What’s an EPLI Policy and Why Do Nonprofits with Staff Need It?

Once a nonprofit hires staff, most people start to think about workers’ comp policies. But that’s not the ONLY policy you may need. You should also chat with your insurance agent about an Employment Practices Liability Insurance. That’s a mouthful, so AKA EPLI.

What is EPLI?

While workers’ comp covers bodily injury or death, but it doesn’t cover issues that might come up surrounding the worker’s actual employment. That’s where EPLI comes in. EPLI policies give coverage for a lot of Human Resources issues, like sexual harassment, wrongful termination, and discrimination.

It always helps if the nonprofit has really solid HR procedures (if you can’t say yours are solid, let’s chat), but if this is your first employee it can take some time to get those down. Plus, even with the best policies and procedures in places, sometimes things just don’t go the way that they should. You don’t want one unhappy employee to sink the nonprofit, right?

When would I need EPLI coverage?

Here’s an example. Say you’re a board member at a nonprofit that’s been growing. Up til now, it’s been mostly volunteer-run, but now there’s room in the budget to hire an employee or a 1099 contractor for a brand new position.

A longtime volunteer puts in her application for the job, assuming she’s a shoe-in. But, for whatever reason, someone else gets the position. The volunteer then sues the nonprofit, claiming she was discriminated against since she’s 6 months pregnant.

Even if her suit has no legs, paying a lawyer to defend the nonprofit in this case is going to be expensive. Much more expensive than getting a decent EPLI policy upfront, hmmm?

So, now what?

For all nonprofits with paid workers or considering hiring one, you should look into getting an EPLI policy.

And, as always, if you choose to go for it, be sure to READ the policy to see what it actually covers (some of the cheapest ones might not cover what you think they will!), and talk it through with an independent agent you trust. I wholeheartedly recommend Tom Wertish from Novallus Insurance, if you’re looking for someone to help you figure out your insurance needs.