Protecting Businesses from Workplace Claims

Businesses face increasing risks related to employment practices. From wrongful termination to harassment claims, even well-intentioned employers can find themselves involved in costly legal disputes. Employment Practices Liability (EPL) Insurance helps protect businesses from lawsuits related to employment-related issues.

What is EPL Insurance?

Employment Practices Liability Insurance (EPL Insurance) is designed to cover businesses against claims made by employees (or former employees) regarding workplace rights violations. These claims may arise from hiring practices, workplace conduct, or termination procedures.

A standard EPL policy typically covers:

• Wrongful Termination: Protects against claims alleging unfair dismissal, breach of contract, or discrimination in layoffs.
• Harassment Claims: Covers claims of sexual harassment, workplace bullying, and other inappropriate conduct.
• Discrimination: Provides coverage for allegations of discrimination based on race, gender, age, disability, or other protected categories.
• Retaliation Claims: Covers claims that an employer took adverse action against an employee for reporting workplace violations.
• Failure to Promote or Hire: Protects against claims that an employer unfairly denied a promotion or employment opportunity.

Who Needs EPL Insurance?

While large corporations often secure EPL coverage due to their higher employee count and potential exposure, small and medium-sized businesses are often at greater risk because they may lack a dedicated HR department to handle complex employment laws. Industries that commonly face employment-related claims include:

• Healthcare and Medical Facilities
• Retail and Hospitality Businesses
• Financial and Legal Services
• Technology and Startups
• Manufacturing and Construction

What EPL Insurance Does Not Cover

While EPL insurance offers broad protection, certain exclusions may apply:

• Bodily Injury or Property Damage: These are typically covered under general liability insurance.
• Wage and Hour Disputes: Many EPL policies exclude claims related to unpaid wages or overtime disputes unless explicitly added.
• Criminal or Intentional Acts: Fraud, malicious intent, and criminal actions are not covered under EPL policies.
• Workers’ Compensation Claims: Employee injury-related claims fall under workers’ compensation insurance rather than EPL coverage.

How Much Does EPL Insurance Cost?

The cost of EPL insurance varies based on several factors, including:

• Business Size and Industry: Companies with more employees or higher risk industries typically pay higher premiums.
• Claims History: Businesses with prior employment-related lawsuits may face increased costs.
• Coverage Limits and Deductibles: Higher coverage limits and lower deductibles lead to higher premiums.
• Workplace Policies: Strong HR policies and regular employee training may reduce premiums by lowering risk exposure.

On average, small businesses can expect to pay $1,500 to $5,000 per year for EPL coverage, depending on their industry and workforce size.

How to Choose the Right EPL Policy

When selecting EPL coverage, businesses should consider:

• Coverage Scope: Ensure the policy covers the most common employment-related risks.
• Legal Defense Coverage: Review whether the policy covers defense costs, settlements, and damages.
• Third-Party Coverage: Some policies extend protection against claims from clients, vendors, or customers.
• Insurer Reputation: Work with a provider known for fair claims handling and strong customer service.
• Risk Management Support: Some insurers offer HR consulting or training services to help prevent claims before they arise.

Employment Practices Liability Insurance is essential for businesses navigating complex employment laws and workplace dynamics. With employee lawsuits on the rise, securing EPL insurance helps employers mitigate financial risks while fostering a fair and compliant work environment.

By proactively investing in the right EPL policy, businesses can focus on growth while protecting their reputation, employees, and financial stability. Insurance Way can help you find the best policy for your size business and number of employees.