Bruce Sackrison's Insurance Matters: Employment Practices Liability Insurance: overlooked by many employers
Insurance Matters

Bruce Sackrison's Insurance Matters: Employment Practices Liability Insurance: overlooked by many employers

Bruce Sackrison

Bruce Sackrison is a Napa Valley Register columnist who will write about property and casualty insurance matters.

Your employee walked out. They quit.

Then you get a letter from their lawyer. What now?

If you had EPLI (Employment Practices Liability Insurance) you might be OK. Let’s find out why.

What is EPLI?

Employment Practices Liability Insurance sounds complicated. The name has lots of words and syllables. So, it must be complicated, right?


EPLI is simple.

Employment Practices Liability Insurance covers your legal expenses when an employee sues you for work-related actions.

If you win, your lawyer gets paid by the insurance company (minus your deductible).

If you settle or lose, your lawyer still gets paid by the insurance company, and damages are also paid by your policy.

EPLI makes sure employee lawsuits don’t bankrupt you.

How important is EPLI?

According to a well-known study by Hiscox in 2017, if you have 10 or more employees, your chances of having an employment-based lawsuit is 10%.

What happens if you are in the unlucky 10 percent?

You will have a 24 percent chance of having to settle or go to court. The average national payout is $160,000. And that’s just the average. Many claims are much higher.

If that doesn’t chill you, I’ll add one more number.

California employers have a 46 percent higher chance of being sued by an employee. So, take the previous numbers and do the painful math.

Every employer needs Employment Practices Liability Insurance.

EPLI: What’s not covered?

It’s important to know what’s NOT covered by Employment Practices Liability Insurance.

First, wage and hour claims are not covered. And that’s a big one, so it’s good to know in advance that if your employees file a class action suit against you, claiming you didn’t abide by the law in your wage and hours practices, you are on your own.

Second, intentional acts are not covered. This means that if there is clear evidence that you intentionally set out to discriminate against an employee, you may not be covered. My advice to prevent against this: always do the right thing with your employees, to the best of your ability.

EPLI: What’s covered?

The good news is that so much is covered by EPLI. Here is just a short list:

  • Harassment
  • Discrimination
  • Wrongful termination
  • Failure to employ or promote
  • Wrongful infliction of emotional distress

I listed harassment first on purpose. Almost half of employment-related charges are made because of harassment. Let’s take a look at how that could happen.

Rude Rudy and the frivolous claim

Rudy was an unpleasant surprise. His resume never mentioned that he was a serial harasser.

As careful as his employer was during the interview, he missed the “this guy is a jerk” signals.

After several moves from cubicle pod to cubicle pod to find someone who Rudy wouldn’t harass, his last stop was Janet’s pod.

Janet filed a formal grievance after being harassed. Others had filed complaints as well. This was the last straw. Rude Rudy was fired.

Six months later, Janet applied for a promotion. She didn’t get it. She stewed and wondered why, and then decided it was because she had filed a complaint against Rudy months ago.

Janet sued for harassment, emotional distress, and retaliation against her for complaining.

It didn’t matter that others had also filed complaints against Rudy. It didn’t matter that Rudy’s employer had fired Rudy for his behavior.

Janet had what some might call a frivolous lawsuit. But it wasn’t frivolous to her. The suit needed defending. It might need to be settled. There was a risk that this could get expensive.

My advice:

Never say never. This scenario could happen to you too.

Check your Employment Practices Liability Insurance with your agent today. Make sure you have high enough levels of coverage.

As always, if you don’t have a local trusted agent, please contact me with any questions.

Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates. He is at 707-931-0186 or


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