We’ve been including plenty of information in recent newsletters on employees filing their employers for various alleged infractions. While strong internal policies are the key to avoiding such actions, even firms with the most airtight policies can still be sued or be the target of a complaint with the Equal Employment Opportunity Commission.

If you have employees, your firm is at risk and the costs of defending against a complaint or an EEOC charge can be enough to bury some companies. That’s why you need employment practices liability insurance (EPLI). But what exactly is it, what does it cover and how much does it cost?

This article attempts to answer those questions for you.

EPLI is written to:

•          Protect a company against damages for events relating to its workforce, including but not limited to: wrongful terminations, harassment, discrimination, defamation and unfair hiring/firing practices; and

•          Provide defense costs associated with responding to employment-related lawsuits.


What are the sources of EPL claims?

•          Race and sex discrimination

•          Employees, former employees and employment applicants for:

–           Wrongful termination

–           Invasion of privacy

–           Emotional distress

–           Breach of contract

–           Discharge in violation of public policy

–           Assault and battery

–           Harassment/discrimination

–           Defamation

•          Regulatory violations and government investigations:

–           EEOC

–           Department of Labor

–           Age Discrimination in Employment Act

–           Fair Labor Standards Act

–           Equal Pay Act

–           Title VII

–           Americans with Disabilities Act


•          Federal, state, city and county statutes

•          Customers, clients and consumer groups


Some examples of actions that could lead to EPL claims:


Wrongful termination

An insured gets involved in a bitter dispute with an independent contractor. After the dispute, the brother of the independent contractor who is an employee of the insured is suddenly fired. The employee alleges that the only reason for the termination of his employment was in retaliation for the business dispute the company had with his brother.

Settlement and defense costs exceeded $200,000



The plaintiff alleges that she had her employment terminated because she testified on behalf of another worker, who had brought a separate action against the company. She alleges that this is a violation of her employment contract, which provides that she can only be terminated for good cause. The plaintiff asserts causes of action for wrongful termination, breach of contract and retaliation.

Total defense and settlement costs exceeded $120,000


Wrongful termination    

An executive of a manufacturing company files suit against the company for wrongful termination and intentional infliction of emotional distress. The plaintiff, a former chief operating officer, makes statements that the company improperly failed to pay an employee overtime and terminated the employee for filing a complaint.

He alleges that although the company advised him that his termination was due to performance problems, he was actually terminated in retaliation for the honest statements he made in connection with a fellow employee’s termination.

Total defense and settlement costs exceeded $750,000


Discrimination based on disability   

The plaintiff in this case was terminated while out on medical leave due to an injury that occurred at work. He asserts that he was the victim of numerous discriminatory and harassing actions and remarks regarding his disability. The plaintiff alleges he was advised that if he filed a workers’ compensation claim, he would be terminated.

He was in fact terminated without disability benefits after he filed a workers’ comp claim. The complaint comprised three causes of action: discrimination based on physical disability; tortuous termination; and specific violation of state laws.

The defense and settlement costs exceeded $75,000