Protect your U.S. business with EPLI. Learn why rising employee lawsuits make Employment Practices Liability Insurance essential today.

For U.S. companies currently, Employment Practices Liability Insurance—or EPLI—is absolutely vital. The workplace is more open, more under supervision, and more regulated. Employees understand their rights. Law firms target employers. Regulators expand obligations.

The number of lawsuits filed by employees has risen. Big corporations face more public cases, but smaller firms are also at risk.

According to a Hiscox study, the average U.S. company faces a 10.5% chance of an employment claim. In California and New Mexico, the probability is more than 50%.

Lawsuits are not rare events. They are business risks you must prepare for. EPLI pays for legal defense, settlements, and judgments. Without coverage, these costs come out of your business.

The Drivers Behind Rising EPL Risk

1. Media Attention: Cases of workplace harassment and discrimination are highly publicized. Every headline raises awareness and prompts more claims.
2. Gender Pay Disparity: Pay transparency and gender pay disparity laws are stricter. Employees who see unequal pay have clearer legal routes to sue. Class actions are possible in some states.
3. Specialized Law Firms: Employment-focused law firms continue to grow. They advertise heavily and pursue cases that once went unfiled. This drives more litigation.
4. Arbitration Agreements Under Pressure: Courts have weakened arbitration agreements. More disputes now reach court, raising costs and exposure for employers.
5. Changes in Laws: Several laws expanded employee rights and employer obligations.
   1. The 1991 Civil Rights Act increased damages for discrimination claims.
   2. The Americans with Disabilities Act required accommodations for disabled employees.
   3. The Age Discrimination in Employment Act protected older workers.
   4. The Older Workers Benefit Protection Act limited how benefits can be structured.
6. Mergers and Acquisitions: M&A leads to layoffs, restructuring, and changes in policy. These incidents frequently inspire allegations of unlawful dismissal or prejudice.

What EPLI Covers

EPLI protects your company from a wide range of employee claims. Coverage usually includes:

• Sexual harassment
• Discrimination based on race, gender, age, disability, or religion
• Wrongful termination
• Breach of employment contract
• Negligent evaluation
• Failure to hire or promote
• Wrongful discipline
• Denial of career opportunities
• Wrongful infliction of emotional distress
• Mismanagement of employee benefit plans

Coverage applies to current employees, former employees, job applicants, and sometimes contractors. Without EPLI, every one of these claims exposes your assets.

Why Smaller Businesses Face Higher Stakes

Large corporations plan for lawsuits. They have legal teams and resources.

Smaller businesses run a greater risk. Almost 20% of EPLI cases filed against businesses with under 500 workers involve defense and settlement expenses above $125,000. This cost is not sustainable for a local company.

Insurers now offer EPLI to smaller firms. Some include it as an endorsement to a Business Owner’s Policy (BOP). Others offer stand-alone coverage with limits suited to business size.

The Real Cost of Going Without EPLI

Many employers believe good HR practices are enough. While policies reduce risk, they do not stop claims. You must still respond when an employee files a lawsuit.

The first cost is legal defense. Attorney fees, court filings, and expert witnesses often reach six figures. These costs apply whether you win or lose.

The second cost is settlement or judgment. Even small cases sometimes lead to payouts of hundreds of thousands of dollars. Without EPLI, those funds come directly from your business.

There are other risks:

• Reputation damage if lawsuits become public. Negative publicity discourages clients and potential hires.
• Management distraction as owners and leaders spend time in depositions and hearings instead of running the business.
• Cash flow strain when large, unexpected legal bills hit at once.
• Difficulty accessing credit if lenders see ongoing litigation with no insurance protection.

One lawsuit alone is sufficient to disrupt your company without EPLI. Even if the assertion is untrue, the interruption and costs continue. Insurance converts those erratic hazards into a reasonable cost.

Practical Steps to Reduce Risk

Prevention remains important. Strong workplace policies help you lower exposure and improve your defense.

Best practices include:

• Write and share clear anti-discrimination and anti-harassment policies
• Train managers and staff regularly on conduct standards
• Document all performance reviews and disciplinary actions
• Apply hiring and promotion standards consistently
• Audit pay practices for compliance with equal pay laws
• Provide channels for employees to raise issues internally

These actions make claims less likely. They also strengthen your legal position if a case goes to court.

Why You Need Both Policies and Insurance

Prevention and insurance must work together. Policies reduce the likelihood of claims. EPLI covers the cost when claims occur.

Relying on one without the other leaves you exposed. Prevention shows good faith but does not shield you from lawsuits. EPLI is the safety net that keeps legal costs from draining your business.

Gonzalez Insurance Can Help

Gonzalez Insurance provides EPLI coverage designed for businesses across the United States. We know how disruptive employment lawsuits are. Our role is to protect your company from their financial impact.

We recommend a two-part strategy:

1. Build and enforce strong internal workplace policies.
2. Secure EPLI coverage to pay defense costs and settlements.

Even if a lawsuit fails, you are still responsible for attorney fees. EPLI ensures those expenses are covered.

We also guide clients on preventive measures. From policy development to employee training, we help reduce exposure while ensuring insurance protection.

Contact us today. Learn how EPLI safeguards your business and prepares you for the legal risks of the modern workplace.

FAQs

1. What’s EPLI and why do businesses need it?

EPLI, or Employment Practices Liability Insurance, is a must-have insurance for U.S. businesses. It helps cover legal costs from employee lawsuits, which are becoming more common.

2. Are small businesses really at risk without EPLI?

Yes, they’re often at a bigger risk. One lawsuit can easily cost over $125,000, which can be devastating for a small business.

3. How can I get help with EPLI?

You can contact Gonzalez Insurance for help getting the right EPLI coverage to protect your business.