Employment Practices Liability Insurance for Connecticut Small Businesses: Who Needs It and What It Covers

Short answer: Employment practices liability insurance (EPLI) pays defense costs and settlements when an employee or job applicant alleges discrimination, harassment, wrongful termination or retaliation. Connecticut's employment laws reach small businesses: since 1 October 2022 its anti-discrimination statute has applied to employers with one or more employees, and employers with three or more employees must provide two hours of interactive harassment-prevention training. General liability policies exclude these claims.

Why small Connecticut employers are exposed

• Low thresholds. Since 1 October 2022 (Public Act 22-82), the Connecticut Fair Employment Practices Act has covered employers with one or more employees, replacing the former three-employee threshold and far below the 15-employee threshold for most federal discrimination laws.
• An accessible agency process. Complaints go first to the Connecticut Commission on Human Rights and Opportunities (CHRO). Even a claim without merit has to be answered, often with an attorney, and defense costs accumulate quickly.
• Training and notice mandates. Since the 2019 Time's Up Act, employers with three or more employees must provide two hours of interactive sexual harassment training to employees within six months of hire, with supplemental training at least every ten years, and must post and distribute notice of the law. Supervisors must be trained at any employer size. Missing training does not create a claim, but it weakens a defense.
• Changing leave and pay rules. Recent Connecticut legislation on paid sick leave and related employment matters creates new ways for a termination to be challenged as retaliation; see Public Act 26-12 and your payroll.

What EPLI typically covers

• Discrimination based on protected characteristics
• Sexual harassment and hostile work environment
• Wrongful termination and retaliation, including for whistleblowing or taking protected leave
• Failure to promote, failure to hire, and certain privacy and defamation claims tied to employment
• Defense costs before the CHRO and the EEOC, not just in court
• Optionally, third-party coverage for harassment or discrimination claims by customers or clients

What EPLI typically does not cover

• Wage and hour claims (unpaid overtime, misclassification), except sometimes a small defense-cost sublimit
• Workers' compensation, ERISA, OSHA and unemployment obligations
• Back pay or reinstatement costs in some forms, and punitive damages where uninsurable
• Claims known before the policy began; EPLI is claims-made, so the retroactive date matters

Buying tips

• Ask whether the policy lets you choose your own counsel or requires panel counsel.
• Check the retention (deductible), which often applies per claim.
• Use the insurer's HR hotline and handbook resources; they are often included.
• Household employers have their own version of this risk: see EPLI for household employers.

EPLI can be bought standalone or bundled with D&O and fiduciary coverage; see D&O for Connecticut boards. New England Insurance, an independent agency in Bridgeport since 2012, can place EPLI for Connecticut employers of any size. Request a review or see professional and management liability.