EPLI is a type of business insurance that covers employers against claims made by current, former, or prospective employees alleging their legal rights were violated in the workplace. Covered claims typically include wrongful termination, discrimination, sexual harassment, retaliation, failure to promote, and negligent evaluation. In 2024, the EEOC recovered nearly $700 million for over 21,000 workers Oyster, making EPLI an essential line of defense for employers of all sizes. 

When an EPLI claim is filed, the insurer assigns defense counsel to represent the employer. The quality and experience of that counsel directly affects the outcome. EPLI claims involve overlapping areas of law including employment regulations, contract obligations, insurance coverage interpretation, and reputational risk. Kelley Kronenberg’s EPLI defense team combines its Professional Liability Defense practice with its Labor and Employment Law Division, providing employers with integrated defense that addresses all dimensions of a claim simultaneously.

The most frequent EPLI claims are wrongful termination, discrimination, sexual harassment, and retaliation. IRMI Claims involving failure to promote, negligent evaluation, and breach of employment contract follow closely behind. Retaliation claims in particular have grown significantly in recent years, as employees increasingly file them alongside or in response to internal complaints. Even well-managed employers face claims, and the cost of defending an unfounded allegation can reach six figures before resolution. 

When a claim is filed, the employer must promptly notify their insurer. The insurer then evaluates coverage, assigns defense counsel, and often has approval authority over settlement decisions. EPLI policies are written on a claims-made basis, meaning coverage must be active when the claim is filed, not just when the underlying incident occurred. Defense costs typically reduce the policy limit, so managing legal expenses efficiently is critical. Employers should avoid communicating with claimants or their attorneys before counsel is involved.

Settlement resolves a claim without a court judgment, typically faster and at lower total cost than litigation. Litigation proceeds through discovery, depositions, and trial, and can take years. The right approach depends on the strength of the defense, the potential damages, the policy limits remaining, and the reputational stakes involved. Kelley Kronenberg pursues negotiated resolutions wherever possible but prepares every EPLI case as if it will go to trial, which consistently produces better settlement outcomes and stronger results when litigation is unavoidable.

The most effective risk management steps are maintaining a current employee handbook, training managers consistently on harassment and discrimination prevention, documenting performance issues and disciplinary actions in real time, and applying policies consistently across all employees. New areas of exposure include pay transparency law compliance, AI tools used in hiring and evaluation, and consistent treatment of remote versus on-site employees. III Kelley Kronenberg provides risk management guidance alongside defense services to help clients reduce the likelihood of future claims. 

Coverage varies by policy. Many standard EPLI policies cover only traditional employees, but as businesses increasingly rely on freelancers, gig workers, and contractors, claims from non-employees have become more common. Employers should review their policy language carefully to understand whether independent contractors, temporary workers, and third parties are covered. Gaps in coverage discovered after a claim is filed are significantly harder to address than those identified in advance.