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Employment Practices Liability Insurance

Protecting Your Business from Employment Lawsuits: A Guide to Employment Practices Liability Insurance (EPLI) for Ohio, Indiana, Michigan, Kentucky, & Pennsylvania Businesses 

March 28, 2024

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Running a small or mid-sized business (SMB) in today’s competitive landscape requires wearing many hats. You juggle finances, marketing, operations, and most importantly, your employees. But what happens if a disgruntled employee claims they’ve been wronged? Employment lawsuits can be costly, both financially and reputationally. This is where Employment Practices Liability Insurance (EPLI) steps in. 

What is EPLI? 

EPLI is a type of insurance specifically designed to protect businesses from lawsuits brought by current, former, or even potential employees. These lawsuits can allege a variety of employment-related issues, including: 

  • Discrimination: Based on race, religion, gender, age, disability, or other protected characteristics. 
  • Wrongful termination: Firing an employee for an unlawful reason. 
  • Harassment: Sexual harassment, hostile work environment, or bullying. 
  • Retaliation: Taking action against an employee who reports discrimination or harassment. 
  • Wage and hour violations: Failing to pay employees properly for their time. 
  • Negligent hiring/retention: Hiring or keeping on an employee who causes harm to others. 

Why do Ohio, Indiana, Michigan, Kentucky, & Pennsylvania Businesses Need EPLI? 

Even small businesses are not immune to employment lawsuits. In fact, studies show that a significant portion of employment lawsuits target SMBs. Here’s why EPLI is crucial for businesses in Ohio, Indiana, Michigan, Kentucky, and Pennsylvania: 

  • Rising Legal Costs: Legal fees associated with defending an employment lawsuit can quickly drain your resources, even if you ultimately prevail. EPLI covers these costs, allowing you to focus on running your business. 
  • Prevalence of Claims: Employment laws are complex, and inadvertent mistakes can lead to lawsuits. EPLI provides peace of mind knowing you have coverage if an employee alleges wrongdoing. 
  • Severity of Awards: Juries can award significant damages in employment lawsuits, potentially crippling your business. EPLI can help cover these awards and settlements. 
  • Reputational Damage: Even unfounded lawsuits can damage your company’s reputation. EPLI can help protect your brand by covering costs associated with crisis management. 

EPLI Considerations for Ohio, Indiana, Michigan, Kentucky, & Pennsylvania Businesses 

While EPLI is a valuable tool, it’s important to understand its limitations: 

  • Policy Exclusions: Carefully review your policy to understand what’s not covered, such as punitive damages or intentional misconduct by the employer. 
  • Wage and hour exclusion: Standard policies exclude wage and hour coverage. Most EPLI we see is thrown onto a commercial package plan. While that solves a lot of problems, there may be a need for this coverage, and a standalone comprehensive EPLI plan may be needed.  
  • 3rd Party Claims Exclusion: Let’s say one of your employees says something to a customer or bystander and they end up suing the business for whatever was said.  For an EPLI policy to respond, the policy must cover 1st and 3rd party instances.  
  • State-Specific Laws: Employment laws vary by state. Ensure your Employment Practices Liability Insurance policy adequately covers the specific laws applicable to your business location(s) in Ohio, Indiana, Michigan, Kentucky, or Pennsylvania. 

Cost of EPLI Insurance Coverage: 

The insurance cost of EPLI is fairly simple. There is typically a flat fee per employee. The cost per employee ranges based on the coverage limit, the business type, and the business owner loss control attributes. The range you can expect to pay is anywhere between $35 to $75 per employee per year.  Of course, this is just a broad explanation, and it depends on what coverages you select.  

Get a Quote for EPLI Today 

At Hitchings Insurance, we understand the unique challenges faced by SMBs in Ohio, Indiana, Michigan, Kentucky, and Pennsylvania. We can help you find the right EPLI policy to protect your business from costly employment lawsuits. Contact us today for a free quote and discuss your specific needs. 

Additional Tips for Ohio, Indiana, Michigan, Kentucky, & Pennsylvania Businesses 

Here are some additional tips to minimize your risk of employment lawsuits: 

  • Develop clear and comprehensive employee handbooks. 
  • Provide regular anti-discrimination and anti-harassment training to employees and managers. 
  • Maintain clear and consistent disciplinary procedures. 
  • Document all personnel matters thoroughly. 
  • Seek legal counsel if you have any questions about employment law compliance. 

By taking proactive steps and securing EPLI coverage, you can safeguard your business from the financial and reputational risks associated with employment lawsuits.

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