As a business owner, your people are your greatest asset—and your greatest potential liability. In 2025, workplace lawsuits are on the rise, and large corporations aren’t the only ones affected. Businesses with fewer employees and limited legal resources are just as likely to face lawsuits, which means they need all the protection they can get.
If you employ even one person, you're exposed to more than just the daily risks of running a business. You're also responsible for maintaining a fair, respectful workplace. That’s where employment practices liability insurance (EPLI) comes in.
At Pepper, Johnstone & Company, we help small businesses across the country protect themselves from risks they might not see coming. Let’s walk through what’s changed in EPLI coverage this year, and why now might be the right time to talk to your independent insurance agent about it.
First—What Is Employment Practices Liability Insurance?
Employment practices liability insurance protects your business when an employee (or even a job applicant) brings a claim against you. These claims often include:
Wrongful termination
Sexual harassment
Discrimination based on race, gender, age, or disability
Retaliation after whistleblowing or reporting misconduct
Failure to promote or hire fairly
What makes EPLI so critical is that it covers not just settlements or judgments, but the legal defense costs leading up to them. Even if you did nothing wrong, defending yourself is expensive. Without EPLI, those costs come out of pocket.
Why Think About EPLI Now? Employment Practices Trends to Know in 2025
1. More Claims Are Ending Up in Court
New laws at the federal level have rolled back the use of arbitration agreements and non-disclosure clauses for harassment and assault claims. That makes it harder for businesses to handle harassment claims privately. These cases are now more likely to go to court—which raises the stakes and the cost.
EPLI is becoming a must-have for even the smallest teams—all the more reason to have proper legal defense built into your policy.
2. DEI Programs Are Leading to More Complex Risks
Diversity, equity, and inclusion (DEI) efforts have grown in recent years, but in 2025, some are being challenged as discriminatory in their own right. Companies that implemented diversity initiatives over the past few years may now face challenges from employees or outside groups alleging reverse discrimination. Whether you’ve put DEI programs in place or not, EPLI offers a layer of protection in these increasingly gray areas.
3. Technology and AI in Hiring Could Lead to Claims
Using AI to screen job candidates or manage HR processes? If the algorithm is shown to be biased—intentionally or not—it could lead to a discrimination claim. EPLI policies haven’t fully caught up to this risk, but insurers are paying attention.
If your business uses hiring software or automation, now is the time to ask whether your coverage reflects those exposures.
4. Rates Have Stabilized—for Now
After years of rising premiums, EPLI pricing is leveling out. In fact, rates were flat or slightly down in late 2024 and are expected to remain stable through 2025. That makes this a smart time to explore coverage if you’ve been holding off due to cost.
How Is Employers’ Liability Insurance Different?
There’s often confusion between employment practices liability insurance and employers' liability insurance, and understanding the difference is key to making sure you’re fully protected.
What is employers' liability insurance? Also known as commercial liability insurance, this is a type of policy that kicks in when an employee sues over a work-related injury or illness—for example, claiming negligence after an on-the-job accident.
What does employers' liability insurance cover? It typically pays for legal defense, settlements, or judgments related to those physical injury claims that aren’t covered by workers’ compensation.
How is Commercial Liability Insurance Different From EPLI?
EPLI deals with legal claims related to how you manage, hire, discipline, or terminate your employees, not injuries. Think of it as protecting your business from allegations of unfair treatment, not physical harm.
It’s easy to confuse these two policies, which is why working with an independent agency like Pepper, Johnstone & Company matters. We help you understand how coverage works together—and where you might have gaps.
What Does Employment Practices Liability Cover?
EPL insurance policies are designed to respond to a range of workplace complaints, but they don’t cover everything. Most policies do cover:
Legal fees (even for frivolous lawsuits)
Settlements and judgments
Claims related to harassment, discrimination, and wrongful termination
However, most policies don’t cover:
Wage and hour violations (like unpaid overtime)
Workplace injuries (which fall under workers' compensation or commercial liability insurance)
Problems with the way your business performs a service (which fall under professional liability insurance, a.k.a. errors & omissions liability insurance)
Contract disputes with employees or vendors
Some carriers offer endorsements that can extend your protection, such as third-party EPLI (for claims made by vendors or customers) or limited defense coverage for wage claims. We help our clients evaluate whether these options make sense for their business.
What Underwriters Are Looking for in 2025
EPLI rates have stabilized compared to the steep increases of the past few years. That’s good news for small business owners. But underwriters are taking a closer look at company culture and HR policies.
To get favorable terms, you’ll want to show:
A current employee handbook with signed acknowledgments
Documented complaint procedures
Evidence of manager and employee anti-harassment training
A clean claims history, or clear actions taken if issues occurred
We guide our clients through this process so you’re not caught off guard by questions during renewal or application.
Tips to Protect Your Business Beyond Insurance
A good EPLI policy is the safety net. But proactive practices are your first defense:
Train regularly: Don’t just check a box. Real-world examples and supervisor training matter.
Document everything: From interviews to terminations, paper trails protect everyone involved.
Create a culture of respect: Businesses that take workplace complaints seriously have fewer issues and better teams.
Review your policies annually: Make sure your policy is up-to-date with federal, state, and local employment laws, especially after growth, turnover, or changes in operations.
Talk to an Independent Insurance Agent—Not an Order Taker
As an independent insurance company, Pepper, Johnstone & Company isn’t tied to one carrier. We work for you. That means we can compare coverage options from multiple top-rated insurers and tailor a policy to fit your business, not someone else’s.
Your business is built on people, and people come with risk. Employment practices liability insurance helps protect everything you’ve worked for. If you have employees on the payroll—even just a few—EPLI should be on your radar. The legal climate is shifting, and small businesses aren’t immune.
If you’re unsure whether your current coverage is enough, or if you’ve never looked into EPLI before, now is a good time to start the conversation.
Let’s Talk About Employment Practices Liability Coverage for Your Business
Have questions? We’re here to help you understand the risks and build a strategy to protect your business for the long haul. Give Pepper, Johnstone & Company a call today at
866-381-5821 or
get a quote online!