A type of liability insurance covering wrongful acts arising from the employment process. The most frequent types of claims covered under such policies include: wrongful termination, discrimination, sexual harassment, and retaliation. In addition, the policies cover claims from a variety of other types of inappropriate workplace conduct, including (but not limited to) employment-related: defamation, invasion of privacy, failure to promote, deprivation of a career opportunity, and negligent evaluation. The policies cover directors and officers, management personnel, and employees as insureds. The most common exclusions are for bodily injury (BI), property damage (PD), and intentional/dishonest acts. EPLI policies are written on a claims-made basis. The forms contain "shrinking limits" provisions, meaning that insurer payment of defense costs—which are often a substantial part of a claim—reduce the policy's limits. This approach contrasts with commercial general liability (CGL) policies, in which defense is covered in addition to policy limits. Although EPLI is available as a stand-alone coverage, it is also frequently sold as part of a management liability package policy. In addition to providing directors and officers (D&O) and fiduciary liability insurance, management liability package policies afford the option to cover employment practices liability (EPL).

Standard policy form (EP 00 01) covering employment practices liability (EPL) exposures promulgated by Insurance Services Office, Inc. (ISO), and filed in the various states for use by its member insurers. The policy uses a claims-made and reported trigger and specifically covers liability arising from discrimination, wrongful termination, sexual harassment, coercion, and other workplace torts.

A law that established a national, hourly minimum wage and promulgated eligibility rules for overtime pay. The Wage and Hour Division of the U.S. Department of Labor administers the law, and virtually all wage and hour claims cite a violation of the FSLA. Wage and hour claims allege that workers classified by employers as "exempt" (and therefore ineligible for overtime pay), are in fact, entitled to overtime pay. Wage and hour claims are a serious exposure for employers; a number of class action wage and hour claims have settled for more than $10 million.

One of the two types of wage and hour claims made by employees against their employers. Misclassification claims allege that an employer has misclassified an employee (as "exempt" from eligibility for overtime pay) and thus has failed to pay overtime wages to that employee in violation of the Fair Labor Standards Act (FLSA) of 1938.

(The other type of wage and hour claim is known as "pay practices claims," which are composed of miscellaneous claims that are not wage and hour claims.)

The FLSA established two broad classifications of employees, as follows: (1) exempt employees, who are those ineligible for, and thus "exempt" from, receiving overtime, and (2) nonexempt employees, consisting of employees who are not exempt and thus eligible to receive overtime pay.

The following five categories of employees are "exempt" from receiving overtime pay: (1) executives, (2) administrative personnel, (3) professionals, (4) computer-related employees, and (5) outside sales employees.

Insurers universally exclude indemnity coverage for both types of wage and hour claims (i.e., misclassification and pay practices) under employment practices liability insurance (EPLI) policies. However, a handful of insurers offer coverage for the costs of defending such claims, albeit subject to sublimits, typically $100,000 or $250,000.

An assertion by an employee-plaintiff that his or her employer has failed to pay overtime wages owed to the employee. Within the past several years, a number of high-profile, high-dollar wage and hour claims have been filed on a class action basis, a fact that has vastly increased the dollar amount payable under such lawsuits. Given the magnitude of this exposure, most employment practices liability insurance (EPLI) policies specifically exclude coverage for wage and hour claims.