Employment practices liability insurance.

Employment practices liability covers claims brought by employees and former employees: wrongful termination, discrimination, harassment, retaliation and failure to promote. It is the policy owners most often assume they do not need, usually on the reasoning that Texas is an at-will state — which is a misunderstanding of what at-will actually protects you from.

At-will does not mean claim-proof

At-will employment means you can generally terminate without cause. It does not permit termination for a prohibited reason, and it does nothing to prevent a former employee alleging that the real reason was discrimination or retaliation. The allegation is what costs money.

Even a claim that ultimately fails has to be answered — through the EEOC or the Texas Workforce Commission, and potentially in court. Defence costs frequently exceed any eventual settlement, and they arrive whether you were right or not.

Claims-made, and the third-party question

EPLI is written on a claims-made basis, so the retroactive date and any tail cover matter in the same way they do for professional liability. Changing insurer carelessly can drop cover for conduct that has already happened but has not yet produced a claim.

Many forms also offer third-party EPLI, covering discrimination or harassment claims brought by customers, clients or vendors rather than employees. For customer-facing businesses that extension is worth asking about specifically.