Employment Practices Liability Insurance

Employment practices liability insurance, known in the trade as EPL insurance or EPLI, provides coverage to employers against claims made by employees alleging:

• Discrimination (based on sex, race, age, or disability, for example)
• Wrongful termination
• Harassment
• Other employment-related issues, such as failure to promote

Large corporations are frequently well-insured against employment practices lawsuits and are equipped to handle almost any one. Small and young enterprises, however, are frequently most exposed to employment-related lawsuits. This is because they frequently do not have an employee handbook or legal department that outlines the policies and procedures for hiring, disciplining, and terminating employees.

1. Review potential loss exposures with your insurance agent and purchase adequate employment practices liability insurance.
2. Develop an employee handbook detailing your company’s workplace policies including attendance, discipline and complaints. 
3. Create a job description for each position that clearly defines expectations of skills and performance.
4. Conduct periodic performance reviews of employees and carefully note the results in the employee’s file.
5. Develop a screening and hiring program to weed out unsuitable candidates on paper before calling them to interview in person.

• Defense costs (court fees, attorney fees, and related costs).
• Payment of settlements or judgments up to the policy's limits.
• Any fines or penalties levied by government agencies.

EPLI policies cover business owners, directors, officers, and managers. Some policies also cover employees. Additionally, you can buy third-party policies to cover claims brought by non-employees, such as clients.