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What is Employment Practices Liability Insurance (EPLI), and Why Do Contractors Need It?

By March 11, 2020December 2nd, 2022No Comments

Contractors are just as exposed to an Employment Practices Liability (EPL) claim as any other business owner.

  • Contractors may have greater exposure due to the lack of employment related policies and use of part-time or seasonal labor.
  • Many small businesses, often employing only a few workers, may be at greater risk for discrimination charges because they lack the legal department of a large corporation, or even an employee handbook that clearly spells out company guidelines for hiring, firing and disciplining workers.
  • Third party coverage speaks to the very real exposure that contractors face from clients, customers, or vendors that may allege discrimination or harassment.
  • Claims alleging race discrimination, gender discrimination, and age discrimination are rising at alarming rates.

EPL coverages protects employers against charges of:

  • Discrimination, based on race, gender, or age, as well as other protected classes
  • Wrongful termination
  • Harassment
  • Other employment-related issues that can be seen as discriminatory

Why is EPL so appropriate for contractors?

  • Coverage for claims brought by applicants for employment
  • Coverage for recognized volunteers
  • Coverage for claims brought by third party clients, customers, or vendors is available.

Examples of typical losses:

  • A contractor who used seasonal help was sued by a former employee for age discrimination.
  • A commercial contractor, recently awarded a contract to renovate a small shopping center, was sued for race discrimination by several African-American applicants for employment.
  • The receptionist at an accounting office brought a claim against a contractor alleging gender discrimination when he was on site conducting business at the firm.

How can you protect your business?

  • Review the loss exposures common to your business. Make sure you have adequate coverage for EPLI by talking to your independent insurance agent and get the necessary coverage for your business.


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