Employment Practices Liability Insurance

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Types Of Small Business Insurance

  • Includes medical payments, legal representation, and defense against libel and slander accusations.
  • Provides financial protection if an employee has a job-related accident or illness.
  • Bundles general liability insurance and commercial property into one affordable policy.
  • Pays to repair or replace your business property if it's stolen, damaged, or destroyed in a fire or natural disaster.
  • Covers mistakes or alleged mistakes on your part (errors) & failures or alleged failures to perform a service (omissions).
  • Is liability and physical damage protection for vehicles, such as cars, trucks and vans, that are used for business.
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Frequently Asked Questions About Small Business Insurance


How much does general liability insurance cost?

In 2019, commercial general liability costs can vary widely based on industry. Businesses in higher risk industries pay more. Premiums are also determined by zip code and often payroll and/or gross sales. You can request a free quote to get an exact premium for your business. Read more...

What types of business insurance do I need?

Almost every business needs general liability and commercial property insurance at the very least. If you have any non-owner employees, you'll most likely need workers compensation insurance too as most state require it. It all depends on the risks your business faces. Read more...

How does general liability insurance work?

Having general liability is the basis of any business insurance program. If you can afford only one commercial insurance policy for your small business - then you should get a commercial general liability policy, because it offers protection against a wide range of common but unexpected risks. Read more...

What is a Certificate of Insurance?

A Certificate of Insurance (COI) is proof of coverage. It verifies that you have insurance coverage for your small business, & contains information on types and limits of coverage, insurance company, policy number, named insured, and the effective date of the policy. Read more...
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Employment Practices Liability Insurance Policy Information

Employment Practices Liability Insurance

Employment Practices Liability Insurance. Also know as EPL or EPLI, is a policy which protects business owners from the potential liability which is posed by employees in the event of a lawsuit. The insurance policy protects from potential claims of sexual harassment, on the job discrimination, or if an employee claims they were improperly dismissed or disciplined, for any reason or another.

Allegations are made by employees who claim to have suffered various types of financial loss or emotional injury because of their employers' acts (or failure to act). The list of allegations involves wrongful termination, demoting an employee without justification, failure to hire or promote a worthy employee, unwarranted discipline or abuse (particularly sexual harassment). Many of these offenses are said to be the result of illegal discrimination on the basis of age, gender, religion, race, nationality, or sexual orientation.

Other offenses are claimed to be a violation of the individual's civil rights, or the failure to accommodate a mental or physical limitation or disability. Sexual harassment by the employer's management or supervisory staff, or by fellow employees, has grown to include allegations of same-sex harassment. In addition to injuries involving sexual abuse, physical, mental or emotional abuses are also being claimed with more frequency.

Employers must take great care to have firm, written policies and procedures in place to prevent such abuses and injuries. Various laws and government agencies hold employers responsible for the training and implementation of programs to protect their employees from supervisors and fellow employees. Modern trends toward "downsizing," business failures, relocations, outsourcing, and companies phasing out or selling-off products or services increase the level of employee claims.

Often, employees deemed most expendable by the company become the most disgruntled and in the frame of mind to sue. In many other cases, employees are becoming more aware of their rights and are gaining the will to seek to have unacceptable actions and work environments addressed.

Due to the sheer fact that as a business owner, you are always under a potential threat where a disgruntled employee might attempt to sue you, or claim you were irresponsible in dealing with them (issues with termination or discipline such as suspending them), it is worth your while to consider purchasing a employment practices liability insurance policy to protect your business.

Employment practices liability insurance protects your business from claims made by employees alleging discrimination with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.

Is Employment Practices Liability Insurance Mandatory?

As is the case with nearly any other insurance policy other than workers compensation, you are not required by law to purchase employment practices liability insurance for your business. However, doing so is the only way to ensure you are covered, and are not going to pay out of pocket, in the event you are found liable of wrongful termination, or other claims an employee or former employee claims you are found guilty of.

How Does An EPLI Policy Protect Your Company?

With your employment practices liability insurance policy you are basically covered in the event an employee or a former employee attempts to sue your business. Issues may stem from:

  • Claims of sexual or other harassment claims.
  • Termination where an employee claims they were unfairly terminated.
  • Lawsuits stemming from on the job injuries or different worker comp claims.
  • Wrongful termination and retaliation claims are also covered under your policy.
  • Suits which may stem from an injury on the job (even if you are not at fault as the employer) where an employee claims you are at fault.
What Is Covered

Employment practices liability insurance provides broad insurance protection from employment-related practices claims and lawsuits that are brought against your company, managers and directors and officers. It covers such things as age and gender discrimination, sexual harassment, wrongful discipline and termination and negligent decisions involving hiring, promotion, and compensation. It also applies to breach of employment contract, employment-related emotional distress, and mental anguish, invasion of privacy, libel, and slander.

The insurance company agrees to pay amounts the insured is legally obligated to pay as damages for wrongful acts covered by the insurance provided, up to the limits of insurance. A wrongful act means any one or more of the following employment-related acts:

  • Wrongful demotion or failure to promote, negative evaluation, reassignment or discipline of a current employee or wrongful refusal to employ
  • Wrongful actual or constructive termination of an employee in violation or breach of law, public policy or a non-employment contract or agreement
  • Wrongful denial of training, deprivation of career opportunity or breach of employment contract
  • Negligent hiring or supervision resulting in any of these offenses
  • Retaliatory actions against an employee
  • Coercion of an employee to perform illegal acts
  • Harassment
  • Libel and other types of personal injury
  • Any type of abuse emanating from discrimination
What Isn't Covered

EPLI exclusions must be examined carefully because many of them have conditions, exceptions, limitations or restrictions not shown below. Coverage does not apply to:

Criminal, Fraudulent Or Malicious Acts - An insured's liability as a result of criminal, fraudulent or malicious acts or omissions by that insured is excluded. The insurance company's defense duty remains until legally determining the existence criminal, fraudulent or malicious act or omission.

Contractual Liability - Any wrongful act for which the insured is obligated to pay damages because of assuming liability solely via a contract or agreement is not covered.

Workers Compensation And Similar Laws - Any obligations of the insured imposed by any workers compensation, disability benefits, unemployment compensation or similar law are excluded.

Violation Of Laws Applicable To Employers - Coverage does not apply to the named insured's violation of its responsibilities or duties required by any federal, state or local statute, rule or regulation, and any related rules and regulations developed to apply to them, other than the following:

  • Title VII of the Civil Rights Act of 1964
  • The Americans with Disabilities Act (ADA)
  • The Age Discrimination in Employment Act
  • The Equal Pay Act
  • The Pregnancy Discrimination Act of 1978
  • The Immigration Reform and Control Act of 1986
  • The Family and Medical Leave Act of 1993
  • The Genetic Information Nondiscrimination Act of 2008
  • Any other similar state or local statute, rule or regulation that prescribes responsibilities or duties involving the same acts or omissions.
  • Amendments to the above
  • A wrongful act that is the result of the named insured's failure to comply with required accommodations for the disabled and any expenses incurred resulting from required accommodations for the disabled due to ADA or any amendments to the act continue to be excluded.

There is no exclusion for claims alleging retaliatory treatment by an insured against any person making a claim as a result of that person's rights under any statute, rule, or regulation.

Strikes And Lockouts - Any wrongful act committed against any striking or locked-out employee, or to an employee temporarily or permanently replaced due to a labor dispute, is excluded.

Prior Or Pending Litigation - No claim or suit that is brought against any insured is covered if it existed or was pending before the applicable Pending or Prior Litigation Date shown on the declarations. This exclusion applies to claims or suits that arise out of the same or substantially the same facts, circumstances, or allegations that are the subject of or the basis for such claims or suits.

Prior Notice - If a claim had been reported or a notice had been given under a prior insurance policy, there is no coverage under this insurance policy for any wrongful act within that reported claim or notice. There is a requirement that the prior insurance policy must provide coverage similar to that which is part of this insurance policy.

Does My Business Need EPLI?

The employment practices liability exposure begins when an entrepreneur hires his or her first employee. A new employer must first identify the job responsibilities of the employees she seeks. She must clearly define the job requirements and expectations, the training needed and the training the employer will provide, as well as the output expected of each type of employee. If employer expectations differ from employee perception of the job duties and compensation, EPLI claims may follow.

The employer must develop excellent recruitment and hiring practices. Its procedures should be carefully evaluated and published in a manual that every supervisor is expected to read and understand. The procedures must be monitored to make sure all are followed in every circumstance. Discrimination among employees can only be practiced when there are clear and unarguable reasons such as setting a minimum employee age to comply with child labor laws or prohibiting certain employees from certain jobs due to known health hazards associated by gender or age.

There are always possible lawsuits lingering around you as a business owner. For this very reason you have to know how to shield yourself from liability with the EPLI policy. This namely is the case when dealing with former employees or an employee who thinks they were unfairly treated for any reason.

Of course each employment practices liability insurance policy is going to differ based on the insurer you choose, as well as the level of coverage you choose to purchase. So as a business owner, you do have to understand EPLI policy terms, and level of coverage, in order to ensure you find the best price as well as the best coverage to fully protect your business and assets from the potential lawsuits from disgruntled current or former employees.

Here are some current trends that are contributing to EPLI allegations and claims:

  • Businesses often have management and supervisory personnel who are older and have different work ethics and disciplinary methods than the newer, younger employees. Supervisors may not have the training or communication skills to manage their younger staff members.
  • Career-long employment is now rare, affecting the level of employee loyalty and causing higher turnover.
  • Certain laws encourage employers to hire untrained employees with little or no experience and few work skills in order to gain tax-incentives.
  • Contractors seeking federal business face higher scrutiny due to the demand to comply with all local, state, and federal employment laws.
  • Employers often must provide very basic interpersonal skills in the workplace training, adding a burden of having to provide such training consistently to every employee.
  • Increasingly, employers must compete nationally or even internationally, dramatically changing the scope of many businesses.
  • Many businesses utilize internship programs and college recruiting practices to hire younger professionals as managers, human resource representatives and for talent acquisition. These younger managers and supervisors may lack the ability to effectively communicate with their older and more tenured staff.
  • Privatization results in jobs previously managed by governments being converted to the private sector. Possible changes in employee support systems may mean that employees may seek new remedies for perceived injustices.
  • Prolonged economic downturns create downsizings, deferred salary increases, higher business expenses, and other issues that strain employer/employee relationships.
  • The American workforce is increasingly diverse, bringing together more people with vastly different backgrounds, race, religion, economic levels, social standings, and cultures.
  • The emphasis on technology and cost-cutting practices place greater demands on remaining workers.
  • The quantity of federal, state, and local legislation and regulatory edicts provide employees with additional ways to allege mistreatment by their employers.

It is important to know how much your deductible is, as well as what additional expenses you are going to incur with the different insurance companies offering this coverage, in order to ensure you make the right decision when the time comes to choose your policy.

Choosing The Best EPLI Policy

When you decide to invest in an EPLI policy, make sure you go through a reputable insurance provider. Sure you may pay less with an unknown insurer that a broker sells you up front, but when the time comes to pay off a claim or pay for legal fees, they might delay and make you wait to receive the claim payments. This will not be the case when you go through a reputable insurer and broker for the coverage you purchase to protect your business.

You have invested so much time and money to build your business; you do not want to run the risk of losing it all because a former disgruntled employee wants to sue you. With employment practices liability insurance in place, you are covered from claims which are made by former or current employees.

'Real Life' Court Cases Involving Employment Practices Liability:

Insurance Legal Cases
Town vs. Michigan Bell Telephone Company

Veronica Town worked for Bell Telephone Company. An opportunity for transfer was initiated by Town and after interview with Bell, offered to her. When Town learned that the work schedule involved four 12-hour shifts, she had to decline as Town provided care for her husband with a serious health condition that would not fit into that type of work schedule. She accepted a position as a manger in another area.

About a year later, due to internal organizational changes, Town learned she was being transferred to the position she had originally turned down because her position as manager was being consolidated into another job. The consolidated managerial position was given to a 35-year old male. Town felt forced to resigned and took an early retirement at age 49. She filed suit against Bell citing both age and sex discrimination.

The jurisdiction of the suit bounced between state and federal court, finally ending within state jurisdiction. A trial was held with a verdict in favor of Town. Bell appealed, requesting a directed verdict. Bell contended that there was a valid reduction in work force necessitating the consolidation and transfer. Town was not selected for the consolidated position because her performance (in the opinion of Bell) was not as good as the person given the position. Both employees were qualified for the combined position.

Town was not able to produce evidence that age or sex entered into the decision. The Michigan Supreme Court made a decision in favor of Bell.

(Town vs. Michigan Bell Telephone Company, No. 97-102845, Veronica Town, Plaintiff-Appellant, vs. Michigan Bell Telephone Company, Defendant-Appellee, Michigan Supreme Court, Lansing, Michigan.)

Lytle v. Malady

Nancy Lytle had worked for Howmet Corporation for 18 years in the human resources area when she was terminated. At the time of her hire, the employee manual carried a statement that no employee will be terminated without proper cause. It further contained a statement that the employee manual was not an employment contract. Later the manual was revised to make clear that employment was at the will of the employer who reserved the right to terminate, however, Lytle was led to believe that the new disclaimer was for new hires only. It was only distributed to new employees as they hired on.

Nancy Lytle had worked for Howmet Corporation for 18 years in the human resources area when she was terminated. At the time of her hire, the employee manual carried a statement that no employee Lytle received favorable reviews and internal promotions. Her performance was exemplary. She had been assured during a period of internal company adjustment that her position was secure and she was well regarded.

When her original director retired, a new director, Michael Malady, took has place. An apparent personality conflict occurred. In one incident, Malady required female employees to wear dresses to a company picnic. When Lytle wore slacks, she received an unfavorable job performance evaluation.

Nancy Lytle had worked for Howmet Corporation for 18 years in the human resources area when she was terminated. At the time of her hire, the employee manual carried a statement that no employee As a result of a swing toward centralization, jobs were realigned within the company and the organizational structure was changed. Lytle, than 44 years of age, was terminated. The reason stated was reduction in work force due to a reduction of military contracts and downward trend in the airline industry.

Upon Lytle's termination processing, her valuation indicated that she had been an employee in good standing and that she would be rehired should an appropriate position open. However, under the new organization, a similar position was created for the new internal structure and an employee from outside the company was hired. The new employee had very similar qualifications to Lytle. Lytle was not contacted or allowed rehire or access to the position. The new employee was 31 and offered a salary higher than Lytle's.

Nancy Lytle had worked for Howmet Corporation for 18 years in the human resources area when she was terminated. At the time of her hire, the employee manual carried a statement that no employee Lytle filed suit challenging the reduction in work force reasoning and alleging age and sex discrimination. The trial court ruled against Lytle but the appeal court ruled in her favor.

Nancy Lytle had worked for Howmet Corporation for 18 years in the human resources area when she was terminated. At the time of her hire, the employee manual carried a statement that no employee In a mixed decision of the Michigan Supreme Court with dissent, it was determined that the reduction in work force overall appeared valid. However, based upon the fact that Lytle was over 40, even though she had had very favorable reviews overall, she was replaced by a substantially younger person at a higher salary. Thus, the decision of the Court of Appeals was affirmed in favor of Lytle.

(Lytle v. Malady, No. 97-102515, Nancy Lytle, Plaintiff-Appellee vs. Michael Malady and Howmet Corporation, Defendants-Appellants, Michigan Supreme Court, Lansing Michigan.)


Small Business Economic Data & Insurance Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. Maybe you want to contribute to the economic growth of your community. Whatever the reason is, if you're thinking about starting a small business, it's important to understand pertinent information relating to small businesses in the United States; namely economic information and insurance regulations. After all, if you want your small business to succeed, you have to understand the economic trends organizations of a similar size in your area.

Likewise, you want to ensure that your small business is well protected with the right business insurance and that you are in compliance with the rules and regulations that pertain to commercial insurance in your region.

Small Business Information

Read up on economic statistics and insurance information that relates to small business owners in the United States.

Small Business Economic Data In The United States

Here's a look at some information that was compiled by the Small Business Association (SBA) regarding the economic data that pertains to small businesses in the United States:

  • In 2015, small businesses in the United States employed an estimated 58.9 million American workers, or 47.5 percent of the nation's private workforce.
  • Largest shares = fewer than 100 employees. The small businesses that employed 100 people or less had the largest share of employment amount small businesses.
  • Employment increased by nearly 2 percent. In 2018, employment amongst small businesses increased by 1.8 percent, which is an increase of 1 percent from the prior year.
  • Increase in proprietors. In 2016, the number of small business proprietors increased by 2.3 percent.
  • In 2015, small businesses were responsible for creating 1.9 million net jobs. Organizations that employed 20 people or less had the largest gains, as they added an estimated 1.1 million net jobs.
  • There were 5.7 million loans that were value less than $100,000 issued by lenders in the United States in 2016. These loans were issued under the Community Reinvestment Act.
  • Small business owners that were self-employed at the incorporated businesses that they owned reported a median income of $50,347 in 2016.
  • Small business owners that were self-employed at the unincorporated businesses that they owned reported a median income of $23,060 in 2016.
Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage. The SBA recommends the following insurance plans for small business owners:

  • Commercial Property Insurance: In the case of an unplanned disaster - fire, flood, vandalism, theft, etc. - this type of coverage will help you avoid paying for the damage out of your own pocket. Even if you rent the property, you should still carry commercial property insurance.
  • Commercial Liability Insurance: In the event that a legal situation arises - a negligence lawsuit, for example - commercial liability coverage will provide financial protection. It will cover the cost of legal defense fees, court fees, and even moneys that may be awarded.
  • Commercial Auto Insurance: If you operate a vehicle for any activities that are related to your business - transporting and/or delivering goods, or meeting with clients - commercial auto insurance is legally required for businesses of all sizes, including small businesses.

Additional Resources For Small Business Insurance

Protect your company and employees with the right commercial insurance policies. Read informative articles on small business insurance coverages - and how they can help shield your company from legal liabilities.


Small Business Commercial Insurance

Your small business faces many potential disasters including: fire, floods, theft, equipment breakdown, lawsuits from clients or customers and current & former employees. Any many other risks you haven't even thought about.

A small business commercial insurance program should provide protection for both larger and smaller disasters. The obvious things like fire, flood and theft most business owners think about... but what if a hacker infects your computers with a virus - and files containing private customer information like credit card and Social Security numbers are stolen?

Who is going to pay to fix your customers credit rating etc...? Will your insurance pay for the cost? You need to know that.

Your commercial insurance program should cover events that can close down your company, or cause it to lose revenue. Anything less than that is not enough coverage. Commmercial insurance doesn't cover everything, and all policies have exclusions and limits.

You need a written plan that allows you to get your operations back up and running as quick as possible.


Employment Practices Liability Insurance
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