Liability

Employment Practices Liability Insurance (EPLI)

Protection for employee claims of wrongful termination, discrimination, harassment or retaliation — exposures any employer can face, whatever its size.

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Employment practices liability insurance (EPLI) responds to claims by current, former or prospective employees alleging wrongful termination, discrimination, harassment, retaliation and similar wrongful acts. Defense costs alone can be significant, even when the employer did nothing wrong.

These claims are typically excluded from general liability and workers' compensation, so EPLI is usually a separate policy, part of a management liability package, or a limited endorsement on a business owners policy (BOP).

Employment laws vary by state, and many apply to small employers. EPLI is usually written on a claims-made basis — the policy in force when the claim is made typically responds — so the retention (the amount you pay toward each claim), defense terms and reporting rules deserve a careful look. We help employers across the U.S. compare how each option would respond before they choose.

Wage and hour claims: a common limitation

Wage and hour claims are about how employees are paid — unpaid overtime, off-the-clock work, missed meal or rest breaks, or treating employees as independent contractors. Most EPLI policies exclude these claims.

Some policies offer a small sublimit (a capped amount within the policy) for defense costs only. Back pay, unpaid overtime and other amounts owed are typically excluded even then. Because these claims are often brought on behalf of a whole group of workers, payroll practices and worker classification deserve their own review with your accountant or employment counsel.

What's typically included

Exact coverage depends on the policy form, endorsements and insurance company.

Wrongful termination

Claims that an employee was fired or laid off in violation of law or an employment agreement.

Discrimination

Allegations based on protected characteristics such as age, race, sex, disability or religion in hiring, promotion, pay or termination decisions.

Harassment

Claims of sexual or workplace harassment, including hostile work environment allegations.

Retaliation

Claims that an employer punished someone for reporting a concern, filing a complaint, taking protected leave or whistleblowing.

Third-party EPL

An option that extends the policy to discrimination or harassment claims brought by customers, vendors or other non-employees.

Defense and agency charges

Defense of lawsuits and of administrative charges filed with state or federal agencies, subject to the policy terms and retention.

Wage and hour defense (limited)

Some policies offer a small sublimit for defending wage and hour claims. Back pay, overtime and other amounts owed are typically excluded.

What to watch for

Wage and hour claims for overtime, misclassification or missed breaks, which are usually excluded or limited to a small defense-cost sublimit.
Claims-made reporting rules, plus prior and pending litigation dates — cutoffs that exclude matters already underway — which matter when you change insurance companies.
Retentions that apply per claim and can be higher for certain claim types or highly compensated employees.
Consent-to-settle (hammer) clauses, which can shift costs to you if you turn down a settlement the insurance company recommends.
Exclusions for benefit plan (ERISA) claims, contract obligations and other statutory duties, and whether punitive damages are insurable where you operate.
Independent contractors, temporary and leased workers, who may or may not be treated as employees under the policy.

What affects price and eligibility

Number of employees by type (full-time, part-time, seasonal) and location
Industry and employee turnover
Prior employment claims, agency charges or demand letters
HR practices such as a written handbook, harassment training and documented discipline procedures
Recent or planned layoffs, reorganizations or acquisitions
Limit, retention and whether third-party coverage is added

Helpful information for a quote

Have what you can — we'll ask for anything else an insurance company needs. Starting a new business? You can begin without prior policies or loss runs.

Number of employees by state and type (full-time, part-time, seasonal)
Your employee handbook or written HR policies, if you have them
Details of any prior employment claims, agency charges or demand letters
Current EPLI or management liability declarations, if you have them
Any layoffs or staff reductions in the past year, or any that are planned
Details of any professional employer organization (PEO), staffing agency or independent contractor arrangements

Written by ALP Insurance

Who typically needs it

Any business with employees, including small, part-time and seasonal workforces
Employers that are growing quickly, restructuring or reducing staff
Restaurants, retailers and service businesses with high turnover
Contractors and trucking companies with field crews or drivers
Client-facing businesses where customers or vendors could bring harassment claims
Businesses whose lenders, investors or contracts ask about EPLI

Talk it through with an agent

Not sure what you need? Start a request and choose "Not sure" — a licensed ALP agent will talk through the options with you.

Request an EPLI quote

Industry guides

Employment Practices FAQs

Is EPLI part of my general liability or business owners policy?

Typically not. Some business owners policies can add a limited EPLI endorsement, but standalone or management liability policies usually offer broader terms and higher limits.

Does EPLI respond to wage and hour lawsuits?

Usually not for damages. Some policies provide a small defense-cost sublimit for wage and hour claims, but back pay and unpaid overtime are generally excluded, so payroll practices and worker classification deserve their own review.

What is third-party EPL?

It extends the policy to discrimination or harassment claims brought by customers, vendors or other non-employees. It is often available as an option and can matter for restaurants, retailers and client-facing businesses.

Do I need EPLI if I use a PEO?

Possibly. A professional employer organization's policy may or may not extend to your company, and its limits and retention may not fit your needs, so ask us to review the PEO agreement and its coverage.

Why is EPLI written on a claims-made basis?

Employment claims often surface months after the events behind them, so the policy in force when the claim is made typically responds. Keeping continuous coverage and the same retroactive (prior acts) date helps avoid gaps, and if a policy ends, an extended reporting period may give extra time to report claims about acts on or after the retroactive date and before the policy ended, depending on the policy.