What does employment practices liability insurance cover?

Employment practices liability insurance (EPLI) protects your business if you improperly manage employee benefits, including health insurance, paid time off, and sick leave.

Example: A computer hardware repair company fails to pay unused vacation time when a technician accepts a new job, and the worker decides to sue.

EPLI provides protection if your business is sued over sexual harassment in the workplace.

Example: A manager at a real estate agency regularly makes suggestive remarks to an agent and follows up with unwanted advances. The employee complains to HR, but no action is taken. The agent files a lawsuit against the business for failing to prevent the harassment.

Adding EPLI coverage will help protect you if an employee alleges wrongful termination or demotion. It protects against accusations of negligence related to hiring and promotion, as well.

Example: A structural engineering company fires a project manager for missing a deadline caused by a colleague’s unsatisfactory work. The terminated employee files a lawsuit claiming that the firing was unfair.

While slander or libel charges coming from non-employees are covered by general liability policies, EPLI coverage offers additional protection.

Example: A manager at an accounting firm accuses a subordinate of stealing money in front of other employees. The employee denies wrongdoing and sues the business for slander.

Employment laws prevent businesses from discriminating against workers based on age, gender, religion, race, or other protected classes. Companies that violate these rules might face a lawsuit.

Example: An architecture firm terminates an older designer and replaces him with a younger employee who is paid much less. The terminated employee files a lawsuit alleging that he was discriminated against based on his age.

When your company makes a candidate a job offer or hires a contractor, it is obligated to adhere to the terms of the agreement that both parties signed. Failing to do so could result in a lawsuit.

Example: A business writes an offer letter promising a contract software developer a $35,000 project. The contractor does not receive the full payment after successfully completing the work; she sues the company.

When monitoring your business, take care not to cross the line into violating employee privacy or you risk a lawsuit.

Example: The owner of a clothing store installs video cameras around the shop to protect against shoplifters and employee theft, but also places them in restrooms that workers use. An employee sues for violation of privacy.

If an employee at your business behaves in a way that causes another worker to suffer and you take no action, you could be held liable.

Example: A supervisor routinely bullies an employee, claiming it's in jest. The employee sues the business for allowing the harassment to continue.

Workers' compensation insurance covers work-related injuries and illnesses. It can pay for medical bills and part of the wages lost while an employee recovers.

Employer's liability insurance, typically included in a workers' compensation policy, covers legal costs if an employee sues over a work injury or illness.

General liability insurance covers legal costs if someone outside your business accuses you or an employee of slander, libel, or another advertising injury.

Professional liability insurance, also called errors and omissions insurance, covers legal costs if your business is accused of professional negligence. It also covers missed deadlines and work mistakes.