Discrimination Claims
Employment claims alleging adverse treatment based on protected characteristics like race, gender, age, disability, or religion, covered under EPLI.
What It Is
Discrimination claims allege that an employer treated an employee or applicant unfavorably because of a protected characteristic—race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), national origin, age (40+), disability, or genetic information. These claims are filed under federal laws (Title VII, ADEA, ADA) and analogous state laws, often with the EEOC or state fair employment agency.
Discrimination claims can arise from any employment decision: hiring, firing, promotion, compensation, job assignments, training opportunities, discipline, and terms and conditions of employment. The legal theories include disparate treatment (intentional discrimination), disparate impact (neutral policies that disproportionately affect a protected group), and failure to accommodate (disability or religious accommodation).
EPLI covers discrimination claims as a core coverage grant, including defense costs, settlements, judgments, and in some policies, EEOC and state agency investigation costs. Some EPLI policies also cover the insured's costs of corrective action required by a settlement or judgment.
Why It Matters for Brokers
Discrimination claims represent approximately 30% of all EEOC charges filed annually. In 2023, the EEOC received over 81,000 charges. Even frivolous discrimination claims cost $50,000-100,000 to defend, and meritorious claims regularly result in six-figure and seven-figure settlements and verdicts. EPLI is the only coverage that responds to these claims—CGL and D&O both exclude employment practices.
Real-World Example
A company passes over a qualified female candidate for promotion in favor of a less-experienced male colleague. The female employee files a gender discrimination claim. EEOC investigation costs: $18,000. Mediation fails. Litigation defense: $165,000. Jury verdict: $340,000 in compensatory damages plus $200,000 in punitive damages. Attorney fees awarded: $95,000. Total: $818,000. The $1M EPLI policy covers $793,000 after the $25,000 retention. Without EPLI, the company pays $818,000 out of pocket—potentially devastating for a mid-size employer.
Common Mistakes
- 1Not recommending EPLI for all employers, assuming discrimination claims only target large corporations—small businesses face proportionally higher discrimination claim rates.
- 2Failing to verify that the EPLI covers all protected categories recognized by both federal and applicable state laws, which may be broader than federal protections.
- 3Not advising clients to implement anti-discrimination policies, diversity training, and consistent employment documentation to reduce claim frequency and severity.
How brokerageaudit.com Handles This
brokerageaudit.com's Policy Checker verifies that EPLI policies cover all applicable protected categories under both federal and state law based on the insured's operating states. The system identifies accounts with workforce composition data that may indicate elevated discrimination risk and recommends appropriate EPLI limits. The Submission Intake captures diversity and inclusion program details that can improve underwriting outcomes.