Employers Practices Liability (EPLI)

What Is Employment Practices Liability Insurance?

Employment practices liability insurance (EPLI) helps protect your business from employment-related claims, like:

Discrimination (age, gender, race, religion, etc.)
Retaliation
Violation of the Family and Medical Leave Act
Wrongful discipline
Wrongful failure to promote
Wrongful termination
Harassment of any kind including sexual harassment

Common employee complaints are centered around wage and hourly violations. This is because employees accuse employers of misclassifying employment status or miscommunicating their eligibility for overtime.

Do I Need Employment Practices Liability Insurance?

Absolutely. The legal costs of employment-related claims are overwhelming. It's also very likely that employers will face many employment-related issues and lawsuits, especially as you continue to employ more through company growth.

Getting the right insurance to help cover defense costs and damages related to employment-related claims is critically important to protect your business. The Firebird Agency provides comprehensive and customizable EPLI policies through a variety of carriers. We’ve made it easy for business owners to get the coverage they need to help protect their companies.

EPLI FAQ

Expand all

What is EPLI insurance?

Employment Practices Liability Insurance (EPLI) is a type of professional liability insurance that protects businesses from financial losses arising from employee claims of workplace misconduct. It covers legal costs, settlements, and judgments stemming from employment-related lawsuits. Common claims include discrimination (based on race, gender, age, religion, or disability), sexual harassment, wrongful termination, retaliation, and failure to hire or promote. EPLI is sometimes called EPL insurance and should not be confused with Employer's Liability Insurance, which is a different product that covers job-related injuries or illnesses under a workers' compensation policy.

What does EPLI cover?

A standard EPLI policy covers legal defense costs, settlements, and court-awarded judgments for claims including: • Discrimination – unfair treatment based on race, gender, age, religion, national origin, or disability • Sexual harassment and other forms of workplace harassment • Wrongful termination – firing an employee in violation of contract or law • Retaliation – punishing an employee for reporting misconduct or exercising their legal rights • Failure to hire or promote – biased decisions in hiring or advancement • Defamation – false statements that damage an employee's or applicant's reputation • Breach of employment contract • Negligent evaluation or supervision Importantly, EPLI coverage typically protects businesses against claims brought by current employees, former employees, and in some cases, job applicants.

What does EPLI NOT cover?

EPLI policies typically exclude: • Criminal acts or intentional wrongdoing by the employer • Punitive damages (in many policies) • Claims related to workers' compensation • Unemployment benefits disputes • ERISA (benefit plan) violations — typically covered by Fiduciary Liability insurance • Bodily injury or property damage (covered by General Liability insurance) • Wage and hour disputes (though some policies offer limited coverage)

Who needs EPLI insurance?

Any business that has employees — regardless of size or industry — faces the risk of employment-related lawsuits. Employment-related risks begin the moment a job applicant visits your "Careers" page or walks through the door for an interview. EPLI is particularly important for businesses that: • Regularly hire, discipline, or terminate employees • Operate in highly litigious industries (retail, restaurants, healthcare, tech) • Are located in states with expansive labor laws, such as California or New York • Have experienced rapid growth and frequent employee turnover • Lack a dedicated HR department or formal employment policies While EPLI is not legally required, it is strongly recommended. Even a single unfounded claim can result in tens of thousands of dollars in legal defense costs.

How much does EPLI insurance cost?

The cost of EPLI varies based on several factors. Key cost factors include: • Number of employees (the primary pricing driver) • Industry and associated risk level • Prior claims history • State and jurisdiction (California and New York are significantly higher) • Policy limits chosen ($100,000–$1,000,000 is the typical range) • Deductible amount (higher deductible = lower premium)

Is EPLI insurance required by law?

No, EPLI is not legally required in any U.S. state. However, it is strongly recommended for any business with employees. Employment-related claims are among the most common and costly lawsuits businesses face. Without EPLI, companies must pay attorney fees, settlement costs, and court judgments entirely out of pocket — costs that can easily reach six figures, even for unfounded claims.

What is the difference between EPLI and Employer's Liability Insurance?

These are two completely different coverages that are often confused: Feature EPLI Employer's Liability What it covers Wrongful termination, discrimination, harassment, retaliation Work-related injuries or illnesses when employee sues Who it protects Business against employee lawsuits Business against injury- related lawsuits Where it comes from Standalone or add-on policy Typically bundled with workers' comp Trigger Employment practice disputes On-the-job injuries or illnesses

How does a claims-made policy work?

EPLI is almost always written as a claims-made policy. This means a claim is only covered if your policy is active both when the incident occurred AND when the claim is formally filed. This is different from occurrence-based policies, which only require the incident to happen during the active policy period. Key implications: Do not let your EPLI coverage lapse. A gap in coverage could leave you exposed to legal costs for incidents that occurred while you were covered but were reported afterward. You may also wish to set a retroactive date to ensure past incidents are covered.

What are the most common EPLI claims?

According to the EEOC and major insurers, the most frequently filed claims are: • Wrongful termination – the most common claim; employees assert they were fired unlawfully or in breach of contract • Workplace discrimination – based on race, sex, age, disability, religion, or national origin • Sexual harassment – especially since the rise of the #MeToo movement; in 2018 alone, the EEOC recovered over $70 million in harassment filings • Retaliation – employer punishes an employee for filing a complaint or exercising a protected right • Failure to promote – alleging promotion decisions were based on discriminatory factors

Can I add EPLI to my existing business insurance policy?

Yes, in many cases. EPLI can be added as an endorsement to a General Liability policy or a Business Owner's Policy (BOP). However, this bundled coverage typically provides lower limits and narrower protection compared to a standalone EPLI policy. For small businesses watching costs, bundling is a cost-effective starting point (as low as $400/year). For growing businesses with higher exposure, a standalone EPLI policy is generally recommended for broader and higher-limit protection. EPLI can also be combined with Directors & Officers (D&O) liability and Fiduciary Liability in a Management Liability package.

How can I reduce my EPLI premiums?

Insurers reward well-managed workplaces with lower premiums. Steps that can reduce your EPLI cost include: • Implementing documented HR policies and an employee handbook • Providing regular anti-harassment and discrimination training for managers and staff • Maintaining consistent, documented disciplinary and termination procedures • Using proper employment contracts and offer letters • Establishing a formal, confidential complaint process • Conducting exit interviews and documenting the reasons for all terminations • Choosing a higher deductible (which lowers the premium)

Does EPLI cover third-party claims?

Standard EPLI policies cover claims made by employees and former employees. Some enhanced or standalone policies also extend coverage to third-party claims — allegations made by customers, vendors, or other outside parties who claim they were harassed or discriminated against by your employees. This is an important consideration for businesses in customer-facing industries such as retail, hospitality, and healthcare.

This FAQ is for informational purposes only and does not constitute legal or insurance advice. Coverage terms, exclusions, and availability vary by insurer and state. Consult a licensed insurance professional at The Firebird Agency for guidance specific to your situation.