Employment Practices
Liability Insurance

Hiring is one of the most complex tasks a founder can take on, thanks largely to the many laws regulating what they can – and can’t – do.

To start, the Department of Labor cites 180 employment-related laws, which account for thousands of pages of text. Then you have state-level laws and, depending where you live, city and county regulations as well.

Here’s the thing: not knowing all the laws you’re responsible for following isn’t an excuse if you accidentally violate one. And if you do, the affected employee might decide to bring a lawsuit.

If that happens, Employment Practices Liability (EPL) insurance may cover the costs.

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General Liability

Whether you’re working on your first startup or your fifth, General Liability insurance is likely the first policy you’ve seriously considered buying. That’s because General Liability is often required by landlords, partners, and clients, all of whom you’ll likely encounter early in your startup experience.

This coverage can offer important baseline protection, protecting your business assets when visitors get injured on your property or by your product, when a third party accuses you of libel or slander, or when a lawsuit results from these types of third-party damages.

General Liability

What

What is Employment Practices Liability insurance and what does it typically cover?
COVERAGE DESCRIPTION

Employment Practices Liability insurance is a type of coverage designed to protect employers from employee lawsuits alleging workplace-related wrongdoing.

Common claims in EPL lawsuits include allegations of…

  • Improper hiring practices

  • Improper firing practices

  • Retaliation

  • Discrimination (based on age, race, sex, etc.)

Not all employee lawsuits alleging these behaviors have merit. EPL insurance can cover your legal costs even in the event of frivolous claims against you.

Ready for some peace of mind? 
Apply for Vouch EPL coverage today

Who

Which startups need Employment Practices Liability insurance?
Any company with employees has at least some EPL exposures. Nationwide, companies face about a 10.5 percent chance of being hit with an employee lawsuit.

But your actual risk level varies depending on where you’re based.

Startups in California, for example, are 40 percent more likely than those in other states to be sued by employees. That’s true in part because California’s laws and courts tend to be more employee-friendly.

No matter where you operate, though, it’s important to understand that bad things can happen to good startups. And the EEOC notes that about 41 percent of EPL-related lawsuits are brought against businesses with fewer than 100 employees.


Because of that, it makes sense for startups to include an Employment Practices Liability policy as part of their larger risk management and company building strategy.

Convinced you need EPL coverage now?

Apply for coverage today, and have a policy within 24 hours.



When

When should startups get Employment Practices Liability insurance?
EPL COVERAGE

We typically recommend that California-based startups get EPL insurance before they even hire their first employee. For startups in other states, it’s usually wise to get coverage around the five-employee mark.

But as we mentioned, risk can vary a lot by industry, business, and location. In Washington, D.C., for example, businesses have an 81 percent higher risk of facing an employee lawsuit than the national average.




So if you're not sure about when to get Employment Practices Liability coverage, ask us! We’re always happy to discuss a startup’s risk exposures and which insurance policies can best mitigate those exposures.

We’re available via email (hello@vouch.us) and chat (see the lower right-hand corner of your screen).

Why

Why get Employment Practices Liability insurance?
This coverage helps startups for two main reasons.
REASON 1
Hiring & Firing

‍Most startup founders launch a business in an industry where they have expertise. But they often don’t have experience in recruiting, hiring, managing, or firing employees. This can cause a lot of anxiety, because all of those employment-related tasks are difficult to get right.

HR is its own discipline for a reason: there are lots of laws and regulations governing how employers can behave toward their employees – and even toward people they never hire.


REASON 2
Peace of mind

The second big benefit EPL offers startups is peace of mind.

We mentioned before that not all lawsuits have merit. But even frivolous lawsuits cost money and require you to spend time on something other than running your business.

That’s because, no matter what you’ve been accused of, you have to take the time to respond to the charges against you in court. If you don’t, the court could enter a default judgment – in other words, force you to pay whatever amount the plaintiff brought suit for.

What scenarios

What does Employment Practices Liability insurance cover?
COMMONLY DOES COVER

From hiring to firing, EPL insurance can protect a business in the event of alleged discrimination, sexual harassment, or wrongful termination of employees. 

Coverage typically includes:

  • Payment of legal fees associated with defending your startup.

  • Judgments or settlements, if your startup is found liable.

Claims that an EPL policy might cover include:

  • Sexual harassment in the workplace.

  • Wrongful termination or discipline.

  • Failure to employ or promote.

COMMONLY DOESN'T COVER

It’s important to note that EPL insurance doesn’t cover all employee lawsuits – just those alleging wrongful acts related to your work as an employer.

Employment Practices Liability insurance does NOT cover the following:

  • Workplace injuries, which are usually covered by Workers’ Compensation.

  • Employee lawsuits alleging you mismanaged employee benefits, which may be covered by Employee Benefits Liability.

  • Employee lawsuits alleging you mishandled your role as fiduciary (not employer), which may be covered by Fiduciary insurance.

Ready for some peace of mind? Get your policy by tomorrow.

Why Vouch?

Why get Employment Practices Liability from Vouch Insurance?
VOUCH INSURANCE

When we started Vouch, we committed to making insurance startup-friendly. That means no PDFs, no waiting weeks for coverage to take effect, and no faxing documents back and forth.

Once you have a policy, you can expect helpful customer service and fast resolution of claims. But really, we’d rather show you than tell you.

Take a look at our 10-minute application and see for yourself how Vouch is different.

Questions?
Need something other than Employment Practices Liability?

Chances are, if you need Employment Practices Liability insurance, you need a few other policies, too. If you’re curious about other policies we offer, take a few minutes to learn about…

Our other policies
General Liability

Baseline coverage that's often required by landlords, partners, and clients.

Business Property

Can cover the cost of repairing or replacing business property like laptops.

Cyber Coverage

For hacking- and data breach-related losses.

Directors & Officers (D&O)

Protects C-suite officers and board members if they’re sued over decisions they made on the startup’s behalf.

Errors & Omissions (E&O)

for lawsuits alleging your professional work caused a financial loss.

Crime Coverage

In the event that an employee commits theft, embezzlement, or related crimes.

Fiduciary Coverage

For lawsuits alleging a breach of your fiduciary duty.

Hired & Non-Owned Auto

For when an employee drives their own car for something work-related, and an accident happens.

Questions about our coverages?

Reach out to pros@vouch.us to connect with a licensed insurance pro, call us at (415) 488-6728 during regular business hours, or chat with us in the lower right hand corner of your screen.

© 2020 Vouch, Inc. All Rights Reserved.
Insurance services provided by Vouch Insurance Services, LLC.  Descriptions are general in nature only. Please refer to the terms and conditions of any policies offered or purchased. Insurance products offered are subject to application and underwriting requirements. Not all products available in all states.  Pricing depends on a variety of factors including policyholder location.  Not all discounts available in all states.