Even a church or nonprofit with just a handful of paid staff — an office administrator, a music director, a program coordinator — carries employment-related legal exposure the moment it has its first employee. Employment practices liability insurance (EPLI) covers claims like wrongful termination, discrimination, harassment, and retaliation, and it’s one of the more frequently overlooked coverages in a small nonprofit’s insurance program.

Small organizations sometimes assume that informal, relationship-based HR practices — “we’re like a family here” — reduce this risk, but the opposite is often true. Without written job descriptions, a documented hiring and termination process, or clear policies on things like harassment reporting, a small nonprofit can actually be more exposed than a larger organization with a formal HR department, simply because there’s less paper trail to show that decisions were made fairly and consistently.

EPLI claims can come from unexpected directions in a religious or nonprofit context — a volunteer who feels they were treated like an employee and then dismissed unfairly, a staff member let go during a budget shortfall who alleges age discrimination, or a disagreement over how a religious exemption was applied to an employment decision. These situations are common enough in nonprofit life that EPLI is worth budgeting for even on a tight insurance spend, rather than treating it as optional.

Beyond insurance, a few low-cost governance steps meaningfully reduce this risk: written job descriptions and personnel policies, a documented process for handling complaints, and consistent record-keeping around performance issues before any termination decision. None of this eliminates the possibility of a claim, but it substantially improves an organization’s position if one is ever filed.

Action Items

• Confirm you carry EPLI coverage and know the limit, even with just one or two paid staff.
• Write basic job descriptions and a simple personnel policy if none currently exist.
• Start documenting performance issues in writing before any termination decision.

This post is for general informational purposes only and isn’t legal or insurance advice — every policy and employment situation is different, so please talk with a licensed insurance professional (and an employment attorney, for HR policy questions) before making decisions for your organization.