Employment Practices Liability insurance

Frequently Asked Questions (FAQ)

• How do I know I have the right coverage for my business?

  Embroker has published a bunch of great resources to help you on your insurance buying journey. Check out the Embroker Resource Hub for articles on coverage, guidance on insurance costs, and what you’ll need to get a quote.

  You can also connect with a broker at any time to get help identifying your coverage gaps.

• Are there additional coverages available with Employment Practices Liability insurance?

  EPLI is often combined with D&O insurance to form uniform coverage, which is called management liability insurance. Typically, merging the two coverages leads to smaller premiums and fewer gaps in coverage for businesses. 

  Additionally, smaller businesses concerned about the cost of their employment practices liability insurance can consider adding the coverage as an endorsement through their BOP policy. Keep in mind that standalone EPLI coverage will offer considerably greater limits and broader coverage.

• Who benefits most from Employment Practices Liability insurance?

  In today’s litigious business environment, there are many instances in which employment practices liability insurance is required.

  Employment-related risks start the moment a job applicant walks in the door or visits the “Careers” section on your website. There are many illegal interview questions, and the applicable law may vary among different office locations.

  For example, some local and state governments have passed “ban the box” legislation that prohibits questions about criminal history to prospective employees, yet in some other areas, these questions are perfectly fine to ask.

  The truth of the matter is that you should have EPL insurance if your business has employees. No business is safe from employment-related lawsuits, so it is always best to be prepared for the worst.

  During employment, rogue managers are often an issue. If someone makes an inappropriate comment within earshot of an offended worker, the company is usually liable. Most EPL policies cover these incidents.

  So, if you’re still asking whether you need EPL or not, the answer is that you probably do.

  Does your business perform any of the following actions?

  • Hire or fire employees
  • Demote or promote employees
  • Offer raises to employees
  • Communicate to or about employees
  • Manage benefits for employees

  If so, then you need EPL coverage.

  Examples of industries that need EPL coverage

  As mentioned, pretty much any business that has employees should have an EPL policy, but here are some specific industries in which EPL is especially important.

  Tech industry

  • • The tech industry has seen a lot of ups and downs in recent years, with massive numbers of new hires in the pandemic years followed by record layoffs in 2023 and 2024. While EPL insurance is important for most industries, the protection is extremely important in the tech world.

  Entertainment industry

  • There has been no shortage of high-profile harassment and wrongful terminations in the entertainment industry, especially in Hollywood. Movements such as the #MeToo have led to a rise in awareness and publicity of these issues as well as a large number of EPL claims. 

  Healthcare

  • Several healthcare and pharmaceutical companies have made headlines recently for discrimination lawsuits. Especially since the COVID-19 pandemic, there have been a slew of EPI claims and lawsuits related to vaccination, illness, and wrongful termination.

  Customer-facing industries

  • For customer-facing industries, it is crucial to have a third-party EPL policy. Just as an employee can make a claim against an employer for discrimination, a customer or third party can sue an organization for discrimination by an employee. For example, if a customer is mistreated or harassed by an employee and sues the company, a third-party EPL policy can cover this.

• Why do you need Employment Practices Liability insurance?

  Employment practices liability insurance protects your business from a broad range of employment-related claims. There are many reasons why the number of harassment claims seems to be constantly increasing; it’s certainly not a coincidence and correlates with broader societal changes.

  Social media has also provided a voice to the harassed and has made it easier for those who have been harassed at work to speak out about it. The #MeToo Movement is a good example of this.

  In addition, LGBT and transgender communities are continuing to grow and assimilate into the mainstream, causing people from these groups to commonly encounter discrimination and harassment in the workplace.

  According to a preliminary 2018 report on sexual harassment claims by the EEOC, sexual harassment charges increased by more than 12% and sexual harassment lawsuits filed by the EEOC’s attorneys increased by 50% from the previous year.

  Employee lawsuits are on the rise, and even if you’re in the right, defense fees can still be staggering. That’s why you need to protect your business with employment practices liability insurance no matter what.

• Which employment laws does this coverage apply to?

  This coverage primarily applies to employment claims arising under Title VII of the Civil Rights Act, although there are several more legal acts that regulate U.S. employment, including:

  • The Equal Pay Act of 1963 prohibits paying different wages to men and women for performing the same work.
  • The Civil Rights Act of 1966 prohibits any discrimination based on race or ethnic origin.
  • The Immigration Reform and Control Act of 1986 prohibits employers from discriminating based on the national origin of employees authorized to work in the United States.
  • The Americans with Disabilities Act of 1990 prohibits discrimination against persons with disabilities.
  • The Age Discrimination in Employment Act prohibits employers from discriminating against individuals who are age 40 or older.

• What are the eligibility requirements?

  Most businesses are eligible for employment practices liability insurance, but not all.

  A key component to guarantee that your business will qualify for EPLI coverage is having an in-depth anti-discrimination policy. Expect frequent revision of the employee handbook, and post-incident investigation practices when applying for an EPLI policy. These are just some of the major items that insurance companies expect an employer to prepare upon review.

  Businesses that may experience difficulty securing EPL coverage typically have neglected their human resources policies on key matters such as employment at will, discrimination, sexual or workplace harassment, and ensuring accommodations for disabled employees. 

  Here are some circumstances that would make you a bad candidate for EPLI insurance:

  • You have no human employees
  • There is no use of employment applications or conducting of periodic employee appraisals
  • Over the past three years, have been the target of prior employment practices lawsuits

• What are claims-made vs. occurrence policies?

  When it comes to employment practices liability insurance, many people get confused about the difference between claims-made and occurrence policies. When discussing liability policies, the difference is all about timing and what the so-called trigger is for the coverage. It’s a question of both what must occur in order for the policy to respond and when it should occur.

  Still confused? The main difference is the policy period a claim is paid for if and when a claim occurs. Let’s look at an example. Imagine there was a wrongful act that occurred in 2004 but was not discovered until 2024. Then:

  With an occurrence policy, the claim would be paid under the 2004 policy – with the limits and deductibles of the 2004 policy.

  With a claims-made policy, the claim would be paid under the 2024 policy – with the limits and deductibles of the 2024 policy.

  What’s most important in a claims-made policy is the so-called “retroactive date.” The retroactive date is the start date of the claims-made policy that you either bought or renewed. This means that you are covered for any incident as long as it occurred either on or after the retroactive date and was reported to the insurance company within the policy period.

  Most EPLI policies are claims-made, as are most professional liability and directors and officers insurance policies.

  Want to learn more? Read our full guide on the differences between claims-made and occurrence policies.

• What is EPLI vs. Employers Liability insurance?

  While these two policies may sound similar, they actually cover completely different things.

  Employment Practices Liability Insurance (EPLI) provides companies cover for claims made against them for issues such as harassment, wrongful termination, retaliation, fair pay, breach of contract, and other employment issues.

  On the other hand, Employers Liability insurance is essentially an extension of workers compensation insurance. This policy fills in the blanks, providing coverage in situations where workers comp policies will not. 

  For example, workers compensation insurance covers medical bills and lost wages if an employee is injured on the job. But, an employee could go further and sue an employer for the emotional distress of their family. The employee could also file a lawsuit claiming that their injury or illness was specifically caused by employer negligence. This is where EPLI would come into play. 

  In another scenario, if the employee was injured by a piece of equipment manufactured by a third party, they could also potentially sue the manufacturer. The manufacturer may then sue the company, which would be covered by employers liability insurance.