7 Ways You Can Prevent Employment Practices Liability (EPLI) Claims

Any employer could face claims of wrongful employment actions. These allegations can lead to time-consuming litigation, reputational damage, and financial loss. To mitigate these risks, employers should implement risk management strategies to prevent the likelihood of these claims occurring. They should also secure employment practices liability insurance (EPLI) to provide coverage if these claims arise.

Here’s how to prevent employment practices liability claims and why EPLI insurance is essential.

What Are Employment Practices Liability Claims?

Employment practices liability claims can stem from a variety of situations. They typically arise when a current employee, former employee or job applicant believes an employer or its representatives have violated their workplace rights. Examples of employment practices liability claims include:

• Discrimination based on a protected class
• Sexual harassment
• Wrongful termination
• Failure to promote or hire
• Infliction of emotional distress
• Wrongful demotion or discipline
• Retaliation for protected conduct
• Breach of employment contract

7 Strategies to Prevent Employment Practices Liability Claims

Employers can implement several measures to proactively address exposures that may lead to employment practices liability claims. These actions can also enhance employee morale and productivity while strengthening employee relationships. Strategies to consider include the following:

1. Develop and maintain an employee handbook with thorough policies and procedures

Employers should have a comprehensive employee handbook that includes detailed policies and procedures, defining and addressing issues that can lead to employment practices liability claims. Specific sections that should be included in the handbook include antidiscrimination policies, anti-harassment policies, anti-retaliation policies, and equal employment opportunity policies. The handbooks should outline the employer’s standards of conduct and explain the progressive disciplinary measures employers will take if those standards are not met. The handbooks should be readily available to all employees and be routinely reviewed by the HR department, in-house counsel, and outside employment law counsel. Employees should acknowledge that they reviewed the handbook, and the records of those acknowledgments should be maintained in their personnel files.

2. Conduct regular training

Employers should ensure that they deliver regular training on their expectations for appropriate workplace conduct, including illegal or prohibited conduct, as well as applicable laws and policies. Training should outline the procedures for reporting workplace misconduct and emphasize that all allegations will be thoroughly investigated and taken seriously. Essential topics to cover include nondiscrimination training, anti-harassment training, and the importance of managers not retaliating against employees who report issues. Employers should also make sure the content, format, and frequency of the training meet any specific requirements mandated by applicable laws. Finally, new hires should receive this information during their orientation or onboarding program.

3. Establish standards to prevent discrimination during recruitment

Employers should implement best practices to reduce the likelihood of discrimination occurring during the recruitment process. This includes posting job descriptions that identify essential job functions and comply with all applicable laws, including those that may require compensation transparency. Hiring managers should also be trained in proper interviewing and hiring techniques, and ensure background checks are conducted but not impermissibly utilized.

4. Implement best practices during the employment relationship

Employers should model appropriate behavior and ensure all workplace policies are enforced, including zero-tolerance policies regarding discrimination and harassment. Employers should ensure that employees feel comfortable engaging in open discussions, asking questions, and bringing forward complaints without fear of retaliation.

5. Apply effective strategies for making employment decisions

Employment decisions, including promotions and terminations, should be made based on job-related, objective criteria. Employment decisions should be based on lawful reasons and conducted in a nondiscriminatory manner.

6. Investigate allegations of misconduct

All accusations of wrongful employment practices should be taken seriously and immediately investigated. Employers should ensure that policies and procedures are in place to prevent retaliation against employees who report misconduct, participate in misconduct investigations, or file lawsuits. The investigative process should be well-documented and thorough, allowing the investigators to draw complete and logical conclusions. Employers should also rely on outside parties to conduct investigations when necessary. When unlawful discrimination, harassment, or inappropriate conduct is found, appropriate corrective action, including disciplinary action, should be taken. It is also essential to have policies and procedures in place to protect potential victims of harassment and to provide resources to support them.

7. Maintain documentation

Organizations should have policies in place to ensure they have procedures for creating, maintaining, and securely storing documentation related to employment practices, while also complying with applicable privacy laws and regulations.

Securing EPLI

Even with robust preventive measures in place, employers of all sizes and industries may still face employment practices liability claims. EPLI is a specialized policy that can cover the costs associated with these claims. Other commercial insurance policies, such as general liability insurance or workers’ compensation insurance, typically do not cover employment practice liability claims, and EPLI can help fill this coverage gap.

EPLI coverage may be packaged with other management liability policies, such as directors and officers liability insurance and fiduciary liability insurance, or it may be written as a standalone policy.

Conclusion

Employment practices liability claims can be complex and costly; however, employers can take proactive steps to reduce their exposure and enhance their overall workplace culture. Obtaining EPLI can also mitigate an employer’s risks and be an essential aspect of their overall risk management plan.

© 2025 Zywave, Inc. All rights reserved.

Benefits of Employment Practice Liability Insurance

An EPLI policy will reimburse a business for the costs associated with defending a lawsuit, as well as for judgments and settlements. While EPLI covers legal costs, whether a business wins or loses the lawsuit, it doesn’t pay for punitive damages or civil or criminal fines.

Get a free quote from the GTM Insurance Agency to learn more.