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Employment Practices Liability Insurance for Food & Hospitality

Employment Practices Liability Insurance for Food and Hospitality Businesses

Get a quote on Employment Practices Liability

Many businesses in the food and hospitality industry rely on healthy relationships with employees to function successfully. However, if an employee believes their legal rights have been violated, businesses may face allegations related to their employment practices. It is crucial to consider Employment Practices Liability Insurance to help protect your company from employment-related lawsuits.

What is Employment Practices Liability Insurance?

Employment Practices Liability Insurance (EPLI) provides financial protection for your business if you are sued by current, past, or prospective employees for wrongful treatment such as discrimination, harassment, or other employment-related issues. EPLI policies cover the cost of defending a lawsuit in court, as well as any judgments and settlements against you. Your insurer will cover legal costs regardless of whether you win or lose the lawsuit, but punitive damages or fines are not covered.


Why do food and hospitality businesses need Employment Practices Liability Insurance?

Any business that hires employees would be wise to consider Employment Practices Liability Insurance. This is especially true for smaller food and hospitality businesses. These small businesses are more vulnerable to EPLI claims because they are less likely to have a human resources or legal department to handle employee-related issues. 

Bakeries, restaurants, food trucks, and other small businesses are also less likely to have an employee handbook or clear procedures for hiring and firing employees. With a small staff, employee performance may not be documented as carefully as it should be. All of these circumstances increase an employer’s risk of being unable to protect themselves in an EPLI lawsuit.  

Employee-related lawsuits can be detrimental to your finances and your company’s overall reputation. EPLI is essential in providing you with funds for lawsuits and settlements, as well as risk management services.


What does Employment Practices Liability Insurance cover?

Employment Practices Liability Insurance provides protection for wrongful employment practices claims brought on by prospective, current, and former employees.

Common claims that are covered by EPLI include:

Wrongful demotion or discipline, failure to promote, negligent evaluation, or wrongful refusal to employ

Wrongful dismissal, discharge, or termination

Wrongful denial of training, deprivation of career opportunities, or breach of employment contract



Libel, slander, invasion of privacy, defamation, or humiliation

Verbal, physical, mental, or emotional abuse arising from discrimination

Coercing an employee to commit an unlawful act or omission in the course of their employment

What is excluded from Employment Practices Liability Insurance?

There are a number of common exclusions to Employment Practices Liability Insurance. These include:

How much does Employment Practices Liability Insurance cost?

AdvisorSmith found that the average cost of Employment Practices Liability Insurance for small businesses was $1,824 per year. This cost survey included small businesses with less than 20 employees and revenue under $500k, for coverage of $500k and a deductible of $2,500.

Pricing does, however, vary depending on a number of factors, including:

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer Employment Practices Liability Insurance:

ProviderEmployment Practices LiabilityGeneral LiabilityProfessional Liability

Is Employment Practices Liability Insurance a claims-made policy?

Although some Employment Practices Liability Insurance policies are available on an occurrence basis, most EPLI policies are written on a claims-made basis. This means that claims are only valid if both the incident and the reporting of the claim occur while the policy is still active. It is important to keep in mind that once you cancel an EPLI policy, you no longer have coverage for actions that occurred while the policy was active. Employment claims may not be filed until months or years after an alleged incident, so it is essential to keep your policy active. 

Shrinking Limits

Employment Practices Liability Insurance features “shrinking limits” of insurance, which means the costs of legal defense reduces your limit of liability. For most general liability policies, legal fees are not counted towards your limit of liability, but since legal fees make up much of the cost of EPLI claims, they are counted towards your insurance limits.

Does Employment Practices Liability Insurance have a deductible?

A deductible is typically included in Employment Practices Liability Insurance. This is the amount of each claim that your company is responsible for paying before your insurance coverage begins. Like other forms of insurance, policies with lower deductibles will have higher premiums.

How to reduce the risk of Employment Practices Liability claims

There are several steps you can take to lessen the likelihood of an EPLI lawsuit. EPLI insurers will often provide resources to help you reduce your risk of employment practices-related claims. Some common strategies include:

Final Word

It is crucial to maintain good employment practices to reduce the risk of claims, but there is no way to guarantee that a current, past, or prospective employee won’t sue your business. These costly employment practices-related lawsuits can take up valuable resources and tarnish your reputation. Make sure you financially protect your company with Employment Practices Liability Insurance in the event that a current, former, or prospective employee sues your company for wrongful treatment.

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