EPLI: What It Is & Why It Matters

Employment practices liability insurance, or EPLI, is a type of business insurance that protects employers from legal and financial liability in the event they’re sued by a current or former employee. It covers certain legal costs associated with defending against claims of wrongful termination, discrimination, sexual harassment, wage and hour violations, and other employment-related issues.

As a small business owner, finding the right combination of business coverages can be overwhelming. The Hartford understands the challenges that small business owners face and is committed to being a partner in providing solutions. By offering flexible EPLI coverage options, The Hartford can help you create a customized policy that fits your specific needs and budget. Let The Hartford help you get the protection you need to focus on growing your business.

What Is EPLI?

EPLI is a type of insurance policy that protects employers from losses in the event they’re sued by an employee. It covers certain legal costs associated with defending against claims of wrongful termination, discrimination, sexual harassment, wage and hour violations, and other employment-related issues. EPLI also covers any settlements that emerge as a result of poor employment practices.

What EPLI covers

EPLI typically covers a wide range of claims related to employment, such as gender discrimination, disability discrimination, sexual harassment, wrongful dismissal, and violation of wage and labor laws. It also provides coverage for any settlements or court awards resulting from these types of legal disputes. 

Some common missteps that EPLI helps protect against include:

• Discrimination. Discrimination claims can cover a variety of different types of behavior, including race, sex, age, religion, and disability. Discrimination can take many forms, and even if a business has comprehensive policies prohibiting discriminatory behavior, the company can still be held liable for discriminatory behavior on the part of its employees, managers, and customers.
• Harassment. Harassment claims can cover a range of different behaviors, such as inappropriate comments or jokes, unwelcome physical contact, and repeated requests for favors. And, like discrimination claims, employers can be held liable for the actions of their employees, managers, or customers.
• Wrongful termination. Employers can also be held liable for failure to promote, demote, or transfer based on factors other than merit.
• Wage and Hour Violations. These can include not paying overtime, not providing meal breaks or rest periods as required by law, making improper deductions from wages, or misclassifying employees as independent contractors. 
• Retaliation. Retaliation claims arise when an employee is punished for filing a complaint.

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How EPLI Works

EPLI coverage is designed to protect employers in the event of a wrongful termination, discrimination, or sexual harassment lawsuit. Generally, this policy pays for the legal costs associated with defending against such claims and any settlements or court awards that result from them. In some cases, EPLI may also cover punitive damages as well as attorney fees and other expenses. 

When deciding on an EPLI policy, it’s important to understand the details of the coverage and make sure you have enough protection for your business. It’s also important to know what is excluded from coverage so you can avoid any unnecessary risks.

While EPLI policies provide valuable protection for employers, they are not a substitute for good employment practices. Employers should still take steps to prevent discrimination and harassment in the workplace, such as providing clear policies and training for staff. Additionally, employers can reduce their risk by taking proactive measures such as conducting background checks on potential employees or implementing a dispute resolution system.

Why EPLI is important

EPLI is important for any small business owner who has employees, as it provides protection from the financial and legal consequences of employment-related lawsuits. These types of claims are becoming increasingly common, and many employers find themselves unprepared when faced with a dispute. Having an EPLI policy in place can help protect your business from costly litigation and help protect you against potentially-crippling losses.

Businesses That Need EPLI

Businesses that have a particular need for EPLI coverage include medium- and large-size businesses, as they tend to be the subject of more employment-related lawsuits. However, any business with employees needs this type of coverage, especially if it has multiple locations or different levels of management.

A few examples of businesses that need EPLI coverage include:

• Engineering or contracting firms. These businesses often have multiple locations or subcontractors and are at a higher risk of being sued by employees or former employees.
• Retail stores. Retail stores often employ large numbers of people and can be vulnerable to employment-related claims such as discrimination or wrongful termination.
• Law firms. Law firms are often sued by former employees or clients. Having EPLI coverage in place can help protect the business from any financial losses that may arise from these lawsuits. 
• Medical practices. Medical practices often have a large staff, handle sensitive information, and are particularly vulnerable to employment-related claims. EPLI coverage can help protect the business from any financial losses that may arise from these claims.
• Restaurants and hospitality businesses. These businesses often have a large number of employees and are subject to laws pertaining to wage and hour violations, discrimination, and sexual harassment. EPLI can provide financial protection against legal costs or awards that may result from these claims. 

Any business that has employees is at risk of being sued by an employee, so it’s important to have EPLI coverage to protect your business. Even small businesses with just a few employees can benefit from having this coverage in place. The more employees you have, the higher the risk of an employment-related lawsuit.

Small business owners have a lot on their plates, and navigating the world of business insurance can be daunting. That’s why it’s important to partner with a company that has the experience and expertise to guide you through the process. The Hartford offers a range of insurance coverages tailored to meet the unique needs of small businesses, including employment practices liability insurance.

As one of the top providers of EPLI coverage in the U.S., The Hartford understands the importance of protecting your business from costly claims related to such issues as discrimination, wrongful termination, and harassment. Don’t hesitate to reach out to The Hartford for answers to your insurance questions and to see how it can help safeguard your business.