What Is Employment Practices Liability Insurance (EPLI)?

Modern HR departments are uniquely positioned to drive meaningful, lasting change within their organizations. One key area of influence? Choosing whether to purchase employment practices liability insurance (EPLI). From how it works to typical exclusions, this guide explains how EPLI coverage can help protect your organization from costly legal claims.

What Is Employment Practices Liability Insurance?

According to SHRM, EPLI covers claims that “usually are not covered by general business liability insurance.” These policies typically exclude claims involving:

• Bodily injury

• Property damage

• Violations of federal labor laws, including:

  • COBRA

  • ERISA

  • WARN Act

  • NLRA

  • State unemployment insurance

  • Workers’ compensation statutes

  • OSHA regulations

Understanding these exclusions can help HR professionals choose the right mix of coverage and internal policies.

Are Employers Required to Have EPLI?

No—employment practices liability insurance is not legally required. However, many employers—especially larger corporations—purchase EPLI coverage as a protective measure in case they are sued by current or former employees.

Nationwide notes that small and new businesses are especially vulnerable to employment claims. These organizations may not have in-house legal teams or comprehensive, up-to-date employee handbooks, making them more susceptible to costly disputes.

How Much Does Employment Practices Liability Insurance Cost?

The cost of EPLI coverage depends on several factors, including:

• Organization size and number of employees
• Employee turnover rate
• Industry risk level
• Litigation history
• Whether employment policies are documented and followed
• Desired policy limits

To get a more accurate estimate, reach out to a licensed insurance broker who can provide quotes tailored to your organization’s risk profile and needs.

How Can HR Reduce the Risk of EPLI Claims?

While EPLI can provide essential protection, it’s not a substitute for solid HR policies. In fact, SHRM emphasizes that many insurers won’t offer coverage to organizations that lack basic employment procedures.

To reduce risk, HR teams should:

1. Keep the Employee Handbook Current

A comprehensive, up-to-date employee handbook should include:

• Anti-discrimination and harassment policies
• Reporting procedures
• Workplace conduct standards

(Need help? Check out BerniePortal’s guide to building a compliant handbook or Culture Guide.)

2. Update Investigation Protocols
If your incident response procedures haven’t been reviewed in years—or ever—make this a priority. Clear, fair, and consistent protocols for investigating complaints are essential.

3. Create or Refine Dispute Resolution Policies
Does your organization have formal arbitration or mediation policies? Specific guidelines for handling workplace disputes help protect your team and strengthen your EPLI defense.

Additional Resources

You can stay informed, educated, and up to date with important HR topics using BerniePortal’s comprehensive resources:

• BernieU—free online HR courses, approved for SHRM and HRCI recertification credit
• BerniePortal Blog—a one-stop shop for HR industry news
• HR Glossary—featuring the most common HR terms, acronyms, and compliance
• Resource Library—essential guides covering a comprehensive list of HR topics
• HR Party of One—our popular YouTube series and podcast, covering emerging HR trends and enduring HR topics
• Community—the HR Party of One Community forum, a place devoted to HR professionals to ask questions, learn more, and help others