Employment Practices Liability Insurance

By Kristin Ryan

woman in front of whiteboard

Employers are vulnerable to lawsuits during all stages of employment – from a potential employee’s pre-interview phase all the way through an employee’s exit interview. Employment practices liability insurance (EPLI) helps protect your business from the risks involved in employing people by covering employers in the event of allegations of harmful employment practices, such as wrongful termination, discrimination, sexual harassment, and retaliation.

Who Needs Employment Practices Liability Insurance?

Simply put, if you employ even one person, you are at risk of an EPLI legal claim that will cost you time and money and could even cripple your business. Responsible employers make great efforts to implement training, practices, and policies to protect their employees. But even the most cautious and proactive employer can be vulnerable to legal complaints from potential, current, and former employees, and sometimes even customers or clients. Even if the employee does not receive an award from the court case, employers face substantial costs defending themselves.

What Does EPLI Cover?

EPLI policies protect against claims related to alleged wrongful employment practices, such as:

  • Harassment
  • Discrimination
  • Actual or alleged wrongful dismissal, discharge, or termination
  • Employment-related misrepresentation
  • Employment-related libel, slander, humiliation, defamation, or invasion of privacy
  • Wrongful failure to employ or promote
  • Wrongful deprivation of a career opportunity, wrongful demotion, or negligent evaluation
  • Wrongful discipline
  • Vicarious liability for intentional acts
  • Punitive damages
  • Coercion or humiliation in relation to race, marital status, gender, age, physical and/or mental impairments, pregnancy, sexual orientation, and any other protected class established by federal, state, and local statutes

How Much Does EPLI Cost?

The cost of an employment practices liability insurance policy will vary but can be as little as $1,000 for $1 million in coverage. Some package policies will incorporate minor EPLI limits into a policy for as little as a couple hundred dollars. At Hanson & Ryan, we recommend policies that have at least $500,000 in coverage.

For your specific policy, the cost will depend on several factors, including the number of employees you have, any past allegations, and major business changes, such as downsizing or mergers. Some industries, like the restaurant industry, are more prone to employment practices liability insurance lawsuits, which will likely increase rates for those businesses. Some states, including New Jersey, often have higher rates than others based on the tendency of courts in the state to rule in favor of employees. In the wake of the COVID-19 pandemic, EPLI rates are rising due to unemployment and employment uncertainty.

Finding the Right EPLI Policy

Employment practices liability insurance is a highly nuanced and complex insurance coverage area with many different options available and a myriad of factors to consider before making your selection. Because of that, it is always best to speak with a licensed professional, so they can assist you in finding the policy that is best for your company. Hanson & Ryan has been supporting the insurance needs of businesses since 1876, and we have the expertise you need to find the right fit. Please contact us today to get started.