Employment practices liability insurance, referred to as EPL insurance or EPLI, offers coverage to employers facing claims from employees alleging:

• Discrimination (based on racial, ethnic, age, or handicap criteria)
• Incorrect dismissal
• Mistreatment
• Other concerns about employment, such not being promoted

While large corporations are typically well-protected against employment practices lawsuits and are equipped to handle these situations, small and emerging businesses are often more vulnerable. This vulnerability is often due to the absence of an employee handbook or a legal department outlining hiring, disciplinary, and termination policies.

Together with your insurance agent, discuss potential loss exposures and ensure that you have sufficient employment practices liability insurance.

• Develop an employee handbook that details your company's workplace policies, including attendance, discipline, and complaints.
• Create clear job descriptions for each position, outlining expectations for skills and performance.
• Conduct regular performance reviews and document the results in each employee's file.
• Implement a screening and hiring program to identify unsuitable candidates before conducting in-person interviews.

EPLI policies generally cover the following:

• Defense costs, including court fees, attorney fees, and related expenses.
• Covers the payment of settlements or judgments up to the specified limits.
• Fines or penalties imposed by government agencies.

These policies protect business owners, directors, officers, and managers. Some policies also extend coverage to employees. Additionally, you can purchase third-party policies to cover claims brought by non-employees, such as clients.