From hiring to firing, managing people brings risk. Employment Practices Liability Insurance (EPLI) helps protect your business if a current, former, or prospective employee claims they were treated unfairly. With employee-related lawsuits on the rise, EPLI has become a foundational coverage for companies of every size.

What Is Employment Practices Liability Insurance?

EPLI covers your company for claims alleging wrongful acts in the workplace. Claims of discrimination, harassment, retaliation, and wrongful termination can result in costly defense fees, settlements, and judgments, even when allegations lack merit.

At its core, EPLI is designed to protect the company from employment-related lawsuits. It pays for legal defense costs and, if applicable, settlements or court judgments. Without EPLI, your business would have to absorb those costs out of pocket.

Who Needs Employment Practices Liability Insurance?

Every employer faces employment risk. Even with a strong company culture and sound HR practices, misunderstandings and disputes happen.

EPLI is especially critical for:

• High-growth companies hiring quickly or expanding into new jurisdictions.
• Organizations with remote or hybrid workforces, where communication gaps can increase risk.
• Businesses with complex reporting structures or limited HR oversight.
• Companies in regulated industries, such as fintech, healthcare, or professional services.

EPLI is important because employee litigation risk isn’t slowing down: the Equal Employment Opportunity Commission (EEOC) recorded more than 88,000 new discrimination charges in 2024, a 9% increase year over year.

What Does Employment Practices Liability Insurance Cover?

EPLI coverage typically includes:

• Wrongful termination: When an employee claims they were fired without just cause or in violation of employment law.
• Discrimination: Based on factors like race, gender, age, disability, or religion.
• Sexual harassment: Including claims of a hostile work environment or inappropriate conduct.
• Retaliation: For example, when an employee alleges they were demoted or fired after reporting misconduct.
• Failure to hire or promote: Claims of unfair hiring or advancement decisions.
• Breach of employment contract: Disputes over the terms or enforcement of an employment agreement.

Learn more about what EPLI covers.

What Isn’t Covered by EPLI?

While EPLI is broad, it doesn’t cover every type of workplace-related loss. Common exclusions include:

• Wage and hour disputes, such as unpaid overtime or misclassification claims.
• Bodily injury or property damage (those are covered under General Liability).
• Workers’ compensation claims, which require a separate Workers’ Compensation policy.
• Criminal or intentional acts, like fraud or assault.
• Benefits administration errors, which are typically covered by Employee Benefits Liability or Fiduciary Liability insurance.

For many businesses, EPLI works best as part of a broader insurance strategy that also includes General Liability, Cyber, and D&O coverage.

Learn more about different types of business insurance.

How Much Does Employment Practices Liability Insurance Cost?

EPLI pricing depends on several factors. Insurers look at your company’s size, industry, claims history, and HR practices. The more employees you have, or the more turnover and regulatory exposure you face , the higher the potential risk.

Other key cost drivers include:

• Workforce size and growth rate: Rapid hiring increases exposure to claims.
• Employee demographics: A diverse workforce across multiple jurisdictions can add complexity.
• Prior claims: Past allegations or settlements raise premiums.
• Industry risk: Sectors like healthcare, technology, and finance face heightened scrutiny.
• Employment policies: Companies with robust handbooks, training, and documentation may see lower rates.

Learn more about how much EPLI costs.

How Much Employment Practices Liability Insurance Coverage Do You Need?

The right coverage limit depends on your company’s size, number of employees, and risk tolerance. A smaller professional services firm may need less protection than a national company with hundreds of employees.

When evaluating how much EPLI coverage to purchase, consider:

• Your average payroll and annual revenue
• The number of employees and contractors
• The complexity of your HR structure
• Contractual insurance requirements from investors or partners
• Whether you’ve experienced prior claims or investigations

Learn more about how much EPLI coverage is right for your business.

Employment Practices Liability Insurance Claims Examples

Real-world claims show how quickly legal costs can add up, even in seemingly straightforward cases:

Wrongful Termination and Retaliation

A former employee alleges they were fired after reporting a safety concern. The lawsuit claims retaliation and emotional distress. EPLI helps pay for defense costs and a negotiated settlement.

Discrimination in Hiring

A job applicant claims they were passed over due to age discrimination. Even though the company followed standard hiring procedures, legal defense costs exceed $50,000 before the case is dismissed.

Sexual Harassment Allegation

An employee accuses a manager of creating a hostile work environment. The claim triggers an internal investigation, followed by a lawsuit. EPLI covers attorney fees, mediation, and settlement expenses.

Each of these examples highlights how EPLI may protect your business from financial and reputational damage while allowing you to focus on running your company.

Employment Practices Liability Insurance helps businesses navigate one of the most unpredictable risks they face: people. Whether you’re hiring your first employees or scaling across states, EPLI can safeguard your company’s finances and leadership from the high cost of workplace claims.

Frequently Asked Questions

Is EPLI required by law?

No. It’s not mandatory, but it’s increasingly expected by investors, clients, and partners.

Does EPLI cover independent contractors?

Some policies extend coverage, but others exclude contractors. Review your policy’s definitions carefully.

Can EPLI help with internal investigations?

If a claim is filed or a government agency like the EEOC initiates an investigation, defense costs may be covered.

Is EPLI included in a Business Owners Policy (BOP)?

No, EPLI is typically not included in a Business Owners Policy.

What’s the difference between EPLI and Employee Benefits Liability?

EPLI covers workplace conduct and employment-related claims. Employee Benefits Liability covers errors in administering benefit plans like health or retirement.

Vouch Specialty Insurance Services, LLC (CA License #6004944) is a licensed insurance producer in states where it conducts business. A complete list of state licenses is available at vouch.us/legal/licenses. Insurance products are underwritten by various insurance carriers, not by Vouch. This material is for informational purposes only and does not create a binding contract or alter policy terms. Coverage availability, terms, and conditions vary by state and are subject to underwriting review and approval.