What Happens If My Employee Sues Me? What is EPLI?

What Happens If My Employee Sues Me? What is EPLI?

May 7, 2018 David Lipson

What Happens If I'm Sued By An Employee?

Without EPLI coverage, your business is exposed to huge lawsuits. I know, I know, I've heard it a million times from business owners: "We're like a family here", "that wouldn't happen in our office", "we've been working together for years". But that way of thinking, that complacency, is exactly why employment-related claims are at an all time high. and why the need to insure one's business for that situation has become a necessity in today's highly litigious work environment. Almost 75% of all litigation against corporations today involves employment disputes.

What Is EPLI Coverage?

An Employment Practices Liability Insurance ("EPLI") policy, sometimes called a Management Liability policy, will protect your firm from claims arising out of actual or alleged wrongful practices relative to hiring/firing, promoting/demoting, sexual harassment, discrimination, wrongful termination, failure to make partner, and a multitude of other workplace related forms of first and third-party claims. Many employers are not aware that their general liability, professional liability or workers’ compensation policies DO NOT protect them in these situations when being sued by employee.


Recent statistics show businesses are far more likely to face an employment-related claim than a property or general liability claim. STOP AND THINK ABOUT THAT FOR A SECOND: you are far more likely to face a lawsuit from an employee than you are of having a fire or a theft or a slip and fall YET almost everyone buys coverage for the fires and for the injuries while much fewer buy coverage protecting against employment-related claims. I expect the trend will continue and soon all types of businesses will have (or may be required to have) an EPLI policy to protect them if sued by an employee. When these workplace issues turn into lawsuits, they become a constant strain and drain on time and resources.

Claims involving lawsuits by employees comprise a significant amount of today’s civil litigation. No organization is immune from employment practices liability litigation, least of all law firms. Not only are the number of employment-related claims increasing, but so is the potential financial risk to your business. The Equal Employment Opportunity Commission reports that employee complaints have escalated to nearly 100,000 new charges per year.

Defending a sexual harassment or discrimination claim, whether you are innocent or guilty, or even if the claim is groundless or fraudulent, can be massively expensive. You can be sued by an employee even if you've done nothing wrong, you'll still need to hire an attorney to get you out of it --- this can cost thousands and thousands of dollars.

What Is Third-Party EPLI Coverage?

Many EPLI policies also include what is known as "Third Party Liability" which covers liability claims brought by non-employees against employees of the insured company. The third-party in these lawsuits can be a customer, a client, a vendor, the mailman or anyone who interacts with your employees. Your organization's third-party liability exposure is driven largely by the degree to which you and your employees interact with the general public.

What Should You Do Next?

Call Paragon at 248-851-3066  OR  request a quote below and we'll reach out to you ASAP!

Please call Paragon at 248-851-3066 with any questions or concerns, we're here to help!

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