What Is EPL Insurance and Why It Is Important to NH Small Businesses


The relationship between a small business and its employees can be like marriage.  When the relationship is new, it can be filled with promises, expectations and high hopes for both parties.  However once the honeymoon period ends, perspectives can shift leaving a rift between employee and employer.  These rifts can not only result in a break-up but also a potential law suit against the employer. 

Though you may think your chances of being sued by an employee are slim, the number of employment related lawsuits continues to rise.  In 2013 alone, the Equal Employment Opportunities Commission (EEOC) received more than 93,000 complaints in the US and 52 in New Hampshire.  Add to that the hundreds of thousands of employee filed claims with each state and local agencies; it is quick to see that this is not a rare incident.

What type of insurance can protect a small business against a suit from its employees?

Employment Related Practices Insurance (EPL) provides protection from employment-related claims and lawsuits brought against your company, its managers, and its directors and officers.  It can insure against claims for age and gender discrimination, sexual harassment, wrongful discipline and termination, and negligent decisions involving hiring, promotion and compensation.  It can also apply to breach of employment contract, emotional distress and mental anguish, invasion of privacy, libel, slander and mismanagement of employee benefits.

What type of businesses need EPL insurance?

Any business that has anyone working for them, be it an employee or subcontractor.

How much does EPL insurance cost?

The cost of EPL insurance will mainly depend on the number of employees, broken down between the number of management/supervisory and non-supervisory workers.  The number of employees matters because the more employees mean the more interaction among employees, performance reviews, disciplinary actions or other situations that could trigger an EPL claim.  Contact an insurance professional, like HPM Insurance, for an exact quote.

Examples of covered EPL claims:

Age discrimination:

A lawsuit was filed against a company by a highly paid 62 year old sales representative who was let go for not making his sales quotas.  Despite other layoffs and cutbacks at the company, there was no documentation that showed the plaintiff was a poor performer.  A settlement of $540,000 was reached, plus legal expenses. 

Alleged sexual harassment:

Plaintiff allegedly patronized an insured's restaurant and completed an application for employment.  She claimed that after completing her application that she was sexually harassed by the employees and managers of the restaurant.  Investigation revealed that the plaintiff drank at the restaurant for several hours, applied for the position and then was the instigator of the sexual activity that occurred.  The matter was tried in front of a jury and came back in favor of the restaurant.  Although the insured won, the defense costs exceeded $350,000.


An assistant to the CFO was terminated for divulging confidential information to staff regarding and impending company layoff.  A suit was brought by the  assistant for retaliation and sexual harassment as she claimed the CFO made suggestive comments and improperly touched her.  Defending the CFO cost $150,000.

How does a small business get an EPL policy?

EPL coverage may be included in a commercial package policy or purchased separately. If you see this endorsement on your existing business policy, speak with your insurance agent, as this coverage may be limited.  Businesses should consult with an insurance professional, like HPM Insurance of Milford NH, to discuss their specific needs.

This material is for informational purposes only.  All statements herein are subject to the provision, exclusions and conditions of the applicable policy.  For an actual description of all coverages, terms and conditions, refer to the insurance company.

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