business against intentional or dishonest acts. Additionally, employee claims related to bodily injury or property damage typically fall under your business's general liability coverage or worker's compensation coverage and aren’t covered by EPLI.

How much does EPLI cost?

The cost of employment practices liability insurance depends on a few factors, according to the Insurance Information Institute:

  • Type of business you have
  • Number of employees at your business
  • History of prior lawsuits

Coverage limits selected Additional factors may also impact the price your business pays for EPLI. Since the cost fluctuates based on various factors, consulting with your insurance agent is essential to gauge the precise cost you will pay based on your business's needs.

Protecting your business with EPLI

Lawsuits related to employment practices might not surface immediately. That's why it's a good idea to have continuous employment practices liability coverage to prevent gaps in coverage. This ensures coverage even when claims arise well after an incident, potentially including extending the reporting period coverage allowing a claim within a year post-policy expiration. State regulations regarding EPLI requirements and limits can differ. Consulting with a local agent advisable to understand the coverage tailored to your business’s needs and state requirements.

Help prevent employee lawsuits

As a business owner, it's important that you make sure to follow all the legal guidelines surrounding employment practices. The U.S. Equal Employment Opportunity Commission offers guidance and resources at its small business resource center for small business owners to navigate employment discrimination laws effectively.

Purchasing employment practices liability insurance is a smart way to protect your business financially protect your business if the unexpected happens. Talk to your insurance provider to explore comprehensive coverage options tailored to your business and to learn even more about EPLI.