Employment Practices Liability Insurance

Why does your nonprofit need Employment Practices Liability Insurance (EPLI)? Many nonprofits believe they are immune to the legal challenges that many of their for-profit counterparts are subject to. However, they are not. If your nonprofit has employees or volunteers, or works with contractors, you likely want to consider an EPLI policy.

Coverage for Volunteers?

Your policy typically considers VOLUNTEERS and employees “insureds”.  So, if your volunteer does, says, or implies something that is sexual, discriminatory, etc., your organization could be held responsible for damages. Employment Practices Liability Insurance protects your non-profit from the following:

1.      Wrongful termination of an employee or volunteer;

2.      Discrimination;

3.      Sexual harassment;

4.      Hostile work environment; and

5.      Unfair hiring (volunteering) practices.

You may think that your employees or volunteers would never engage in any such practice, and you may be right.  However, we live in a litigious society. An allegation may be filed against your organization at any time.  Even if your nonprofit isn’t found “guilty”, defense costs can be costly and unaffordable. 

Employment Practices Liability Insurance covers the costs of your organization’s defense.  It also covers any settlement to the plaintiff (but not punitive damages or fines – those are not paid by insurance). Many insurance carriers provide risk management programs offering advice and guidelines and best practices for hiring, firing, and other employee and volunteer issues.

In 2017, over 80,000 employment discrimination charges were filed with the EEOC.  Consequently, can your organization afford NOT to have this coverage?


One way to better explain Employment Practices Liability Insurance may be to give examples of claims. These claims examples are provided by Great American Insurance. This is a small sampling of claims. 

TOTAL CLAIM – $118,800

A former Executive Director of a human service organization filed a complaint for  alleged whistleblower violations and wrongful termination. The claimant maintained she was terminated after reporting alleged misuse of the organization’s funds. The matter settled for $100,000 at early mediation, with an additional $18,800 in defense costs.

 TOTAL CLAIM – $161,400

An officer of a youth organization filed suit for alleged race and national origin discrimination, breach of contract and defamation. The claimant maintained that he was one of only two minority senior managers. The claimant alleges that he was discharged in retaliation for questioning the organization’s spending practices. The matter settled for $135,000, with an additional $26,400 in defense costs.

TOTAL CLAIM – $672,190

Former employees filed suit after allegedly being subjected to egregious sexual misconduct by the Executive Director of a social service organization. The organization also had financial issues that would have caused a public relations problem if the matter proceeded to trial. The matter settled for $645,000, with an additional $27,190 in defense costs.

Learn More

Are you interested in learning more about nonprofit insurance? Contact local insurance agent, Sandi Purinton with The Insurance Connection. Contact her at 678-439-8757 or sandi@insconnectga.com to get a free insurance quote and review.

Disclaimer: This material is for information only. This post does not provide legal or professional advice. Consult with your own attorney or other expert consultants for a professional opinion specific to your situation. The Insurance Connection welcomes all applications, without regard to religion, race, color, national origin, sex, handicap or familial status.