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Does My Business Need Employment Practices Liability Insurance?

Updated: January 2017

Depending on the number of employees you have, federal and state employment discrimination laws may apply to your business. Common private-sector employee complaints filed with the U.S. Equal Employment Opportunity Commission include charges of retaliation (for participating in a discrimination investigation), as well as discrimination based on race, disability or sex.

Small business owners may want to consider the possibility of a claim related to employment practices, and should know what kind of insurance may help cover these claims.

As a business owner, it's important that you make sure to follow all the legal guidelines surrounding employment practices. But, purchasing employment practices liability insurance (EPLI) is also a smart way to help protect yourself financially in case of unforeseen circumstances.

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What Is Employment Practices Liability Insurance?

Employment practices liability is a type of business insurance coverage that may help protect your business if an employee or contractor sues you. According to the Insurance Information Institute (III), EPLI may help reimburse you for legal costs if you must defend your business in court against an employee lawsuit.

EPLI may be sold as a coverage that you can add on to your existing business owners policy, or it may be sold as a standalone policy. Check with your insurer to see which option is available for your business.

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What Does Employment Practices Liability Cover?

The International Risk Management Institute (IRMI) says EPLI may help protect your business against the following types of lawsuits:

  • Discrimination
  • Sexual harassment
  • Retaliation
  • Wrongful termination
  • Deprivation of a career opportunity

What Isn't Covered?

Employment practices liability insurance does not protect you or your business against intentional or dishonest acts. IRMI also notes the coverage typically does not include claims of bodily injury or property damage — those types of claims would usually fall under your business' general liability coverage.

Who Is Covered?

According to the American Bar Association, EPLI typically helps protects your business against claims made by: employees, former employees and employment candidates. Coverage may also extend to lawsuits brought by:

  • Temporary employees
  • Leased employees
  • Independent contractors
  • Customers
  • Vendors

IRMI says EPLI policies may help cover your business' management personnel and even employees.

Thinking about purchasing employment practices liability insurance? Talk to an experienced business insurance agent to better understand the coverage options for your business.

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2017 Allstate Insurance Company, Northbrook, IL.
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