Over the last year, there has been one category of claim in our agency that has increased in frequency more than any other category. In almost all cases, it was not covered. And yet, almost every employer has this exposure. That is in the area of Employment Practices Liability.
What are “Employment Practices”? Employment Practices deal with hiring, firing and general management of your employees. Any company that has employees is vulnerable from the pre-hiring process through the exit interview. The employee may never have been hired, at the company a matter of days, or been with the company over a long span.
Employment Practices Liability coverage provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. It also provides the cost to defend such allegations, whether true or not. In many cases, the cost to defend is higher than any settlement.
These allegations do not just have to stem from owners or management. They can be employee-to-employee, or vendor-to- employee, or independent contractor- to-employee.
There is nothing that prevents a disgruntled employee from suing the company in order to try to collect a settlement. In the current economy, many employees are using such tactics.
Note that unless they are a single, white male under the age of 40, your employees have some protection under the law in regards to discrimination.
Employment Practices Liability has been available in the market for a number of years, but has been expensive and cumbersome to obtain. However, more recently, the market has been more accessible. Let us know how many employees you have. With just a few details, we can now provide a premium proposal.
AN EMPLOYMENT PRACTICES CLAIM WILL HIT 3 OUT OF EVERY 5 BUSINESSES. BE PROTECTED!
Real –life Examples:
|Wal-Mart found themselves at the wrong end of a $3.5 Million jury verdict, after a paraplegic job applicant was not hired, being told that the store, “had no openings for a person in a wheelchair.|
|A manufacturing company was hit with a judgment in excess of $1 Million, when a worker in their shipping department sued for racial harassment, based upon repeated “jokes” and racial slurs.|
|A female member of a mining crew sued her employer under both State and Federal law, alleging a hostile working environment. While her employer was successful in defending itself on the Federal claims, they were not as fortunate under the State law claims. Judgment for the plaintiff was entered for approximately $150,000. Defense costs exceeded the damages in this case!|
|An employee was awarded $375,000 after his employer refused to grant him 12 weeks of leave, guaranteed under the Family Leave Act of 1993.|
|A professional firm was hit with a $900,000 award, when a female employee claimed that her supervisor had sexually harassed her, along with a number of other employees, and that she was retaliated against after she complained to senior management.|
A $6.6MM jury verdict was awarded to a woman for her claim that she was subjected to two and a half (2 ½) years of sexual harassment. The verdict was reduced to $3.7 million by the trial judge. The plaintiff presented evidence as to seventeen (17) separate incidents of harassment and alleged a daily barrage of abusive language. The trial court, in refusing to vacate the award of punitive damages in its entirety, stated that “the amounts previously awarded to plaintiffs inTitle VII cases have not been a sufficient deterrent in view of the significantly increasing number of employment claims.
The law firm fired the Executive Director, where he worked for a year, after it was learned that he had multiple sclerosis. The claimant alleged that the firm did not provide reasonable accommodations for his disability, increased his workload and did not place his desk closer to the elevator. The firm claimed that it did not discriminate against the claimant, alleged that the claimant did not notify the firm of what he needed to make his job easier and that he could have altered his schedule to accommodate his condition. The jury awarded $2.5MM in punitive damages.
A woman filed a harassment claim against the employee of a gas station attendant and the employee who allegedly made lewd gestures and unwanted sexual advances when she stopped by the station to gas up her car and use the restroom. She logged a complaint with the company that owned the gas station regarding the employee’s conduct and demanded that the employee be fired. When the employee was not fired nor was any disciplinary action taken against him, she sued the employer alleging that the company was advised of this employee’s conduct but did nothing to prevent future actions. The case is still ongoing.
A former sales manager sued the company he was fired from alleging his wrongful termination was due to his age. The company alleged the plaintiff was fired due to poor performance but the jury came to a $2.3MM verdict.
An auto technician alleged he was wrongfully terminated in retaliation for his filing of a Worker’s Compensation Claim. The defendant firm contended that he was fired for failing to give proper notice and for taking leave without proper authorization. A jury ruled in favor of the plaintiff and a $2.56MM verdict was awarded.
So, you still think this could never happen to you? You think that your employees are all a happy family and would never make such a claim? Think again!