Employers today are more likely to have an employment practices liability (EPL) insurance claim than a property or general liability claim.

EPL provides protection against claims made by employees, whether former, current or potential, regarding discrimination — age, sex, race, disability, etc., wrongful termination, sexual harassment and other employment-related allegations.

When looking to have your exposures covered, underwriters carefully evaluate your company’s written procedures and practices.

“You need to confirm that these procedures are distributed and enforced constantly throughout the organization,” says Daniel R. Slezak, vice president at ECBM. “There should be a way to promote awareness and a ‘hotline’ for employees to communicate concerns without fear of intimidation or retaliation.”

Underwriters also will look at factors such as turnover rates to judge employee moral and/or possible management problems.

Smart Business spoke with Slezak about what is — and is not — covered by EPL insurance.

Retaliation claims have greatly increased, according to the Equal Employment Opportunity Commission (EEOC). What do employers need to know about their risks?

Title VII of the Civil Rights act of 1964 states an employer may not fire, demote, harass or otherwise ‘retaliate’ against an individual for filing a charge of discrimination, participating in a discrimination proceeding or otherwise opposing discrimination. The same laws that prohibit discrimination based on race, color, sex, religion, national origin, age and disability, as well as wage differences between men and women performing substantially equal work, also prohibit retaliation against individuals who oppose unlawful discrimination or participate in an employment discrimination proceeding.

Retaliation occurs when an employer, employment agency or labor organization takes an adverse action against a covered individual because he or she engaged in a protected activity. For example, it’s illegal to refuse to promote an employee because he or she filed a charge of discrimination with the EEOC, even if the EEOC later determines no discrimination occurred. The law forbids retaliation when it comes to any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, etc.

Employers can reduce claim risk by training managers and supervisors to be aware of anti-retaliation obligations under Title VII, including specific actions that may constitute retaliation. They also can reduce risk by carefully and timely recording the legitimate business reasons for disciplinary or performance-related actions, while sharing these reasons with the employee.

What is covered with Family and Medical Leave Act (FMLA) claims?

The FMLA was virtually unknown, but now most employees know it’s a tool they can use to adapt to life changes. Plus, with recent Americans with Disabilities Act amendments, the number of persons defined as having a disability has increased. While disability discrimination is covered, typically there isn’t coverage for the cost of accommodation and employer fines.

How are social media, harassment and gender/sexual orientation covered?

Social media has little regulation at this time, but employers need to have policies in place that address those practices. An event involving a social media claim is covered to the extent there was discrimination.

Harassment claims increased by 33 percent from 2006 to 2008, according to the EEOC. This seems to always be in the news, whether in schools or the NFL’s Miami Dolphins locker room. These events may trigger coverage, but you should make an effort to ensure everyone is getting along.

Policies can be extended to cover third-party discrimination claims made by customers and tenants. The policy also covers discrimination and sexual harassment claims made by customers for the acts of employees.
Read your policy and pay attention to carve outs and exclusions/endorsements that give coverage or take it away. Expert insurance professionals are available to help with any issues or questions.

Daniel R. Slezak is a vice president at ECBM. Reach him at (610) 668-7100, ext. 1323, or dslezak@ecbm.com.

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