Running a business comes with all kinds of risks – supply chain hiccups, cyber threats, the coffee machine going on strike right before a Monday morning meeting, etc. But one of the most serious (and unfortunately, common) threats to your business often walks out the front door: a former employee with a lawsuit. That’s where Employment Practices Liability Insurance, or EPLI, steps in like a legal bodyguard for your business.

EPLI is a type of business insurance designed to protect you from claims made by employees (past, present, or even future candidates) over workplace issues such as discrimination, harassment, wrongful termination, and more.
Think of it as that sturdy umbrella you never think about – until you are suddenly caught in a legal downpour.
Whether you run a boutique, a tech startup, a dental office, or a family-run restaurant, EPLI coverage can help shield you from the financial stress of a lawsuit. And no, this isn’t just for “big companies.” In fact, small and mid-size businesses are often the most vulnerable simply because they don’t always have legal departments on standby.

Great question. EPLI is not just one-size-fits-all, but it generally covers a broad range of employee-related claims, including:

When an employee claims they were fired unfairly or without proper cause, EPLI helps cover legal defense costs and any potential settlements.

These claims can be devastating – not just financially but also to your company’s reputation. EPLI can help manage the legal expenses and damages involved.

This can include alleged discrimination based on age, race, gender, sexual orientation, religion, or disability. With today’s focus on equity and inclusion, even perceived discrimination can result in a claim.

Did an employee claim you didn’t pay them fairly for overtime or classify them incorrectly as an independent contractor? EPLI can help cover the fallout from those types of wage disputes.

Even with well-intentioned payroll practices, misunderstandings can happen – and when they do, EPLI is there to help handle the legal costs.

While this may not be the first thing you think about, it’s included in many EPLI policies. If an employee sues because they were injured (or felt unsafe) due to workplace violence, EPLI can provide coverage.

Here’s the truth: you don’t need to do anything “wrong” to be sued. You might have the best intentions, clear policies, and a great team – but all it takes is one employee who feels wronged. And lawsuits? They’re not cheap.

Attorney fees, court costs, settlement amounts – they add up fast. And in many cases, a lawsuit can drag on for months or even years. EPLI helps absorb those costs so they don’t drain your business – or keep you up at night wondering how to pay for both legal fees and payroll.

Many business owners assume their General Liability or Business Owners Policy (BOP) covers everything. But guess what? Most standard policies do not include EPLI unless you add it.

So if you’re thinking, “Oh, I’m covered,” double-check. Or better yet, ask your insurance broker.

As with all insurance, EPLI has its limitations. It typically won’t cover:

• Criminal acts or intentional wrongdoing
• Punitive damages (in some states)
• Claims covered by Workers’ Compensation
• Bodily injury or property damage (that’s more in the General Liability world)

But for employment-related claims? That’s EPLI’s turf.

Premiums for EPLI vary depending on factors like:

• Number of employees
• Your industry
• Claims history
• Whether you’ve had prior lawsuits
• Internal practices and procedures (e.g., Do you have an employee handbook or anti-harassment training?)

The good news is that EPLI is usually much more affordable than people expect – especially compared to the cost of a single lawsuit.

If you are a business owner, you’ve probably heard the phrase, “It’s not if you get sued. It’s when.” That might sound dramatic, but in today’s world of ever-changing labor laws and heightened awareness of employee rights, it’s not too far from the truth.

EPLI is your business’s backstage pass to peace of mind. It won’t stop lawsuits from being filed, but it will absolutely soften the blow – financially and emotionally – if one comes your way.

So go ahead and add EPLI to your business insurance shield.