In today’s complex workplace environment, even the most conscientious employers can face allegations from current or former employees. That’s where Employment Practices Liability Insurance (EPLI) comes in.
What Is EPLI?
Employment Practices Liability Insurance coverage protects businesses against claims made by employees (or even applicants) alleging wrongful acts related to their employment. This may include:
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Discrimination (based on race, gender, age, religion, disability, etc.)
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Harassment (including sexual harassment)
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Wrongful termination
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Retaliation
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Failure to promote or hire
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Breach of employment contract
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Defamation or emotional distress
EPLI typically covers legal defense costs, settlements, and judgments, which can add up quickly, even in cases where the employer hasn’t done anything wrong.
Why Is EPLI Important?
Even for small businesses or companies with a strong HR framework, the risk of an employment-related lawsuit is significant. In fact:
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The U.S. Equal Employment Opportunity Commission (EEOC) receives tens of thousands of complaints annually.
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The average cost to defend an EPL claim is around $125,000, and the average settlement is approximately $75,000.
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Legal costs alone can cripple a small to mid-sized business.
In short, EPLI provides a financial safety net and peace of mind in a highly litigious environment.
Real world examples:
It can be difficult as a business owner to picture yourself involved in a lawsuit with your carefully selected team, but it is important to be aware and prepared for possible situations you might face:
1. Staffmark Investment LLC – Disability Discrimination
Staffmark, a major staffing agency, assigned a woman with a prosthetic leg to inspect televisions at a logistics facility. On her second day, she was removed from the site due to concerns about her prosthetic leg and was never reassigned. The EEOC sued Staffmark for disability discrimination under the Americans with Disabilities Act (ADA). Staffmark agreed to a $100,000 settlement and implemented measures to prevent future discrimination. EEOC
2. CPG Staffing and Executive Personnel Group – Perceived Disability Discrimination
These staffing companies rescinded a job offer to a welder after learning about a previous knee injury, despite the applicant’s full recovery and medical clearance. The EEOC filed a lawsuit alleging discrimination based on perceived disability. The companies settled for $60,000 and agreed to revise their medical questionnaires and provide ADA training to employees. EEOC
3. Staffing Solutions of WNY Inc. – Multiple Discrimination Allegations
Staffing Solutions faced allegations of discriminatory hiring practices, including rejecting applicants based on race, sex, age, pregnancy, and disability. An office manager who opposed these practices was forced to resign. The company settled with the EEOC for $550,000 and agreed to implement significant policy changes and training programs. EEOC
These cases underscore the importance of EPLI coverage, especially for firms in industries like independent adjusting, where employment-related risks can be significant. EPLI provides a financial safety net and supports businesses in handling sensitive employee disputes professionally.
Who Needs EPLI?
If your business has employees, whether one or one hundred, you have exposure to employment practices liability. EPLI is especially vital for:
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Startups and small to mid-sized businesses without in-house legal teams
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Companies undergoing growth, restructuring, or layoffs
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Businesses in industries with high employee turnover (hospitality, retail, healthcare)
Final Thoughts
No matter how strong your internal policies are, no workplace is immune to conflict or miscommunication. EPLI doesn’t just protect your business financially, it also helps you handle sensitive employee disputes professionally and responsibly.
For businesses focused on growth, stability, and reputation, EPLI isn’t just a luxury; it’s a must-have layer of protection.