EPLI Insurance: Everything You Need to Know
EPLI insurance is a form of liability insurance that provides employers with coverage for wrongful acts or omissions that occur during the hiring of employees.2 min read
EPLI insurance is short for “Employment Practices Liability Insurance.” EPLI insurance is a form of liability insurance that provides employers with coverage for wrongful acts or omissions that occur during the hiring and employment of employees.
EPLI Insurance Explained
EPLI policies provide employers insurance coverage for a variety of claims based on allegations of wrongful employment related conduct, including negligent hiring and retention, defamation, invasion of privacy, and failure to promote. The majority of employment related lawsuits covered by EPLI policies involve the often-related issues of discrimination, retaliation, wrongful termination, and sexual harassment.
Under an EPLI policy, the insured company’s employees, managers, directors, and officers are covered as the insureds.
Unlike general liability policies, EPLI policies contain “shrinking limits,” where the policy limits are reduced by the amount the insurer pays out for legal defense costs to defend the employer against a particular claim. Legal defense costs are usually a large part of a claim, so this is important to keep in mind when choosing what dollar amount of coverage you want.
Policies often exclude certain types of claims like property damage, personal injury, and wrongful workplace acts that were performed intentionally.
Types of EPLI Coverage & Costs
Costs for federal employment laws and regulations that govern the employment relationship, the following are some of the most common legal basis for employment lawsuits:
- Title VII of the Civil Rights Act of 1964 (“Title VII”) prohibits discrimination based on a current or prospective employee’s sex, national origin, religion, race, or color. Harassment based on one of these bases is considered a form of discrimination. Discriminating against a pregnant woman is considered a form of sex-based
- The Equal Pay Act of 1963 makes it unlawful for employers to pay different wages to women and men who perform substantially the same work in substantially the same environment.
- The Civil Rights Act of 1966 like Title VII prohibits discrimination based on race or national origin.
- The Immigration Reform and Control Act of 1986 provides another prohibition against national origin discrimination. It prohibits employers from discriminating against current or prospective employees based on the employee's citizen status or national origin. The Act does not require employers to hire illegal non-citizens (that would be illegal).
- The Americans with Disabilities Act of 1990 (“ADA”) prohibits discrimination against persons with disabilities. Employers are not required to hire disabled employees for jobs that would be impossible for them to do. However, the ADA requires that reasonable accommodations be made that would allow a person with a disability to hold a given job.
- The Bankruptcy Code and the Equal Employment Opportunity Act of 1972 prohibit discrimination based on certain financial situations. Specifically, employers cannot discriminate against someone because they have declared bankruptcy or against minorities based on bad credit ratings.
- The Age Discrimination in Employment Act (“ADEA”) prohibits discrimination against persons because they are over 40 years old.
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