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Employment Practices Liability

Did You Know Employment Practices Liability Claims are on the rise?

The current level of workplace morale, the state of the economy, and legislation such as the Americans with Disabilities Act and the Family Medical Leave Act has led to an increase in employment practices Liability – related claims and lawsuits. Claims can come from current employees, former employees and job applicants. The procedures that employers use or don’t use in hiring, firing and managing their employees can translate into huge defense costs and legal awards to plaintiffs for unintentional errors or oversights. As the name suggests, Employment-Related Practices Liability Coverage provides broad insurance protection from employment-related claims and lawsuits brought against a company, its managers and its directors and officers. It covers such things as age and gender discrimination, sexual harassment, wrongful discipline and termination and negligent decisions involving hiring, promotion and compensation. Too many businesses believe their General Liability or Professional Liability policy will cover them for these types of claims. Most General Liability or Professional Liability policies will exclude this exposure or may provide very minimal coverage.

Here are just a few claims examples:

A maintenance worker sued his employer for disability discrimination and wrongful termination. The employee alleged that he was put on involuntary leave of absence and subsequently terminated after he informed his employer that he had multiple sclerosis. The jury awarded the plaintiff $286K.

A female employee sued a parts company for sexual harassment and retaliation. She alleged that she was sexually harassed by her supervisor over a two month period and that the company failed to investigate after she complained. She also alleged that she was terminated after complaining. The jury awarded the plaintiff $6.8M: $6.75M for punitive damages and $50K for compensatory damages.

A former convention center manager sued the facility for age and race discrimination when a less qualified, younger employee was given the position of director of marketing. Jury awarded $659K.

The EEOC sued a “tool and die maker” for race and gender discrimination in hiring practices. EEOC alleged that the African-American and female applicants were turned down for all positions except clerical. The matter settled for $940K.

A movie theatre settled a sexual harassment claim brought by the EEOC on behalf of teenage boys against their manager for $765K. The claim alleged that the theater failed to check the manager’s background, which would have revealed that he was a convicted sex offender.

If you would like to obtain a premium indication for this important coverage, please contact a Rue Insurance representative at 1-800-272-4RUE.

Scott Harrigan

About Scott Harrigan

Scott started his career in insurance in 1988 and joined Rue Insurance in 2004 as a Marketing Specialist focusing on creating effective risk financing and risk transfer programs for companies and non-profit organizations. In addition to this he is a member of the Rue Insurance educational team that provides ongoing professional development in critical insurance concepts and programs to Rue employees. About Scott | More Posts by Scott