Every employer, no matter how small, faces the specter of being sued by a past, present or prospective employee at some time.

In fact, such employment practices claims are widespread. Nearly three-quarters of all litigation against corporations today involves employment disputes. The cost associated with an employment practices claim can be significant.

In fiscal year 2025, the Equal Employment Opportunity Commission secure nearly $660 million million in total monetary relief for 17,680 victims of workplace discrimination. 

This included a historic $528 million recovered through pre-litigation processes (processes, such as mediation and conciliation).In addition, the EEOC recovered over $5.4 million across 26 sexual harassment suits in FY 2025.

Keep in mind, the above are just penalties and do not include defense costs, which can exceed $100,000 per claim for employers. Also, many cases never make it to the EEOC and are handled by private parties suing their employers. 

For these reasons and more, employment practices liability insurance is crucial for any employer. The risks of being sued by an employee for discrimination or harassment have increased substantially since the #MeToo era.

 

EPLI coverage

Employers need EPLI coverage because comprehensive general liability policies and workers’ comp policies exclude employment-related claims. 

Policies may cover (up to policy limits):

• Defense costs (court fees, attorney fees and related costs).
• Payment of settlements and/or judgments.
• Fines or penalties levied by government agencies.

 

EPLI policies cover business owners as well as directors, officers and managers. Some policies also cover employees. Additionally, you can buy third-party policies to cover claims brought by non-employees, such as clients. 

Types of action covered include:

• Discrimination based on gender, race, national origin, religion, disability or sexual orientation
• Sexual harassment or other unlawful harassment in the workplace
• Wrongful termination
• Failure to employ or promote
• Retaliation
• Employment-related misrepresentation
• Failure to adopt adequate workplace or employment policies and procedures
• Employment-related defamation or invasion of privacy
• Negligent evaluation of an employee
• Wrongful discipline of an employee
• Employment-related infliction of emotional distress.

 

NOTE: Wage and hour claims, or disputes regarding overtime pay for non-exempt employees, have become more expensive in recent years, so most EPLI policies exclude this coverage. Business owners may be able to find endorsements to add wage and hour coverage.

 

Costs

EPLI claims can be extremely expensive. The average cost of a discrimination claim is $125,000, and 25% of judgments exceed $500,000.

Most businesses are wise to have at least $1 million in coverage. However, higher coverage limits increase your premium cost, so you want to balance your coverage needs and your budgetary concerns.

Call us if you want further information or need help in gauging your EPLI coverage needs.

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