EMPLOYMENT PRACTICES LIABILITY INSURANCE
George T. Solomon, D. B. A.
Associate Professor of Management
Director, Center for Entrepreneurial Excellence (CFEE)
Editor, Academy of Management Conference Proceedings
The George Washington University
2201 G Street NW
Funger Hall Suite 315
Washington, DC 20052
202 994-3760 voice
202 994-4930 fax
gsolomon@gwu.edu
Lloyd W. Fernald, Jr., D. B. A.
Professor Emeritus
University of Central Florida
Literature Review
Definition
Employment Practices Liability Insurance (EPLI) provides company protection against many
kinds of employee lawsuits, such as sexual harassment suits, discrimination suits, wrongful
termination actions and breach of employment contract lawsuits (Strauss, 2005).
History
The roots of Employment Practices Liability Insurance (EPLI) started in the 1930’s due to the
increasingly complex issues surrounding employers and the resulting need for the intervention of
the federal government. Until the 1930’s the federal government did not regulate the workplace
with respect to child labor, occupational hazards, minimum wage, overtime, and the unions. In
essence, the employer had the ability to terminate employees at will (Schaffer & Schmidt, 2000).
Thus, in the past, employment-at-will was the general guideline that employers followed. This
rule stated that an employer might discharge an employee for any reason, regardless of whether
the employer’s motive was reasonable, unreasonable, justified, unjustified, indifferent or
malicious. Employees neither had a right to work nor a sense of security from termination
(Levin, 2000).
The above is no longer the case. Employment-related lawsuits are more common than ever.
State and federal regulations mandating employment practices continue to broaden, giving
employees who feel they have been wronged greater recourse. In addition, the courts are
imposing greater liability on employers in discrimination laws. One of the most significant
examples of this is a recent rulin