Q: What is employment practices liability insurance, and do I need it?

-Befuddled Boss

Employment practices liability insurance (EPL) protects your business from lawsuits that originate over employment disputes, including suits brought by current employees, former employees, and even potential hires.

EPL is one of several different types of businesses liability insurance, such as general liability, product liability, and professional liability. Given that almost 75% of all litigation against corporations involves employment disputes, it’s one form of coverage you should definitely not overlook. 

EPL covers just about all employment-related lawsuits, but the most common claims include those alleging:

• Discrimination based on race, sex, religion, national orgin, age, disability, or pregnancy
• Wrongful termination
• Invasion of privacy
• Retaliation
• Sexual harassment
• Breach of employment contract
• Wage law violations

If you’re sued for an employment-related claim, your EPL policy will hire you a lawyer and pay out (up to your coverage limits) to cover any resulting damages as well as cover attorney’s fees and court costs. EPL is vital because you’re at greatest risk of lawsuit from an employee matter. And even if you’ve done everything by the book, the cost of fighting such a lawsuit could force you to settle, especially if you don’t have insurance to cover your defense.

Contact a Family Business Lawyer™ to determine what levels of EPL coverage your company should have in place.