Employment Practices Liability

• Harassment & Discrimination. Harassment and discrimination claims are at a decade high, with sexual harassment remaining the top driver statewide.
• Expanding Protected Classes. California’s expanded definition of protected classes under FEHA means more employees qualify for protected status than ever before.
• Remote Work Claims. Remote work disputes over scheduling, monitoring, and termination have created a new wave of wrongful termination filings since 2021.
• PAGA Exposure. PAGA (Private Attorneys General Act) suits often run parallel to EPLI claims, multiplying employer exposure significantly.
• Nuclear Verdicts. Jury sympathy for employees in California courts consistently drives verdicts well above national medians, even in cases with limited merit.

California employees enjoy protections unavailable in most other states, including:

• No-fault leave protections under CFRA, PDL, and FMLA with overlapping obligations
• Among the broadest anti-discrimination statutes in the country under FEHA
• A three-year statute of limitations for most employment claims
• Mandatory arbitration restrictions that push more claims into open court
• One-way fee-shifting: if you lose, you pay the plaintiff’s attorney fees

Small and mid-sized employers are not immune. In fact, they are often the most vulnerable because they lack in-house legal counsel and formal HR infrastructure.

Insurance is not a substitute for strong HR practices. Carriers evaluate both when pricing and underwriting EPLI policies. Companies that demonstrate proactive risk management not only reduce their claims frequency, they secure better terms.

Key risk management priorities:

• Up-to-date employee handbooks and written policies reviewed annually by employment counsel
• Documented, consistent discipline and termination processes
• Annual manager training on harassment prevention (required by law for CA employers with 5+ employees)
• Clear complaint and investigation procedures with documented outcomes
• Regular audits of classification, leave, and pay practices

One of the most common mistakes employers make is buying the minimum EPLI limit available on a bundled policy without benchmarking it against their actual exposure.

Limit adequacy depends on:

• Total headcount and workforce complexity
• Percentage of employees in California vs. other states
• Prior claims history and litigation experience
• Industry sector (hospitality, healthcare, and retail carry elevated risk)
• Defense cost structure (inside vs. outside limits matters enormously)

Many employers discover their limits are inadequate only after a claim is in motion. By then, it is too late to restructure.