What is Employment Practices Liability Insurance?

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.
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Startups in California, for example, are more likely than those in other states to be sued by employees

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