Employment practices liability for California employers.

How California and federal law count your employees

How employees are counted decides which discrimination, training and federal rules reach your business.

• Out-of-state workers count. The Civil Rights Department (CRD) says employees inside and outside California are counted when deciding whether an employer is covered by the training law and by FEHA more generally, even though the out-of-state employees do not have to be trained.
• Contractors, volunteers and unpaid interns count toward the training threshold. They do not have to be trained themselves, but CRD's example is an employer with 2 full-time employees and 6 unpaid interns: it meets the 5-employee threshold and must train the two employees.
• Complaints come from more than staff. CRD says an employee, applicant, unpaid intern, volunteer or contractor may file a harassment complaint.
• The window is long. CRD says an employment discrimination complaint must be filed within three years of the alleged act.

Federal law draws different lines. The EEOC says its rules on race, color, religion, sex, national origin, disability and genetic information apply once a business has 15 or more employees for at least twenty calendar weeks in the current or prior year, the age rules apply at 20 or more, and virtually all employers are covered by the Equal Pay Act. Outside California the thresholds vary by state, and the EEOC notes that an employer below the federal count may still be covered by a state or local law. On multistate applications I list headcount by state.

What an EPLI form addresses and leaves out, line by line

IRMI describes EPLI as coverage for wrongful acts arising from the employment process and lists bodily injury, property damage and intentional or dishonest acts as its most common exclusions. Reading an actual form shows more. One published example is Arch's Essential EPL policy (form 00 EPL 0004 00 07 11); other carriers word these points differently:

• Wrongful acts it defines include discrimination, harassment, wrongful termination, demotion or failure to promote, breach of an employment contract including a handbook, retaliation and FMLA violations, plus related privacy, emotional distress, defamation and negligent hiring or supervision allegations.
• "Claim" includes a proceeding before the EEOC or a state or local fair employment practices agency, not only a lawsuit.
• Benefit and labor laws are excluded: workers' compensation, unemployment, ERISA (except section 510), NLRA, WARN, COBRA and OSHA, with retaliation carved back.
• Wage-and-hour is excluded: the FLSA (except the Equal Pay Act) or similar laws, overtime, on-call time, minimum wage, exempt classification, meal and rest periods and recordkeeping, again with retaliation carved back.
• Defense costs reduce the limit. IRMI calls this a shrinking limit; that form says defense payments reduce each applicable limit.

IRMI describes wage-and-hour endorsements as paying defense costs only, typically not settlements or judgments, with a sublimit that usually applies (IRMI's example range is $100,000 to $500,000). Injuries on the job belong on workers' compensation, not EPLI. I compare the exclusion text itself, not the summary page.

Third-party EPLI: claims from customers and vendors

Third-party EPLI is designed for allegations that your staff harassed or discriminated against a customer, client or vendor. IRMI explains why it matters: CGL policies exclude harassment and discrimination, the claims third parties most often bring.

• How it is attached: IRMI says it most often sits in a separate Insuring Agreement B with its own limit; a substantial minority of insurers add it by endorsement, with the limit counted inside Insuring Agreement A.
• Who counts as a third party: on the Arch form, a natural person who is a customer, vendor, service provider or other business invitee, never an insured person.
• What that form addresses: discrimination or sexual harassment directed at a third party, including conduct online or by email.
• Shared limit: that form's third-party limit is part of, not in addition to, the main limit.
• Optional: on that form it applies only if elected on the declarations.

IRMI notes the exposure tracks public contact: a business in constant contact with customers carries more of it than one selling to a few industrial buyers. Restaurants, retail, salons, medical offices and property managers are where I ask about it first. See coverage by industry.

Official sources

• CRD - Employment (FEHA coverage, who may file, filing deadline)
• CRD - Sexual Harassment Prevention Training: Information for Employers (Oct 2025)
• EEOC - Coverage of Business/Private Employers
• IRMI - Employment practices liability insurance
• IRMI - Retroactive date
• IRMI - Prior acts coverage
• IRMI - Extended reporting period
• IRMI - Third-party employment practices liability coverage
• IRMI - Wage and hour insurance coverage endorsement
• Arch Essential EPL policy, form 00 EPL 0004 00 07 11 (sample carrier form)