CLAIMS NOT COVERED BY EPL POLICY

CLAIMS NOT COVERED BY EPL POLICY

We recommend that all companies purchase Employment Practices Liability insurance. If you haven’t done so, make sure to discuss this program with your broker.

However, it’s important to understand that EPLI does not cover claims involving:


Charges, audits, and claims by the Federal Contract Compliance Programs
Workers Compensation claims
Unemployment insurance claims
Disability benefits claims, including ERISA
Any breach of independent contractor services agreement
Violations of the Fair Labor Standards Act and state equivalents
Workers Adjustment and Retraining Notification Form
COBRA
OSHA
National Labor Relations Act (union claims)
US Longshoremans and Harbor Workers Compensation Act
The Jones Act
The Labor Management Relation Act
Breach of contract claims
And other exclusions

Of course, other coverages (such as Workers Compensation, Directors & Officers, and General Liability insurance) might cover some of these exposures. The point: Be very clear about which risks you have covered with which policies and which risks remain uninsured.

No One is Immune

Think it cannot happen to you. "I don't need to waste money on Employment Related Practices Coverage," is said to me day after day. Well read on.


It was announced today that Sidley Austin, one of the nation's largest law firms, agreed to pay $27.5 million to 32 former partners to settle a closely watched age-discrimination lawsuit brought by the federal Equal Employment Opportunity Commission. In this case not one of the partners even filed a complaint with the EEOC. read on.

American Ballet Theater fired a trumpeter in its orchestra because it believed he was too old, the federal Equal Employment Opportunity Commission charged in an age discrimination lawsuit. The musician, Henry Nowak, was let go in 2005 at age 74, says the suit, filed on Thursday in United States District Court in Manhattan.

No one is immune. Including you.

Could You Financially Survive Such a Verdict

NEW YORK_In an end to a salacious three-week trial, a jury ordered the owners of the New York Knicks to pay $11.6 million to a former team executive who allegedly endured crude insults and unwanted advances from coach Isiah Thomas.



This blog doesn't comment on the merits of the lawsuit. Despite my love of sports I ignored the articles and broadcasts, focusing on an exciting end of the regular baseball season and the beginning of college and Pro football.



This verdict caught my eye though. Time and time again, I counsel clients to consider D&O, EPL, or Union Liability Insurance to protect themselves from such a verdict and the tens of millions of attorneys fees that have been incurred and will increase through an appeal and possible retrial. The usual response is "we don't have that problem" or " we have a human resources department that takes care of those things" or " I can't afford that coverage right now."



As a risk manager, time and time again, I encourage clients to adopt procedures and give trainings on Employment Related Practices only to receive a response "we don't have the time or the money" to do that.

Here are a few facts to consider if you have given such a response:

1. Three of five businesses will be sued this year by an employee or a former employee over an employment practice

2. Employment practices suits account for 20% of all Federal Court filings

3. 56% of all employment practice filings going to trial result in a verdict for the plaintiff employee

4. The average jury award is S250.000, with 15% exceeding $1 million

5. 33% of wrongful termination verdicts have punitive damages equal to or exceeding compensatory damage.

Today's sports headlines should represent a "wake up call." yesterday's verdict did not include punitive damages, did not include Plaintiff's attorneys fees, did not include all the attorneys fees that the defendant incurred and will incur, did not include the damage to the reputation of the Defendant's and the PR costs they will now incur to remedy.

Talk to your Independent Agent or your Certified Risk Manager. " Do not Pass Go, or someone will be collecting a lot more than $200 from your wallet."

Employment Liability Practices Coverage -- Think you don't need it? Consider this.

Scary Compliance Facts:

-Tens of Thousands of employment practices claims filed every year (DOL)
-Employees win 63% (Jury Verdict Research)
-Average verdict exceeds $250K (JVR)
-Sex discrimination easiest for plaintiffs to win (JVR)
-Age discrimination highest average verdict- over $275K (JVR)
-Awards even higher in state court (JVR)
-Retaliation is fastest growing claim category (DOL, JVR)
-Median Settlement $89K (JVR)
-Entry level settlement $30K (JVR)
-Top filings in health services, business services, eating and drinking places (GenRe)
-None of these figures includes cost of legal fees, loss of time and emotional strain

Employment Related Practices Insurance

In case, you have been putting off talking to your Independent Insurance Agent about that Employment related practices insurance or Union liability insurance he/she has been recommending consider the following:

1. 1991 “Tailhook” convention —— $ 8 million to settle allegations of physical and verbal sexual abuse

2. State Farm —— $157 million to 800 staff employees to settle allegations of failure to pronlote and denial of opportunity

3. IDS Financial Services -- $ 35 million to 32 former employees to settle age discrimination allegations

4. Shoney’s -- $134 million out-of-court settlement arising from race discrimination allegations



Employment Related claims

1. Three of five businesses will be sued this year by an employee or a former
employee over an employment practice

41.5% of all claims-- employers of’ 15 to 100
23.9% of all claims -— employers of 500 or more
18.0% of’ all claims -- employers of’ 101 to 499
16.6% of all claims-- employers of less than 15

2. Employment practices suits account for 20% of all Federal Court filings

3. 56% of all employment practice filings going to trial result in a verdict for the plaintiff employee

4. The average jury award is S250.000, with 15% exceeding $1 million

5. 33% of wrongful termination verdicts have punitive damages equal to or exceeding compensatory damage.

Here are just a few sources of Liability for Employment Related Practices



• Civi1 Rights Act of 1964

• Civil Rights Act of 1991
• Americans With Disabilities Act (ADA)
• Age Discrimination in Employment Act of 1967 (ADEA)

• Worker Adjustment and Retraining Act (WARN)
• Employee Polygraph Protection Act of 1988
• Equal Pay Act
• Older Worker Benefit Protection Act

• National Labor Relations Act

• Uniform Services Employment and Reemployment Rights Act of 1994
• Family and Medical Leave Act (FM LA)
• Fair Labor Standards Act (FLSA)
• Immigration Reform and Control Act

• Occupational Safety and Health Act (OSHA)
• Civil Rights Act of 1866
• Attorneys Fees Award Act of 1976

• Pregnancy Discrimination Act of’ 1978

• State parallel laws
• Local parallel laws

Next time take a few minutes to discuss this with your Independent Insurance Agent.