EPLI Coverage: What Is Covered and Why Do Businesses Need It? 

Running a business in California comes with incredible opportunities and unique challenges. One significant risk employers face today is workplace-related lawsuits. From wrongful termination claims to allegations of harassment or discrimination, even the most diligent business owners can find themselves defending themselves against costly employee claims.

Employment practices liability insurance (EPLI) is a vital component of any well-designed business insurance plan. This coverage can help cover claims made by employees, former employees or job applicants. These claims often allege that an employer’s actions violated their legal rights in the workplace. Without EPLI, defending against such lawsuits can be financially devastating, especially for small and mid-sized businesses.

What Does EPLI Cover?

EPLI policies typically cover a wide range of employment-related risks, including:

• Wrongful termination: Claims that an employee was fired without proper cause or in violation of employment laws.
• Discrimination: Allegations based on race, gender, age, disability, religion, or other protected categories.
• Harassment: Claims of sexual harassment or hostile work environment.
• Retaliation: When employees allege they were punished for reporting misconduct or exercising their rights.
• Failure to promote or hire: Claims from job applicants or employees who believe they were unfairly denied opportunities.

Coverage typically includes legal defense costs, settlements, and judgments, subject to policy terms, conditions and limits, which are expenses that can impact a company’s financial stability, even if it ultimately prevails in court.

How EPLI Premiums Are Determined

Premiums for Employment Practices Liability Insurance (EPLI) depend on the following:

• Business size and number of employees
• Industry risk level
• Claims history
• Coverage limits & deductibles

Working with an experienced insurance provider helps you find the right balance between cost and protection. Our agents can help you compare personalized EPLI quotes.

Why California Businesses Need EPLI

California is known for having some of the most employee-friendly labor laws in the country. This means businesses may face a higher likelihood of workplace lawsuits compared to other states.

California’s wage and hour laws, anti-discrimination statutes and workplace protections create complex compliance requirements. Even unfounded claims can result in thousands of dollars in legal fees. EPLI helps ensure businesses don’t have to shoulder these expenses alone. However, it’s important to note that some wage-and-hour exposures may be limited or excluded under standard EPLI policies unless specifically endorsed.

For small and mid-sized businesses, a single lawsuit can pose a significant threat to financial stability. EPLI allows company owners and HR professionals to focus on growth rather than worrying about unexpected legal battles.

Protect Your Business Today

EPLI coverage can help safeguard your company’s future. Whether you have five employees or fifty, EPLI ensures you’re prepared for the realities of running a business in California.

If you’re ready to explore EPLI coverage for your business, the team at Muzio & Rovero Insurance Services can help. Contact us to discuss your options with an experienced advisor.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.