What is Employment Practices Liability Insurance (EPLI)?

The United States has passed a number of sweeping regulations regarding fair employment practices, and that’s where employment practices liability insurance (EPLI) comes in. This insurance is an absolutely essential part of any growing organization where hiring takes on a life of its own throughout the human resources and recruiting departments. Because this insurance deals with incidents of employment law violations, it can be used to recoup the costs of expensive lawsuits and accidental oversights when interviewing, hiring, or terminating employees for any reason. This is an especially attractive option for smaller businesses, which may simply lack the financial position needed to defend themselves against one of these lawsuits as they grow and operate within a very tight budget.

Protection from Litigation and Oversights: What’s Protected

Employment practices liability insurance isn’t the best known type of business insurance, but it’s certainly one of the most essential in a world where regulations cover everything from wrongful termination to proper hiring procedures for Americans with disabilities. The insurance covers a few specific types of hiring violations, compensating companies that are charged with violating these laws so that they can adequately defend themselves in court.

1. Wrongful Termination

It’s important to remember that at-will employment laws do have all kinds of limitations. An employer that doesn’t pay careful attention to these limitations could find themselves facing a wrongful termination lawsuit, perhaps for violating state protections like the public policy exemptions and many others.

[What Does At-Will Employment Mean?]

If a worker feels that he or she was let go due to suspect reasons, and wishes to sue their employer, the costs could be astronomical. While larger companies could easily absorb these costs, even if they’re not very excited to do so, smaller companies could be placed into a dire position quite quickly. The good news is that EPLI will reimburse covered businesses for a significant percentage of their legal costs, based on the terms of the policy agreed to at the time of initiation.

2. Workplace Retaliation

Retaliating against employees for any reason is considered unethical, and in many states it is also considered illegal. Employees who feel that they have suffered from retaliation for trying to organize with a union, reporting a manager for misconduct, or executing the duties of their job in any way, could sue their employer for damages. If the retaliation led to their firing, the case could be combined with a wrongful termination lawsuit. EPLI will help cover the costs of any legal proceedings or minor disputes that arise when an employee feels that they suffered unjust disciplinary action for any reason.

3. Sexual Harassment Suits

Another problem covered by EPLI is the filing of sexual harassment lawsuits by employees against a specific individual or the organization as a whole. Once again, depending on the agreed terms of the insurance policy, the company can have most of its costs covered as it defends itself from a lawsuit and investigates the allegations lodged against the company by a disgruntled employee.

Just One Component of a Good Liability Policy

EPLI is a great way to protect a company’s budget in the event that an employee files a lawsuit against it, but this is not the only liability policy worth having. A successful company will, first and foremost, avoid engaging in these behaviors, but will also pair employment practices liability insurance (EPLI) with other policies that cover various forms of workplace, employment, and products liability to protect the organization’s long-term viability.