Who is not covered: standard employment practices liability insurance (EPLI) responds to claims by employees, former employees and applicants. A claim by a customer or vendor, such as a spa customer who says an employee refused her service because of discrimination, is a third-party claim. Coverage for it must be specifically added, usually by endorsement.

What issues are excluded: EPL policies commonly exclude matters handled by other systems or laws, such as workers' compensation benefits, ERISA benefit claims, and wage-and-hour claims under the federal Fair Labor Standards Act (FLSA). Some insurers offer limited wage-and-hour coverage by endorsement, but the standard policy does not include it. Retaliation against an employee who reported harassment is not excluded; it is a core covered wrongful act.

What is a claim: EPL policies typically define a claim broadly enough to include a written demand for monetary or non-monetary relief. A lawyer's letter demanding reinstatement, with no money requested and nothing filed, is already a claim, and the employer should report it promptly.

Administrative and regulatory proceedings: claim definitions typically reach these too, including charges filed with the U.S. Equal Employment Opportunity Commission (EEOC). That matters because the employer may have to take part in mediation or submit a position statement long before any finding, and those steps cost money. In California, the parallel state filing is a complaint with the Civil Rights Department under Government Code §12960.