Employment Practices Liability Insurance (EPLI) vs Workers Compensation: What’s the Difference?

Employment Practices Liability Insurance (EPLI) and Workers' Compensation Insurance both protect businesses from employee-related risks. EPLI, an optional coverage, protects businesses against employee claims such as discrimination, harassment or wrongful termination. Workers' Compensation is mandatory and protects employees who suffer job-related injuries or illnesses, covering medical expenses and lost wages.  

What is Employment Practices Liability Insurance?

Employment Practices Liability Insurance (EPLI) is a type of coverage that helps you, as an employer, handle the financial fallouts related to employment practice issues. Your EPLI policy will protect you against claims from your employees who believe their legal rights have been violated.

What types of issues are covered by EPLI?

When you buy an EPLI policy, your business is protected against several claims. Coverage typically includes but is not limited to:

• Discrimination (based on sex, race, age, disability, etc.)
• Sexual harassment
• Wrongful termination
• Retaliation
• Defamation
• Invasion of privacy
• Failure to promote

The specifics of what is covered can vary, so you should review your policy carefully for exact coverage details.

Examples of Claims

These are examples of situations that EPLI will protect your business:

• A claim of sexual harassment made by an employee against a manager
• An allegation of wrongful termination by a recently let-go staff member
• A complaint from a candidate who wasn't hired, claiming discrimination in the selection process

What is Workers’ Compensation Insurance? 

Workers' Compensation is a type of insurance that protects employees who get injured while at work. 

What is covered under the policy? 

Medical Expenses: all medical treatment related to the
injury

Lost Wages: a portion of the employees wages will be paid during their recovery

Rehabilitation Costs: any physical therapy or retraining necessary for the employee to resume work

Death Benefits: Financial support for the dependents of a worker who has died from a work-related incident

Important things to know about Workers’ Comp Insurance

Workers' Compensation insurance is usually required by each state’s law and compliance is not optional. 

Coverage Requirements: Vary by state but generally require that all employees are covered

Penalties for Non-Compliance: Can include fines and legal
consequences

No Fault System: Benefits are provided without the need to prove your employer's negligence

What are key differences between EPLI and Workers’ Compensation?

Understanding the differences between Employment Practices Liability Insurance (EPLI) and Workers’ Compensation is crucial for effective business risk management. These differences include the scope of coverage, coverage limits, the process of policy acquisition, cost of the policies, and the claims handling procedures.

Differences in Coverage: EPLI vs. Workers Compensation 

EPLI Coverage:

• Legal defense costs for covered claims
• Judgements or settlements
• Allegations of wrongful employment practices

Workers’ Compensation Coverage:

• Medical expenses for work-related injuries
• Lost wages and rehabilitation costs
• Death benefits to beneficiaries

EPLI and Workers’ Compensation cover different things. EPLI focuses on the issues from your employment practices, whereas Workers’ Compensation will help when your employees when injuries occur on the job.

Coverage Limits: EPLI vs. Workers Compensation

EPLI policies typically include coverage limits, which set a maximum amount the insurance company will pay for legal expenses, settlements, and judgments. 

It’s important to understand what your limits are as the policy will only cover up to the limit and after that, the business will have to pay the rest.

In contrast, Workers' Compensation does not have limits. This is because Workers' Compensation is a legal requirement that is designed to protect an injured worker. Since there is no telling how badly they will be hurt, the policies are crafted to provide all necessary medical treatment and compensation for lost wages.

How to purchase a policy: EPLI vs. Workers Compensation  

Employment Practices Liability Insurance (EPLI) is typically purchased as a standalone policy. To acquire EPLI, you would:

• See how at risk your business is from a lawsuit related to your employment practices
• Contact an insurance broker or agent who specializes in commercial policies
• Figure out the appropriate coverage limits and any possible exclusions
• Complete an application with detailed information about your business practices and employee demographics

For Workers' Compensation, the steps generally include:

• Contact an insurance broker or agent who specializes in commercial policies OR finding a quick online form
• Fill out the application with detailed information about your business details and payroll
• Ensuring coverage meets state-mandated minimums for medical expenses and lost wages
• Decide if you want to include elective coverage for owners, officers, or certain employee classifications if not automatically included

Policy Cost: EPLI vs. Workers Compensation 

• Employment Practices Liability Insurance (EPLI): Often quoted based on your business's size, number of employees, and past claim history. Policies are typically subject to a deductible.
• Workers' Compensation: Premiums depend on factors like workplace risk, industry, and individual state's regulations and can include a state-mandated base rate.

Remember, failing to have adequate coverage can result in out-of-pocket expenses far outweighing the cost of premiums.

Claims Process: EPLI vs. Workers Compensation 

The claims process for EPLI often requires a careful examination of the circumstances surrounding the alleged wrongful act. If an employee sues your business, EPLI may cover the associated costs after a deductible is met.

When it comes to Workers’ Compensation, an injured employee typically files a claim directly through workers’ comp channels without the need for a lawsuit. The system is designed to expedite the process and the employee usually doesn’t need to sue the employer for injuries covered by the policy.

Ready to get Workers' Compensation Insurance coverage?

Protect your employees and your business with a policy crafted to meet your unique needs.

• Easy Process: Get started with just a few clicks.
• Customized Coverage: Tailor your policy to suit your business specifications.
• Peace of Mind: Gain confidence knowing you’re prepared for the unexpected.

Your business deserves the assurance of comprehensive coverage. Start your quote now to embrace a more secure tomorrow.