Restaurant owners often confuse Employment Practices Liability Insurance (EPLI) with Workers' Compensation - or assume that if they have Workers' Comp, they're covered for all employee-related claims. That's not the case.
At Anchor Insurance, we explain the difference clearly: Workers' Comp covers physical injuries on the job. EPLI covers claims about how employees are hired, managed, and fired. Both are essential for restaurants, and they often work together to protect you from different kinds of employment risk.
EPLI vs Workers' Comp: Side-by-Side Comparison
Here's a clear breakdown of what each policy covers, who it protects, and when it applies.
Workers' Compensation Insurance
- What it covers: Medical expenses, lost wages, and disability benefits for employees who are injured or become ill due to their job
- Who it protects: Employees who suffer bodily injury or occupational disease in the course of employment
- What triggers a claim: A physical injury (burn, slip and fall, cut, repetitive strain) or illness (heat exhaustion, chemical exposure) that occurs at work
- Legal requirement: Required by law in almost every state once you have employees (exact thresholds vary by state)
- Examples of covered claims: A line cook burns their hand on a grill; a server slips on a wet floor and breaks their wrist; a dishwasher develops carpal tunnel syndrome
- What it does NOT cover: Harassment, discrimination, wrongful termination, retaliation, wage disputes, or any non-physical employment claim
Employment Practices Liability Insurance (EPLI)
- What it covers: Legal defense and damages for claims alleging harassment, discrimination, wrongful termination, retaliation, wage violations, and other employment-related wrongs
- Who it protects: The business (and often individual owners, managers, and supervisors) from lawsuits by employees, former employees, or job applicants
- What triggers a claim: An employee or applicant alleges they were harassed, discriminated against, wrongfully terminated, retaliated against, or otherwise mistreated in violation of employment law
- Legal requirement: Not required by law, but increasingly considered essential for any employer with employees
- Examples of covered claims: A server sues for sexual harassment by a manager; a terminated employee claims age discrimination; a worker alleges they were fired in retaliation for filing a workers' comp claim
- What it does NOT cover: Physical injuries or illnesses (those are covered under Workers' Comp)
Where EPLI and Workers' Comp Overlap (and Where They Don't)
There are scenarios where an incident might trigger both a Workers' Comp claim and an EPLI claim - or where you might think you're covered under one policy when you actually need the other.
Scenario 1: Injury + Retaliation Claim
What happens: An employee suffers a back injury and files a Workers' Comp claim. Two weeks later, they're terminated. They sue, claiming they were fired in retaliation for filing the workers' comp claim.
- Workers' Comp covers: The medical bills and lost wages from the back injury
- EPLI covers: The legal defense and potential settlement of the retaliation lawsuit
This is a classic example of why restaurants need both policies. The injury itself is covered by Workers' Comp, but the employment claim that follows is covered by EPLI.
Scenario 2: Workplace Harassment (No Physical Injury)
What happens: A server alleges that a kitchen manager subjected them to ongoing sexual harassment, creating a hostile work environment. There is no physical injury.
- Workers' Comp covers: Nothing - there's no bodily injury
- EPLI covers: The legal defense and damages if the employee sues for harassment
This is a pure EPLI claim. Workers' Comp doesn't apply because there's no physical injury.
Scenario 3: Workplace Harassment Leading to Injury
What happens: An employee alleges ongoing harassment and develops stress-related medical issues (anxiety, insomnia, high blood pressure). They file both a Workers' Comp claim for the medical condition and an EPLI claim for the harassment.
- Workers' Comp covers: Potentially the medical treatment, but this is contested territory - many states exclude 'mental-mental' injuries (purely psychological injuries with no physical cause) from Workers' Comp
- EPLI covers: The harassment lawsuit, regardless of whether there's a compensable injury under Workers' Comp
This is a gray area. The Workers' Comp carrier may deny the claim if the injury is purely psychological. The EPLI claim, however, stands on its own.
Scenario 4: Wage and Hour Dispute
What happens: A group of servers files a lawsuit claiming unpaid overtime and illegal tip pooling.
- Workers' Comp covers: Nothing - wage disputes are not bodily injuries
- EPLI covers: Potentially yes, but it depends on your policy. Traditional EPLI policies often exclude wage and hour claims. Newer policies may offer defense cost coverage or full wage and hour coverage as an endorsement
This is why it's critical to review your EPLI policy language. At Anchor, we compare how different carriers handle wage and hour claims and make sure you have the coverage you need.
Why Restaurants Need Both EPLI and Workers' Comp
Restaurants face both physical and employment-related risks, often at higher rates than other industries. Here's why both policies are essential:
- High injury rates: Burns, cuts, slips, falls, and repetitive strain injuries are common in kitchens and dining rooms - Workers' Comp is non-negotiable
- High turnover: More hires and terminations = more wrongful termination claims - EPLI is critical
- Diverse workforce: Managing employees of different ages, races, religions, and national origins requires careful compliance - discrimination claims are a real risk
- Tipped employees: Tip disputes, wage violations, and overtime miscalculations can lead to wage and hour lawsuits
- Manager training gaps: Many restaurant managers lack formal HR training, increasing the risk of harassment, retaliation, and discrimination claims
- Retaliation claims after injuries: Workers' Comp covers the injury, but EPLI covers the retaliation lawsuit that often follows
Workers' Comp is legally required in almost every state. EPLI is not required by law, but it's just as essential for protecting your business from financial ruin.
How Anchor Insurance Helps You Get Both Right
At Anchor, we don't sell EPLI or Workers' Comp in isolation. We look at your entire risk profile and help you build a coordinated package that covers both physical and employment risks.
- We shop multiple carriers: Different carriers have different appetites, pricing, and policy language for both EPLI and Workers' Comp
- We review coverage grants and exclusions: We make sure you understand exactly what each policy covers - and where the gaps are
- We coordinate limits and deductibles: We help you choose limits that make sense for your headcount, turnover rate, and risk exposure
- We explain where policies overlap: When a claim could trigger both policies (like a retaliation claim after a workers' comp injury), we make sure you know which policy responds
Frequently Asked Questions
If I have Workers' Comp, do I still need EPLI?
Yes. Workers' Comp only covers physical injuries and illnesses. It does not cover harassment, discrimination, wrongful termination, retaliation, or wage disputes. EPLI is a separate policy that covers employment-related lawsuits - and those lawsuits can be just as expensive (or more expensive) than workers' comp claims.
Does EPLI cover retaliation claims after a Workers' Comp injury?
Yes. If an employee files a Workers' Comp claim and is later terminated, and they sue claiming retaliation, that's an EPLI claim. Workers' Comp covers the injury itself, but EPLI covers the retaliation lawsuit. This is one of the most common scenarios where both policies come into play.
Can I bundle EPLI and Workers' Comp together?
Sometimes. Some carriers offer package policies that include both Workers' Comp and EPLI. However, in many cases, it's better to buy them separately through specialized carriers to get the best coverage and pricing. At Anchor, we compare both bundled and standalone options and recommend the structure that gives you the best value and broadest protection.