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Law Firm Insurance

Employment Practices Liability for law firms

Defends your firm against claims of wrongful termination, harassment, discrimination, and other workplace disputes brought by employees.

Employment Practices Liability insurance for law firms

Key Takeaway

Defends your firm against claims of wrongful termination, harassment, discrimination, and other workplace disputes brought by employees. Law firms face the same employment risks as any business, but the adversarial nature of legal work and high-pressure environments can amplify workplace tensions.

Overview

Employment Practices Liability Insurance (EPLI) covers the firm against claims made by current, former, or prospective employees alleging wrongful employment practices. Covered allegations include wrongful termination, sexual harassment, workplace discrimination based on protected characteristics, retaliation, wage and hour violations, failure to promote, and negligent hiring or supervision. EPLI pays for legal defense costs, settlements, and judgments arising from these claims. Policies are written on a claims-made basis and may include coverage for claims brought by third parties such as clients who allege harassment by firm employees.

Why it matters for law firms

Law firms face the same employment risks as any business, but the adversarial nature of legal work and high-pressure environments can amplify workplace tensions. Associate turnover, partner disputes over compensation, and the hierarchical structure of many firms create fertile ground for employment claims. Ironically, attorneys who advise clients on employment law are not immune from making the same mistakes in their own practices, and juries may hold law firms to a higher standard of knowledge.

Typical Limits

Small firms with fewer than 25 employees commonly carry $500,000 to $1,000,000 in EPLI coverage. Firms with 25 to 100 employees typically maintain $1,000,000 to $3,000,000 limits. Deductibles range from $2,500 to $25,000 per claim. Some policies offer separate defense cost limits that do not erode the indemnity limit, which is a valuable feature for firms expecting prolonged employment disputes.

Coverage at a Glance

FeatureSmall Firm (1-5 attorneys)Mid-Size Firm (6-25 attorneys)Large Firm (25+ attorneys)
Typical Limit$500K/$1M$1M/$3M$5M+
Typical Deductible$2,500-$5,000$10,000-$25,000$25,000-$100,000
Annual Cost Range$2,500-$8,000$15,000-$60,000$50,000-$500,000+
Priority LevelEssentialEssentialEssential

Frequently asked questions about employment practices liability

Does EPLI cover wage and hour class actions?
Traditional EPLI policies often exclude or sublimit wage and hour claims because of their potential severity. However, some carriers offer wage and hour coverage as an optional endorsement, typically with a separate sublimit and higher retention. Firms with significant non-exempt staff should specifically request this coverage.
Are partner disputes covered by EPLI?
EPLI covers employment-related claims, and whether a partner dispute qualifies depends on the partner's status. Equity partners are typically not considered employees for EPLI purposes. However, non-equity partners, income partners, and of-counsel attorneys who function as employees may have standing to bring covered employment claims.
How does EPLI handle claims from independent contractors?
If an independent contractor is later reclassified as an employee by a court or regulatory agency, their employment-related claims may be covered retroactively. Some EPLI policies specifically include claims from individuals alleging misclassification. This is an increasingly important coverage consideration as worker classification laws continue to evolve.
Does EPLI cover retaliation claims from whistleblowers?
Yes, retaliation claims are a core coverage of EPLI policies. This includes claims from employees who allege they were terminated, demoted, or otherwise penalized for reporting illegal activity, filing complaints, or cooperating with investigations. Retaliation claims are among the fastest-growing categories of employment litigation.
What is the typical EPLI claims process?
When an employment claim is filed, notify your EPLI carrier immediately. The carrier will assign defense counsel, typically from their approved panel. Early intervention is critical -- many EPLI carriers offer pre-claim consultation services and mediation to resolve disputes before they escalate to formal litigation.

Common questions about employment practices liability

What insurance do employment and labor law attorneys need?Employment law attorneys need professional liability covering both plaintiff and defense work, plus EPLI for their own f...What insurance do virtual and remote law firms need?Virtual law firms need the same core coverage as traditional firms — professional liability, cyber liability, and potent...What insurance does a law firm need for its employees?Law firms with employees (paralegals, secretaries, administrators) need workers compensation (legally required in most s...What insurance is needed when adding a new partner to a law firm?Adding a new partner requires updating your malpractice policy to include the new attorney, reviewing their claims histo...

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