What Is Employment Practices Liability Insurance (EPLI) and Why Every Employer Needs It

Are you running your business, wondering if you’re protected from workplace claims? Even when you’re doing everything right, you can still find yourself facing claims of harassment, discrimination, or wrongful termination. 

These claims aren’t just stressful—they’re expensive! According to the EEOC’s most recent enforcement statistics, the EEOC received over 88,500 new discrimination charges in 2024 alone, and such complaints are filed each year, costing companies valuable time, resources, and reputation. 

That’s exactly why employment practices liability insurance (EPLI) exists. It’s not just a policy—it’s your peace of mind for navigating today’s complex employment landscape!

What Is Employment Practices Liability Insurance (EPLI)?

Does your business have employment practices liability insurance? This specialized commercial insurance protects your business against claims made by employees alleging violations of their legal rights. These claims can include issues like discrimination, wrongful termination, harassment, and more. EPLI is typically offered as a standalone policy or as part of your broader business insurance package.

Why is EPLI important for companies of all sizes? It’s especially crucial for small to mid-sized businesses that may not have dedicated HR legal teams. With workplace laws becoming more complex and employees increasingly aware of their rights, your potential exposure to lawsuits has never been greater. This isn’t just about compliance—it’s about protecting everything you’ve worked to build!

What Does EPLI Cover?

An EPLI policy generally covers:

• Wrongful termination
• Sexual harassment
• Discrimination (based on race, gender, age, disability, etc.)
• Retaliation
• Defamation or emotional distress
• Failure to promote or hire

In many cases, EPLI may also cover legal costs associated with investigations or administrative proceedings before a lawsuit is filed, such as EEOC complaints.

It’s important to note that coverage varies by insurer and policy, so employers should work closely with an insurance advisor to understand what’s included and what may require additional endorsements.

What EPLI Does Not Cover

While EPLI provides critical protections, there are important exclusions to be aware of:

• Criminal acts
• Workers’ compensation claims
• Wage and hour violations (unless specifically added)
• Bodily injury or property damage (covered under general liability policies)

Understanding these exclusions helps companies create a well-rounded risk management plan that includes other forms of training and coverage.

Why Every Employer Should Care

Employment-related claims are not only costly but can damage a company’s reputation and culture. The average cost to defend and settle an employment lawsuit can exceed $160,000, according to Hiscox. In a time where workplace inclusion, harassment prevention, and accountability are front and center, employers must be proactive.

EPLI offers:

• Financial Protection: Covers legal fees, settlements, and judgments.
• Peace of Mind: Allows HR and leadership to focus on business rather than litigation.
• Credibility: Demonstrates that the organization takes workplace compliance seriously.

Employers that pair EPLI with preventative measures, such as anti-discrimination and harassment training, are better positioned to reduce risk and create a safe, inclusive workplace.

EPLI vs. Other Business Insurance Policies

It’s easy to assume your general liability policy covers everything—but EPLI is unique. Here’s how it differs:

• General Liability: Covers physical injury or property damage, not employee lawsuits.
• Workers’ Comp: Covers job-related injuries, not legal rights violations.
• Directors & Officers (D&O): Covers leadership decisions, not HR-related claims.

EPLI fills the gap by covering internal employment disputes that are excluded from other standard business insurance plans.

Real-World Example: EPLI Saves a Mid-Sized Company From a $175K Discrimination Lawsuit

A healthcare staffing firm with 80 employees across three states faced a discrimination claim from a former employee who alleged age and gender bias after being passed over for promotion. The company lacked consistent documentation, making it difficult to defend the claim.

Fortunately, they had recently added EPLI coverage. The insurer covered legal fees and most of the $70,000 settlement, with the company only responsible for a $10,000 deductible. Without EPLI, the financial impact could have been devastating. Additionally, the claim created internal disruption and lowered team morale until it was resolved.

This case highlights the importance of having both EPLI and internal HR training protocols. Programs like bystander intervention and workplace violence prevention can work alongside EPLI to reduce exposure.

How to Choose the Right EPLI Policy

Choosing the right EPLI policy involves:

• Understanding your risk profile (industry, workforce size, claims history)
• Comparing policy limits and deductibles
• Reviewing exclusions and optional endorsements (like wage & hour coverage)
• Consulting with an experienced insurance broker who understands industry-specific risks and regulations

Speak with your insurance broker or compliance partner to tailor coverage that suits your specific business.

Integrating EPLI Into Your Risk Management Plan

EPLI is most effective when combined with a broader workplace compliance strategy. Employers should:

• Offer regular EEO and sexual harassment training
• Create a culture of accountability and inclusion
• Keep accurate HR documentation
• Evaluate risk annually as part of a comprehensive insurance and training review

For help building a customized plan, explore EEO Training’s full suite of programs or contact us directly.

Conclusion

In a climate where even minor missteps can result in costly lawsuits, employment practices liability insurance (EPLI) is not a luxury—it’s a necessity. By protecting your organization financially and strengthening your workplace culture, EPLI offers peace of mind and a critical competitive edge.

At EEO Training, we help with the compliance training that will educate your employees and reduce claims.  Whether you’re a small business owner or HR professional at a growing company, don’t wait until it’s too late. Consider EPLI today—in addition to providing proactive training and tools to build a safe, compliant work environment from the ground up.

Start protecting your workplace today—sign up for training today.