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What is employment practices liability insurance (EPLI)?

Last Updated : May 2025
Published By : Allstate

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.

For instance, if one of your staff members takes legal action against your company, alleging discrimination based on race, gender, age, religion, or disability, your EPLI policy can cover your legal expenses, including attorney fees and potential settlements, up to the policy limit.

Typically offered as an optional add-on coverage to your existing business owners policy, EPLI's coverage options can vary. It's important to consult with your insurer about tailoring your coverage to meet your business needs.

Why do you need employment practices liability insurance (EPLI)?

Today's workforce is likely to know their rights and take legal action against their employers. If a lawsuit occurs and your business lacks EPLI coverage, you could face costly legal fees, expensive settlements, and reputational harm. Companies of all sizes, even those with risk management practices, can benefit from EPLI as it offers financial security and peace of mind in the event of employment-related claims.

Who is covered under employment practices liability insurance?

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

This coverage might include lawsuits against your business filed by the following groups:

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

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What is covered under EPLI?

EPLI covers a range of employment-related claims, helping to 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)

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 is 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 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.

Employment practices liability insurance FAQs

Employment practices liability insurance and general liability insurance protect businesses against different types of claims. General liability insurance covers bodily injury and property damage claims, such as slip and fall accidents or damage to an employee's property. In contrast, EPLI covers claims related to employment issues, such as discrimination, wrongful termination, and harassment.

Any company that has employees or uses contractors can benefit from EPLI, regardless of size. Smaller businesses can be particularly harmed by employee lawsuits, as just a single lawsuit can have significant financial consequences.

How much EPLI coverage costs depends on several factors, including the type of business you operate, the number of employees you have, your business location, any past lawsuits, and the coverage limits you choose.

Yes, employment practices liability insurance is commonly available as an optional add-on coverage to your existing business owner’s policy. Additionally, some insurers offer EPLI as a standalone policy. Check with your insurance agent to learn how to purchase EPLI for your business.

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