Employment Practices Liability Insurance

Diverse group of employees standing together with arms linked, symbolizing workplace unity and the importance of Employment Practices Liability Insurance.

Do Volunteer-Run Nonprofits Need Employment Practices Liability Insurance?

If your nonprofit has employees, volunteers, or even contractors, it’s time to talk about Employment Practices Liability Insurance (EPLI). Many organizations believe they’re too small, too mission-focused, or too well-meaning to face employment-related claims. Unfortunately, that belief doesn’t hold up in court—and the costs can be staggering.

What Is Employment Practices Liability Insurance?

EPLI protects your nonprofit from claims related to workplace conduct. This includes lawsuits involving:

  • Wrongful termination (of employees or volunteers)
  • Discrimination (race, age, disability, etc.)
  • Sexual harassment
  • Hostile work environments
  • Unfair hiring or volunteer practices

If a current or former employee, volunteer, or job applicant believes your organization mistreated them, they can bring a claim. Even if your nonprofit did everything right, defending that claim can cost thousands—if not hundreds of thousands—of dollars.

Are Volunteers Covered?

In most EPLI policies, especially those tailored to nonprofits, volunteers are treated as “insureds,” just like employees. That means if a volunteer behaves inappropriately—makes a discriminatory remark or crosses a boundary—your nonprofit could still be held liable. EPLI provides a layer of financial protection if someone files a claim.

Why This Coverage Matters (Even for Small Nonprofits)

We live in a litigious world. In 2017 alone, the EEOC recorded over 80,000 employment discrimination charges. Legal defense costs continue to climb, and public allegations can damage your nonprofit’s reputation—especially in smaller communities.

Even if the case is dismissed or settled early, your nonprofit will likely still be responsible for legal fees. EPLI helps cover those costs, and in many cases, your insurer may provide risk management guidance to help prevent future issues.

Real Examples of EPLI Claims Against Nonprofits

Here are a few real-world EPLI claims (source: Great American Insurance) that show how costly these claims can be—even for small, mission-driven organizations:

🧾 Total Claim – $118,800
A human services nonprofit terminated its executive director after she reported financial misuse. She filed a whistleblower and wrongful termination complaint. The case settled for $100,000, plus $18,800 in legal fees.

🧾 Total Claim – $161,400
A senior manager at a youth organization filed suit for race and national origin discrimination, breach of contract, and defamation. The case settled for $135,000, with $26,400 in defense costs.

🧾 Total Claim – $672,190
Multiple former employees of a social service nonprofit alleged egregious sexual misconduct by the executive director. The case settled for $645,000, plus $27,190 in legal fees—avoiding what could’ve been a damaging trial.

Is EPLI Right for Your Nonprofit?

If you work with volunteers, employees, or contractors, Employment Practices Liability Insurance isn’t optional—it’s essential. It protects your mission, your people, and your financial stability.

At The Insurance Connection, we specialize in nonprofit insurance, including EPLI policies that fit your organization’s size and risk level. Let’s make sure you’re covered.

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Disclaimer: This post is for general informational purposes only and does not constitute legal advice. Please consult with an attorney or risk advisor for guidance tailored to your organization.