First there was the #MeToo movement, which concentrated attention onto sexual harassment of women in the workplace. Then Black Lives Matter created a conversation around racial inequities, including those on the job. Now it’s COVID-19, and we are seeing issues of employee rights and employer responsibilities in providing a safe work environment, as well as layoffs or terminations at a time when the economy is on a downward trajectory coming into our awareness.
No matter what the catalyst, upheaval in social, economic, or corporate milieus tend to cause ripple effects across organizations. As unrest increases, typically, so too do employee lawsuits. Between September 2017 and September 2018 in the wake of the #MeToo movement, the Equal Employment Opportunity Commission (EEOC) received 90,558 cases charging discrimination: 51% were claims of retaliation, and just over 32% were claiming sexual harassment.
For the firearms industry, claims are on the rise. We’re seeing significantly more claims related to employment practices, which have only increased since COVID-19 took hold. Yet what many companies may not realize is that employment practices liability, or EPL, is excluded from most liability policies. In the last 18 months, NFP has seen EPL claims rise to become possibly the number one issue impacting our firearms industry clients from a risk management standpoint.
That’s a problem, particularly when employers are charged with laying off or terminating employees, a practice that’s been exacerbated since the pandemic began.
The Issues Up Close
An employee being harassed because of his or her ethnicity. An employee being shown inappropriate content on a phone or computer. An employee’s religious practices that are in direct conflict with safety regulations. All of these examples of harassment could trigger legal action by an employee. Employers cannot always control employees’ actions, but are still required to take remedial steps when an incident is reported.
Other issues involve customers. In one case, a firing range found itself facing a discrimination case because the plaintiff was wearing a religious headscarf and was asked to remove it for safety reasons.
Even when employees are fired for cause, employers can find themselves defending against lawsuit. A well-documented history of reprimand, warnings, or other actions taken by the employer to get the employee to correct such action does help, but a case still has to be defended. That defense can become costly.
Despite whether a case has merit, organizations must defend each suit. If an organization doesn’t have EPL coverage, those defense costs fall directly onto the organization. Should a judgment be rendered, that too becomes the organization’s responsibility to pay.
Some organizations attempt to put coverage in place once a claim is made. Doing so is extremely difficult, and any coverage a company can secure would be costly. In one case, a client refused employment practices liability at renewal, then found themselves defending a particularly complex, expensive claim. NFP secured three quotes for them, which all came with high premiums and high self-insured retention.
NFP recommends that organizations review their insurance programs now to determine if EPL has been purchased. Having an employment practices liability policy in place protects the organization from claims brought without regard to the merit of those claims. EPL covers alleged wrongful acts arising from the employment process. These include wrongful termination, discrimination, harassment, and retaliation. Also, such a policy would cover certain issues related to: defamation, privacy, promotions, or employee reviews. As always, discussions with NFP or your insurance broker will be very helpful in determining the specifics of your coverage and exclusions.
Covering The Basics
Organizations face plenty of pressures these days, as do their employees. In times of unrest in society, economy or politics, claims historically increase. For employers, those claims they face could be ones charging them with wrongful acts relating to their employees.
Employment practices liability is an essential insurance product that can protect a business from such claims. NFP can help organizations understand the basics of EPL protection, and can locate options that fit their specific needs. Being proactive in protecting against employee related claims can save a business from costly litigation and keep them on track for the future.
For more information, please contact Heather Gillingham at heather.gillingham@nfp.com