Employment Practices Liability — It’s Too Late to Buy After the Claim Comes

The real deal conversation between F. Michael Conte and Michael Honig, partners at Honig Conte Porrino Insurance Agency with offices in Manhattan and Brooklyn. What starts out with a discussion on Employment Practices Liability moves into NYS & NYC mandatory sexual harassment training, claim scenarios, situations small business owners face and some laughs along the way…

Jay, a small business owner from NYC, had this to say about the podcast:

Just listened to the podcast nice work! Learned a few things and got a few laughs.

Are you up to date with your mandatory Sexual Harassment training as required by both New York State AND New York City? Have you thought about what the repercussions of this training could be?

Employment Practices Liability Insurance (also known as EPLI) can protect a business from claims made by employees (workers) that their legal rights as employees have been violated. Claims that are typically made, that can be covered by an EPLI Insurance policy, are:

Sexual Harassment
Discrimination
Wrongful Termination
Breach of Employment Contract
Wrongful Discipline
Failure to Employ
Failure to Promote
Negligent Evaluation

And that is just the tip of the exposure iceberg.

EPLI is perhaps one of the most important coverages that not enough people are purchasing. Perhaps it is because a lack of understanding or the belief that they will never be sued but businesses need to get in front of this, get educated and purchase EPLI coverage.

Statistics have shown that a privately-owned company is more likely to have an employment practices liability claim than a property loss or general liability claim. Three out of five employers are sued by former employees. In 2006 the median awarded for all plaintiff verdicts was over $200,000…how much do you think those verdicts are now?

Claim Scenarios Provided by One of Our Insurance Carriers:

Discrimination/Wrongful Termination:

A female marketing manager took leave subject to the Family Medical Leave Act (FMLA) upon the birth of her first child. She was terminated one month after her return to work for poor work performance and the company eliminated her position. There was no documentation of poor performance prior to her FMLA leave.

Third Party Liability:

A blind customer entered a local grocery store with his guide dog. The manager of the meat/deli department asked the customer to take his dog outside because he thought the dog presented a health hazard. The customer sued for violation of the Americans with Disabilities Act.

Internet/Email Liability:

An employee who intended to email a pornographic joke to only a single recipient accidentally pressed the wrong button, sending the off-color joke to the company’s entire workforce. The employer made the employee send a follow-up email apologizing to the workforce. Two months later, during a company downsizing, an employee sued for a hostile work environment and used the email as evidence.

Spousal Liability:

The president of a company was being threatened with a sexual harassment suit by one of his employees. The president decided to transfer most of his assets into his wife’s name in order to avoid being personally sued and subjecting his personal assets to any possible claim settlement against him. The employee later sued the president for sexual harassment. The suit named both the president and the president’s wife because of her ownership interest in the president’s assets. These assets were later subjected to the settlement provisions.

Retaliation:

An African American employee of a barge repair and painting firm complained to management that some of his coworkers were using racial slurs and jokes. His supervisor transferred him to an inside warehouse position at a reduced hourly rate stating that it would be better for him to work alone rather than be exposed to those workers. The employee later sued for discrimination and retaliation for reporting the discrimination.