Top 5 Employment Practices Liability Insurance (EPLI) Claims Every Cannabis Employer Should Understand to Protect Their Growing Business
As the cannabis industry continues to expand across the United States, employers face a unique set of legal and operational challenges. With more states legalizing both medical and recreational cannabis, businesses in the sector are navigating complex regulations while building teams and maintaining compliance. One crucial but often overlooked aspect of risk management is Employment Practices Liability Insurance (EPLI), which protects companies from claims made by employees regarding workplace practices. Understanding the most common EPLI claims can help cannabis employers safeguard their businesses, mitigate risk, and foster a fair and compliant workplace.
1. Discrimination Claims: Recognizing and Preventing Bias in Cannabis Workplaces
Discrimination remains one of the leading sources of EPLI claims in nearly every industry, and cannabis is no exception. These claims often allege that an employer treated an employee unfairly based on protected characteristics such as race, gender, age, religion, or disability.
In cannabis workplaces, where teams may include a mix of young startups and experienced agricultural professionals, the risk of unconscious bias can be high. Employers must establish clear anti-discrimination policies, conduct regular training, and implement consistent performance evaluations. Early intervention and transparent complaint procedures can reduce the likelihood of disputes escalating into formal claims.
2. Harassment Claims: Maintaining a Safe and Respectful Workplace in Cannabis Operations
Harassment, including sexual harassment and hostile work environment claims, is another frequent source of EPLI lawsuits. In cannabis businesses, where small teams often work in close quarters in dispensaries, cultivation facilities, or labs, conflicts can escalate quickly if not properly addressed.
Employers should develop comprehensive harassment policies, provide ongoing staff training, and ensure that reporting mechanisms are confidential and effective. Prompt investigation of complaints and documented corrective actions are key steps in defending against potential EPLI claims.
3. Wrongful Termination Claims: Navigating Employee Separation in a Highly Regulated Industry
Termination-related claims are particularly common in the cannabis industry, which is still navigating evolving labor laws and regulations. Employees may allege that their termination violated employment contracts, was discriminatory, or retaliatory.
Cannabis employers can reduce risk by clearly defining performance expectations, maintaining accurate records, and applying consistent disciplinary procedures. Consultation with HR and legal professionals before terminating an employee can help avoid costly EPLI claims.
4. Wage and Hour Disputes: Ensuring Compliance With Compensation and Labor Laws
Wage and hour claims, including allegations of unpaid overtime, misclassification of employees, and failure to provide legally mandated breaks, are a growing concern in the cannabis industry. With multiple states enforcing varying labor laws, the risk of inadvertent noncompliance is high.
Employers should implement payroll systems that ensure accurate time tracking, classify workers correctly as employees or independent contractors, and stay up to date with state-specific wage and hour regulations. Clear communication with staff about compensation policies can also prevent misunderstandings that lead to EPLI claims.
5. Retaliation Claims: Protecting Employees Who Report Misconduct or Exercise Legal Rights
Retaliation claims occur when employees allege they faced adverse action for reporting workplace issues, filing a complaint, or exercising legally protected rights. In cannabis businesses, this can include whistleblowing about regulatory violations, safety concerns, or discriminatory practices.
Employers can mitigate this risk by cultivating an open and responsive workplace culture, documenting employee complaints and management responses, and providing clear anti-retaliation policies. Proper handling of complaints not only reduces EPLI exposure but also strengthens trust and morale within the organization.
Conclusion: Why Cannabis Employers Must Understand EPLI Claims to Safeguard Their Business and Employees
The cannabis industry presents exciting growth opportunities, but it also exposes employers to complex legal risks. EPLI coverage is a critical tool for protecting businesses from financial losses associated with employee claims, but prevention is equally important. By understanding the top five EPLI claims discrimination, harassment, wrongful termination, wage and hour disputes, and retaliation cannabis employers can implement proactive policies, foster fair workplaces, and reduce the likelihood of costly litigation.
For employers navigating this rapidly evolving industry, staying informed about EPLI risks and maintaining strong compliance practices is not just smart business—it’s essential for long-term sustainability and employee trust.
