With organizations facing a continually evolving landscape and the challenges that arise in operating a business, securing and retaining good employees, and trying to shield themselves from a far more litigious environment than ever before, the need for employment practices liability insurance (EPLI) is finally raising eyebrows—the quiet and unassuming coverage that speaks volumes. Employees are increasingly aware of their rights and more willing to challenge perceived violations, from harassment and retaliation to discrimination and wage-hour disputes. The costs and frequency of litigation have risen exponentially, and the once-safe mindset of "what we've always done" no longer insulates organizations from legal or operational risk.
How We Got Here
Over the past several decades, the legal landscape for employment rights has expanded dramatically. Since the Civil Rights Act of 1964, additional legislative acts have been introduced—such as the Americans with Disabilities Act, the Age Discrimination in Employment Act, and, most recently, the Pregnant Workers Fairness Act of 2024—that have ensured strengthened protections for employees. While these laws have improved workplace conditions, they have also increased the complexity of compliance, making EPLI more essential than ever.
Commonly identified misconduct and harassment that could give rise to claims include discrimination based on age, race, sex, religion or disability; harassment and sexual harassment such as hostile work environment or unwelcome conduct; wrongful termination through violations of law or contracts; retaliation in the form of actions that cause one to feel punished for exercising their rights; and third-party interactions such as with customers, vendors or contractors that allege discriminatory or harassing behavior from an organization's employees.
Emerging practices, like the use of biometric and genetic data for identification, have introduced new exposures to consider. In 2008, the State of Illinois enacted the Biometric Information Privacy Act, which ensures recourse to individuals when their biometric identifiers such as fingerprints, facial recognition, DNA, palm print, retina scans are collected, used, and stored by private entities. Both biometric and genetic information are now considered protected classes, adding another layer of risk for employers navigating modern compliance. This evolving environment is exactly why Employment Practices Liability Insurance (EPLI) has become such a critical safeguard for organizations of all sizes.
How Does EPLI Protect Businesses?
Without EPLI an organization may be forced to absorb the full cost of litigation, settlements, or judgments on its own. The financial impact of an EPLI claim can be devastating (sometimes beyond repair), threatening not only an organization's ability to continue operations but also its reputation and long-term recovery.
Defense coverage is one important benefit of a standard EPLI policy and can be triggered even if the complaint is groundless. For businesses, EPLI may be a form of balance sheet protection.
Employers today are not as insulated as they once believed, especially smaller organizations that may underestimate their obligations or the potential impact on their financial stability. The unforeseen is already revealing itself in subtle "red flags" that, left unchecked, can quickly evolve into costly lawsuits.
Lawsuits may allege denying promotion to employees due to age, or an employee dispute claiming failure to pay overtime or duty misclassification may turn into a wage-hour lawsuit. Complaints could include an employer's operations being ceased due to employing undocumented migrant workers, or an employee could sue because of biometric data improperly safeguarded. An EPLI broadened policy can address fines and legal fees and provide the pre-claim and post-claim resources employers need.
Looking Ahead: Protecting the Evolving Workforce
The evolution of employment law continues, driven by changing workplace norms, remote/hybrid models, artificial intelligence, hiring and termination practices, and new legislation. For example, emerging litigation related to algorithmic bias in hiring tools is already attracting attention.
We emerge from history with practices for a better future. As society and laws evolve, new challenges will emerge. Employers who proactively protect themselves with EPLI are better positioned to survive and thrive through those challenges.
In Summary
Employment Practices Liability Insurance is intelligent risk management. As we've seen, the workplace has evolved dramatically. New laws, new technologies, and new employee expectations have reshaped what it means to be an employer today. These shifts have also created more opportunities for liability. EPLI provides organizations with balance sheet protection in an environment where litigation and reputational risks are only growing. Employment law will not stand still, and neither should your protection strategy. If your business is not yet covered, now is the time to act to safeguard your operations, your people, and your financial future.
