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Sexual harassment
A female employee exhibited a sudden drop-off in her work performance. Her supervisor set up a meeting with her to discuss her performance, but she failed to show up. She did show up for a rescheduled meeting, but she had alcohol on her breath. She complained during the meeting that she faced continuous sexual harassment from a senior manager and that his unwanted advances had created a hostile work environment. Her supervisor suggested that she take another position in the company at a different location, which the woman agreed to do. However, she failed to show up for work at the new location and skipped several more meetings with her supervisor.
The company terminated the employee, and she filed a lawsuit, alleging sexual harassment and wrongful termination and seeking $1 million in damages. In her suit, she alleged that a senior manager had been sexually obsessed with her for nearly two years, had maintained an uncomfortable closeness with her in the workplace, and had continually harassed her with questions about her personal life.
It was later discovered that the female employee and the senior manager were engaged in a consensual romantic relationship over the two-year period.
RESOLUTION The company determined that it would rather settle than go to court. After paying more than $120,000 in defense costs, the company settled with the former employee for $250,000. |
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Growing Vulnerability
Makes Employment Practices Liability Insurance a necessity |
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Most IT and technology
firms recognize that employees are their most valuable
assets in running an efficient business. However, you
may not be aware of your growing vulnerability to exposures
resulting from your liability as an employer. Businesses
today are increasingly at risk for liability claims
and lawsuits that arise from employment practices and
related human resources issues, such as sexual harassment
and discrimination.
Employment practices related lawsuits — lawsuits
alleging discrimination, wrongful termination, sexual
harassment or retaliation — continue to grow in
both frequency and severity according to the latest
employment practices liability insurance statistics.
In fact, over the past 10 years, federal employment
laws, together with parallel state laws, have expanded
employees’ rights in the workplace, opening the
way for new “causes of action” to be brought
against employers and broader than ever rights of recovery.
Third parties, such as customers, consumers and clients,
are also more frequently seeking legal recourse for
alleged discrimination or harassment.
These trends, coupled with more expansive judicial
interpretation of applicable laws, have gone hand-in-hand
with the emergence of a professional plaintiffs’
bar eager to drive employment related lawsuits against
employers. The employment practices liability insurance
statistics tells us that EPLI claims are on the rise
— that's why you need Employment Practices Liability
Insurance for InsureCast. If you don't get it form us.
Get it from someone else. It is that important.
You can try to do everything right and still find
your business subject to claims of wrongful employment
practices. Whether the allegations against you are legitimate
or unfounded, you may be faced with expensive legal
bills. InsureCast is your source for Employment Practices
Liability Insurance for technology firms. Please go
to our online CoverageCoach
questionnaire to get a free no obligation Employment
Practices Liability Insurance quote. |
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Increase in EPLI Litigation |
| The tremendous increase
in employment-related litigation during the past several
years makes Employment Practices Liability Insurance
an essential coverage. Claims for wrongful termination,
discrimination and sexual harassment continue to be
a serious concern for the technology community. Judgments,
settlements, and defense costs for employment-related
litigation continue to rise at an astonishing pace.
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Employment Practices Liability
Insurance |
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What is Employment Practices Liability
Insurance? |
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| Employment Practices Liability Insurance
is a relatively new form of liability insurance. It 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 covers your firm, including its Directors
and Officers. |
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When do I need Employment Practices
Liability Insurance? |
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| Employment Practices Liability insurance is
needed as soon as you start to hire employees. Most investors
and directors will require that you carry this coverage as part
of your Directors and Officers Liability insurance since they
can also be held liable in suits relating to employment practices.
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Why do I need Employment Practices
Liability Insurance? |
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Employment Practices Liability Cases
against employers are on the rise. It is estimated
that three out of five firms will be sued by an employee.
Companies are finding that they are vulnerable from the pre-hiring
process through the exit interview, even if the employee was
never hired, or only at the company a matter of days.
It can happen to ANY firm. We have all experienced
it. It could be a joke told in the break room, an employee
you had to fire, a “friendly” programmer, or that
person you chose not to hire. Every employer faces the reality
that it will be the target of legal action from past, present
and prospective employees. Even if the claim is groundless
or fraudulent, the defense of a suit can be expensive in time,
resources and financially.
New technology firms are especially vulnerable.
Newer and fast growing companies are often prey to employment
practices liability claims because their management team has
not yet designed or implemented procedures for hiring, firing,
and disciplining employees.
Welcome to the reality. Just because you
might not have told the off-color joke to the new employee
on her first day, your Independent Contractor, or client,
might not think the same way. It's still your firm that gets
sued, and you can't always monitor every hire, termination,
or conversation that takes place in your office. Nor can
you always know who will sue, and you can't always prevent
a disgruntled employee from lying or exaggerating just to “get
even”
with your firm. |
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Employers face a growing multitude of serious
employment practices liability (EPL) exposures |
It’s no longer off the radar screen.
It’s front page material. More and more companies are
finding out the hard way just how complex the employment relationship
has become. Employers face a growing multitude of serious
employment practices liability (EPL) exposures in their day-to-day
interactions with employees.
Companies and their managers are subject to a widening
collection of federal, state, and local employment laws,
such as the Americans with Disabilities Act, the Civil Rights
Act of 1991, the Age Discrimination in Employment Act, and
Title VII of the Civil Rights Act of 1964, just to name
a few. The Equal Employment Opportunity Commission (EEOC)
is taking a much more aggressive stance in investigating
EPL claims and filing lawsuits for sexual harassment, women
being discriminated in the workplace, wrongful termination,
retaliatory treatment, unfair hiring practices, and other
types of workplace torts.
The average number of charges filed with the EEOC from 1996
to 1999 was nearly 80,000 annually. Monetary awards increased
275% between 1994 and 1999, when the total amount awarded
topped $100 million. The average verdict in EPL cases now
exceeds $450,000, and employment issues now make up 30% of
all civil litigation in the U.S. Court cases of discrimination
in the workplace and age discrimination court cases are on
the rise. The truth is, the courts have decided, the employee
is almost always right. According to the Department of Labor,
employees and other plaintiffs won 41% of all jury trials
and 26% of all non-jury trials in 1999, and punitive damages
were assessed in 19% of all cases.
Repercussions of these lawsuits can be felt well beyond their
initial devastating and distracting impact, because one large
uninsured employment practices claim can lead to shareholder
lawsuits. Discrimination lawsuit settlements and cases of
wrongful termination have had a dramatic affect on the bottom
line of small and large businesses in the United States.
There’s no question that EPL claims can have a serious
financial impact on small to mid-sized companies. To help
protect private companies and their employees, InsureCast
offers Employment Practices Liability Insurance coverage.
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