Employment Practices Liability Insurance (EPLI)
for IT Businesses, Consultants & Subcontractors

Employment Practices Liability Insurance (EPLI) can help information technology businesses manage lawsuits that their employees initiate against the business. Specifically, EPL Insurance covers the costs of lawsuits alleging discrimination against employees or violations of their civil rights.

An Employment Practices Liability policy often covers the types of discrimination regulated by the federal Equal Employment Opportunities Commission (EEOC), such as…

  • Sexual harassment.
  • Wrongful termination.
  • Wrongful demotion or discipline.
  • Mismanagement of employee benefits.
  • Breach of an employment contract.
  • Slander or libel.
  • Invasion of privacy.
  • Emotional or mental distress.
  • Negligent hiring, promotion, or compensation practices.
  • Discrimination based on gender, race, religion, age, ability status, or other protected classes.
How EPLI Can Protect Your Technology Business

How EPLI Can Protect Your Technology Business

Imagine your business has grown in the last few years and, to meet increasing demand, you hired two programmers, an administrative assistant, and a QA expert. Business is booming, but your administrative assistant can't seem to keep up with the increased demand. You speak to him about his responsibilities and the expectations of the job, but things don't improve. You speak to him again, letting him know he's on probation — if he doesn't start performing better, you'll have to let him go.

Unfortunately, things don't get better. In fact, because of his carelessness, you miss proposal deadlines for two major projects that would have meant significant revenue for your business. You sit down with the administrative assistant and let him know that, as you warned in your last conversation, you're letting him go.

While you were careful to follow fair employment practices protocol, the administrative assistant is angry that you fired him. Two weeks after he leaves, you're served with papers letting you know that he's bringing a lawsuit against you. He claims he was fired because of his age (he was 62) and demands $1 million in damages.

Even though you're confident that your documentation of his performance will show that you weren't negligent, you still have to answer the charges in court or risk a default judgment against your business. When you're facing a lawsuit like this from one of your employees, your Employment Practices Liability Insurance can pay for…

  • The cost of hiring a lawyer to defend your business in court.
  • Any settlements your lawyer negotiates with the ex-employee's lawyers.
  • Any judgments (if you're found liable), up to the limits of your policy.
  • Additional court costs (if the case goes to court), including expert witness fees, docket fees, and more.
Does Your IT Business Need Employment Practices Liability Insurance?

Does Your IT Business Need Employment Practices Liability Insurance?

If you don't have employees, you don't need EPLI.

If you do have employees, keep in mind that you don't have to do anything wrong to be sued for employment practices violations.

Consider this: in 2013, the EEOC resolved more than 97,000 employment suits. Of those, 66 percent were found to have "no reasonable cause" of discrimination. In other words, about two-thirds of complaints against employers were determined by the EEOC to be without merit.

So two-thirds of cases like the one described above likely won't end in fees your business has to pay — but because it involves the court system, they will mean legal bills for your business. And EPL cases are notorious for being expensive.

Still, EPLI isn't right for every IT business. Talk to your agent about whether investing in an Employment Practices Liability Insurance policy makes sense given your risks.

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