Massachusetts Employment Practices Liability Insurance

More than 135,000 small businesses in Massachusetts have employees, and these companies employ approximately 1.4 million people.

If your small business has employees, the risk exists that they may one day sue your company. Even if the cases are entirely without merit, costs for legal defense can build up quickly. That is why having an employment practices liability insurance policy is so important.

Local independent insurance agents can help you find the best and most affordable policy to cover your Massachusetts business. Find an insurance agent near you to start comparing customized quotes for employment practices liability insurance.

What Is Employment Practices Liability Insurance?

Employment practices liability insurance (EPLI) is a business liability insurance product. It is designed to cover employers against financial losses related to accusations of illegal employment practices such as discrimination, harassment, and breach of contract.

Who in Massachusetts Needs Employment Practices Liability Insurance?

Any business that has employees can benefit from the protections offered by employment practices liability insurance. According to a study conducted by insurance professionals, employers in the US have an 11.7% chance of one day facing an EPLI lawsuit.

Although the Insurance Information Institute (III) reports that the majority of employment practices lawsuits are filed against large corporations, they warn that no company, regardless of size, is immune.

In 2018, the average cost to settle an EPLI lawsuit out of court was $75,000, and for cases that went to trial, the average cost was $217,000. It is easy to see why an EPLI policy can prove invaluable to protecting your company’s finances.

How Much Does Employment Practices Liability Insurance Cost in Massachusetts?

Rates for EPLI coverage can vary from one employer to the next. Factors that can influence how much a policy will cost your business include the following.

• The number of employees you have
• Your company’s average rate of employee turnover
• What (if any) efforts your company has made to prevent potential employment practices lawsuits
• The amount of coverage you are purchasing
• Your company’s EPLI claims history

On average, small businesses pay about $800 a year for EPLI coverage while mid-sized companies spend about $3,000 a year. If you own a large corporation that has thousands of employees, your coverage costs will be considerably higher.

Local independent agents can help you obtain and compare a few customized quotes so you can be sure that you are getting the coverage you need at a reasonable price.

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What Does Employment Practices Liability Insurance Cover?

EPLI is designed to cover expenses such as court costs, legal fees, settlements, judgments, and other damages if your company is accused of illegal employment practices, regardless of whether or not the courts rule in your favor.

Examples of covered accusations include the following.

• Discrimination
• Sexual harassment
• Retaliation
• Wrongful termination
• Breach of employment contract
• Failure to pay at least the minimum wage
• Failure to pay overtime
• Intentional infliction of emotional distress
• Mismanagement of employee benefits

Your insurance agent can help you review what your employment practices liability insurance policy can cover.

What Does Employment Practices Liability Insurance Not Cover?

As with any insurance policy, EPLI has some limitations. Coverage exclusions may vary between insurance companies, but for the most part, you can expect that your policy will not cover the following.

• Punitive damages, criminal fines, or civil fines if your company is found guilty of illegal acts.
• Liabilities that are covered by other policies like workers’ compensation insurance or cyber liability insurance.
• Incidents involving violations of the following.
  • The National Labor Relations Act (NLRA)
  • The Worker Adjustment and Retraining Notification Act (WARNA)
  • The Occupational Safety and Health Act (OSHA)
  • The Employee Retirement Income Security Act (ERISA)

A local independent insurance agent can review the coverage exclusions of any policies you are considering before you make a purchase.

Employment Practices Liability Insurance vs. Employment Liability Insurance

Although the names of the policies are similar, employment practices liability insurance is different from employment liability insurance.

• Employment practices liability insurance: This is designed to cover employers against lawsuits related to accusations of illegal employment practices.
• Employment liability insurance: This is designed to cover employers against financial losses resulting from worker injuries or occupational illnesses that are not covered by workers’ compensation insurance.

If you are interested in learning more, local independent agents can explain these two types of insurance as well as all of your other business insurance policy options.

How Can Massachusetts Business Owners Find the Best EPLI Coverage?

The easiest way to find a reliable EPLI policy at a competitive price is by working with an independent insurance agent. These agents do not work for a specific insurance company, so they are free to obtain customized quotes from a variety of top-rated providers as they work to find the coverage you need at the lowest cost.

There are nearly 1,300 independent agents in Massachusetts who are ready to help. Arrange an obligation-free consultation with an insurance agent near you to get started.