EPLI — or Employment Practices Liability Insurance — protects you against claims of unfair hiring and firing practices. This coverage is essential to medium and large businesses. When you're not the one directly in charge of every hiring decision, it's good to know that you have a safety net should someone have a case against the people you've entrusted to make those choices.
Even so, it might be a good idea to invest in EPLI coverage as soon as you start hiring on help. Here's why:
The ultimate judgment on whether your employment practices are biased or unfair will have little to do with your actual intentions.
Intentions are very difficult to prove. Whether a case will be brought up against you depends on whether someone feels they were unjustly fired, or whether they feel you practice bias in your hiring decisions. Fighting that case can be expensive. And if it goes to court, the decision comes down to whether the judge agrees with the person bringing the case against you.
Maybe you are a person without prejudice. You don't care how old someone is, their gender, their religion, their race — so long as they can do the job you're hiring them to do. You would never hire someone just because they went to the same school as you, or fire them because of rumors about their personal life. But how much are you willing to spend to prove those points. And what if there's simply no convincing the judge?
This is not to imply that people bringing employment practices cases against companies are doing so frivolously. Indeed, if you are a fair employer, you are far less likely to have to contend with claims of unfair practices. But insurance is about managing risk, and this is a risk we all face in running a business.