HR compliance and employment practices liability
Every employee interaction, from hiring to termination, creates potential liability. Proactive HR compliance reduces claims, and Employment Practices Liability Insurance (EPLI) responds when claims happen anyway.
Employment claims are rising
Employment-related lawsuits are among the fastest-growing areas of business litigation. Discrimination claims, harassment allegations, wrongful termination suits and wage-and-hour disputes affect businesses of every size. An employment lawsuit costs about $200,000 on average to defend, even when the employer wins. Settlements regularly exceed $500,000 and jury verdicts can reach millions, and small and mid-size businesses are increasingly targeted.
Compliance reduces claims; insurance protects when claims occur despite your best efforts. First Underwriters has helped Pacific Northwest employers with both since 1992.
Common employment claims
Understanding the risks helps you prevent them and insure against them.
Discrimination
Unfair treatment based on race, gender, age, religion, disability, national origin, sexual orientation or other protected characteristics, in hiring, promotion, compensation or termination. High frequency.
Sexual harassment
Hostile work environment and quid pro quo claims, including third-party harassment by customers or vendors. Reporting has increased significantly. High severity.
Wrongful termination
Claims that a termination violated employment contracts, public policy or anti-discrimination laws, often with retaliation claims attached. Most common.
Wage and hour violations
Exempt/non-exempt misclassification, unpaid overtime, missed meal breaks and minimum wage violations. Class actions can affect an entire workforce.
Retaliation
Adverse action against employees who report violations, file complaints or take part in investigations. Often accompanies other claims and can be easier to prove. Rising trend.
FMLA / leave violations
Interference with protected leave, failure to restore the same position and retaliation for taking leave. Complex regulations create compliance challenges.
HR risk solutions
Prevention through compliance, plus protection through insurance.
Employment Practices Liability Insurance (EPLI)
Defense costs and damages from employment-related claims, for businesses from startups to large employers.
- Discrimination claims (all protected classes)
- Sexual harassment allegations
- Wrongful termination lawsuits
- Retaliation claims
- Failure to promote or hire
- Breach of employment contract
- Negligent evaluation
- Wrongful discipline
- Defamation arising from employment
- Third-party harassment coverage available
HR compliance support
Many EPLI carriers provide HR resources that help prevent claims and can be worth thousands in consulting fees.
- Employee handbook templates and review
- HR hotline for employment questions
- Manager training programs
- Anti-harassment training modules
- Job description templates
- Performance review forms
- Termination checklists
- Compliance alerts and updates
- Investigation guidelines
- State-specific forms and guidance
Wage and hour coverage
Traditional EPLI often excludes wage claims. Coverage can be added by endorsement or standalone policy.
- Overtime violations
- Minimum wage claims
- Exempt/non-exempt misclassification
- Independent contractor misclassification
- Meal and rest break violations
- Off-the-clock work claims
- Tip pooling violations
- Prevailing wage disputes
- Defense costs for class actions
- DOL investigation response
Additional employment coverages
Layered coverages for the full range of employment-related risks.
- Fiduciary liability (benefit plan errors)
- Directors & officers liability
- Crime / employee dishonesty
- Cyber liability (employee data)
- Immigration violation defense
- OSHA citation defense
- Workplace violence response
- Employment-related defamation
- Third-party discrimination
- Punitive damages where insurable
Washington State requirements to know
Pacific Northwest employers face additional state-specific requirements. Figures shown are as published for the years noted and change regularly; confirm current amounts with L&I.
Minimum wage
One of the highest minimum wages in the nation: $16.66/hr statewide (2025). Seattle, SeaTac and other localities set higher rates, so employers must track which rate applies to each employee.
Paid Family & Medical Leave
Washington's mandatory PFML program provides up to 12–18 weeks of paid leave. Employers coordinate with the state program, continue benefits and protect reinstatement rights.
Paid sick leave
All employers must provide paid sick leave accruing at 1 hour per 40 worked, usable for employee or family illness, safety issues and business or school closures.
Pay transparency
Employers with 15+ employees must include salary ranges in job postings and provide pay scale information on request. Violations can trigger discrimination claims.
Salary history ban
All employers are barred from asking about salary history during hiring; compensation must be based on job requirements and qualifications.
Overtime threshold
Washington's salary threshold for overtime exemption is higher than federal: $1,302.40/week (2025).
Non-compete restrictions
Non-competes are limited to employees earning $116,593+ (2024), must be disclosed before acceptance, and require garden-leave pay or they are void.
WLAD protections
The Washington Law Against Discrimination is broader than federal law, applies with no minimum employee count and protects sexual orientation and gender identity.
Reasonable accommodation
Accommodation is required for pregnancy, domestic violence survivors and disability, through an interactive process with documentation and good-faith effort.
What EPLI covers
Claims can come from current or former employees, job applicants or third parties, and can be based on perception rather than reality. Most EPLI policies are duty-to-defend, so the insurer manages the claim with experienced employment attorneys. General liability and business owner's policies do not cover employment claims. Discrimination or harassment claims from customers and vendors may also need a third-party endorsement.
Defense costs
Attorney fees, expert witnesses and court costs, even for frivolous claims.
Settlements
Negotiated settlements before or during litigation.
Judgments
Court-ordered damages, including compensatory and back pay awards.
Administrative claims
EEOC charges, state agency complaints and investigations.
Individual protection
Managers and supervisors personally named in lawsuits.
How EPLI responds to employment claims
Illustrative examples of employment claims and their outcomes.
Age discrimination in a workforce reduction
During a restructuring layoff, a 58-year-old former employee alleged the selection criteria disproportionately affected older workers while younger, less experienced employees were retained. The company had documentation gaps in its selection criteria.
- Settlement$425,000
- Defense costs$180,000
Illustrative example. Real outcomes depend on the facts and your policy terms.
HR compliance essentials
Proactive compliance reduces claims and strengthens your defense when they occur.
Documentation
- Current employee handbook
- Signed acknowledgment forms
- Written job descriptions
- Offer letters for all positions
- Performance review documentation
- Disciplinary action records
- I-9 forms properly completed
- Required workplace postings
Policies
- Anti-discrimination policy
- Sexual harassment policy
- Complaint / investigation procedure
- Leave policies (FMLA, state, sick)
- Accommodation request process
- Social media / technology policy
- Drug and alcohol policy
- Remote work policy
Training
- Harassment prevention (managers)
- Harassment prevention (all staff)
- Diversity and inclusion
- Interview and hiring best practices
- Documentation and discipline
- Accommodation and leave administration
- Workplace safety
- Data privacy and security
Wage and hour
- Proper exempt/non-exempt classification
- Accurate timekeeping system
- Meal and rest break compliance
- Overtime calculation accuracy
- Final paycheck timing
- Expense reimbursement policy
- Independent contractor review
- Pay equity analysis
Hiring and termination
- Consistent interview process
- Background check compliance
- Reference check procedures
- Progressive discipline process
- Termination documentation
- Exit interview process
- COBRA / benefits continuation
- Separation agreement review
Investigations
- Prompt response to complaints
- Trained investigator identified
- Documentation procedures
- Confidentiality protocols
- Interim protective measures
- Consistent remedial actions
- Anti-retaliation monitoring
- Follow-up procedures
Industries with elevated employment risk
Healthcare
High stress, diverse workforce, physical demands and shift work.
Hospitality & food service
Young workforce, tip issues, scheduling and high turnover.
Manufacturing
Physical work, safety concerns, shift differentials and accommodation requests.
Construction
Physical requirements, safety issues and contractor relationships.
Retail
Part-time workforce, scheduling, customer interactions and loss prevention.
Professional services
Promotion, partnership, compensation and work-life balance disputes.
Education
Tenure disputes, student interactions, academic freedom and budget-driven layoffs.
Technology
Rapid growth and contraction, diversity concerns, equity compensation and age bias.
Employment risk handled with care
Tailored coverage
EPLI programs matched to your industry, workforce size, risk profile and budget.
Market access
Relationships with leading EPLI carriers, including admitted and surplus lines options.
Claims advocacy
We stay involved through the claims process so coverage responds as it should.
Protect your business from employment claims
Get an EPLI quote and compliance resources tailored to your business. Confidential consultation and coverage review.
Coverage descriptions and employment law summaries are general information for education. They are not legal, tax or coverage advice, a statement of coverage, an offer or a binder. Scenarios and dollar figures are illustrative examples, not representations about any business. Coverage, limits and eligibility are governed by the terms, conditions and exclusions of the policies issued and are subject to underwriting.