How EPLI Can Save Your Company from Itself

In the fast-paced world of software development, innovation isn’t just a buzzword—it’s your company’s lifeline. You’re constantly pushing boundaries, building cutting-edge solutions, and redefining industries. But what if the biggest threat to your company isn’t your competition, a failed release, or a software flaw?

What if the risk is coming from inside your own company?

Imagine this: You’ve just launched a game-changing SaaS product. The market loves it, your investors are thrilled, and your team is celebrating. Then, unexpectedly, you receive a legal notice from a former employee—a wrongful termination lawsuit. Suddenly, your focus shifts from scaling innovation to damage control.

Employee-related lawsuits can disrupt operations, drain resources, and damage company morale. This is exactly why Employment Practices Liability Insurance (EPLI) exists—to protect tech companies from costly and time-consuming legal battles.

What Is EPLI and Why Does It Matter?

Employment Practices Liability Insurance (EPLI) is designed to protect businesses from employee-related lawsuits, covering legal costs, settlements, and damages for claims such as:

Wrongful termination
Discrimination (gender, race, age, etc.)
Sexual harassment
Wage disputes
Retaliation claims

For software companies, EPLI isn’t just a formality—it’s a critical risk management tool. The tech sector’s rapid growth, remote work structures, and compliance challenges make employment disputes more frequent and more costly.

Additional Reading: For a deeper understanding of EPLI coverage, check out this detailed guide from the EEOC.

Why Tech Companies Face Unique Employment Risks

Unlike traditional industries, software firms face specific employment challenges that make EPLI coverage essential:

1. Discrimination & Harassment Claims in Diverse Workplaces

Tech startups and software firms champion diversity, but workplace tensions still arise. Even unintentional bias in promotions, pay, or hiring decisions can lead to lawsuits.

2. High Turnover & Layoff Disputes

The software industry is highly competitive and often experiences rapid hiring and firing cycles. Even well-documented terminations can spark costly legal battles.

3. Misclassification of Contractors vs. Employees

Many software companies hire freelancers and contractors, but misclassifying workers (under labor laws like California’s AB5 or the FLSA) can lead to wage disputes and penalties.

4. Remote Work Challenges

As remote work becomes the norm, issues around workplace discrimination, harassment, and overtime pay are harder to track—creating new legal risks.

The Society for Human Resource Management (SHRM) offers great insights on employment compliance best practices.

The Cost of Employee Lawsuits: Can You Afford the Risk?

A single employment lawsuit can cost software companies hundreds of thousands of dollars. Consider these statistics:

$75,000 – Average settlement cost for employment lawsuits (EEOC)
$200,000+ – Cost if the case goes to trial
41% – Percentage of businesses sued by employees at least once (Hiscox Report)

Beyond legal fees, employee lawsuits bring hidden costs:

Productivity Losses: Time spent in courtrooms instead of building software.
Reputation Damage: Negative media coverage can deter investors and talent.
Workplace Tension: Lawsuits create stress, turnover, and low morale.

Preventative Strategy: EPLI doesn’t just cover lawsuits—it discourages frivolous claims by ensuring companies have the resources to fight back.

Real-World Examples: When EPLI Made the Difference

Let’s compare two software companies facing the same lawsuit risk:

Company A (With EPLI)

A tech startup faced a wrongful termination lawsuit after a developer was let go. The case was settled out of court, and EPLI covered legal fees, preventing major disruptions.

Company B (Without EPLI)

A mid-sized SaaS company faced a similar lawsuit but lacked EPLI coverage. They paid $300,000+ in legal fees—delaying hiring plans and straining investor confidence.

EPLI is not just an expense—it’s financial protection that keeps companies moving forward.

How to Implement EPLI in Your Software Company

Step 1: Assess Your Risk Profile

Do you hire frequently?
Do you employ remote teams across multiple states?
Are HR policies up-to-date with labor laws?

Step 2: Work With an EPLI Specialist

Not all EPLI policies are the same. An insurance expert can tailor coverage to fit your company’s growth stage and workforce size.

Step 3: Train Leadership & HR

Implement anti-discrimination & harassment training.
Ensure contracts and employment terms are legally sound.

Step 4: Conduct Annual EPLI Reviews

As your company scales, adjust coverage levels to reflect new risks.

Want guidance? Schedule a free EPLI consultation with a specialist here.

FAQs About EPLI for Tech Companies

Q: Is EPLI necessary for small startups?

A: Yes. Even small teams face lawsuit risks—especially if layoffs, promotions, or contractor relationships aren’t well-documented.

Q: Does EPLI cover independent contractor disputes?

A: Some policies do, but coverage varies—ensure your plan includes classification disputes.

Q: How much does EPLI cost?

A: Premiums depend on:

Company size
Number of employees
Claims history

Average cost: $1,000–$3,000 per year per $1M in coverage.

Get a customized EPLI quote here.

Final Thoughts

Tech innovation doesn’t just happen in the code—it happens in the workplace. Protecting your company from internal risks is just as important as protecting it from external competitors.

EPLI isn’t just about lawsuit protection—it’s about long-term stability. With the right coverage, your team can focus on what matters most: building the future.

Take action today. Consult an EPLI expert and secure your company’s financial and operational future.

The Hidden Threat to Tech Innovation