How Are Employers Protected From Covid-19? Now Is The Time To Understand Your EPLI Coverage!

What can we learn from the first COVID-19 related suit filed against Walmart in March 2020? What the claim identified as Negligence.

See article below to ensure these considerations are built into your COVID-19 Returning to Work Strategy and Your Company’s Action Plan on handling everything COVID.

What does your EPLI policy cover? Important policy line items and questions ask to understand your coverage.  When does my PEO EPLI kick in, what is the WARN Act Exclusion specific to my policy, etc

Read the below to know the right questions to ask about your EPLI coverage.

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The COVID-19 pandemic has forced employers across the country to rapidly make numerous and significant decisions about how to manage their business in this unprecedented time. Employers have had to quickly develop and implement policies and procedures addressing remote work, layoffs, furloughs, pay cuts, workplace conditions, and a host of other issues. Not surprisingly, we’re already starting to see COVID-19-related lawsuits being filed against employers.

The first suit was filed against Walmart by the estate of an employee who passed away due to complications of COVID-19 on March 25, 2020. The complaint alleged that store management knew that several employees and individuals at the store were exhibiting symptoms of COVID-19. Nevertheless, the estate alleged, Walmart was negligent in the following respects:

  • Failing to cleanse and sterilize the store in order to prevent infection of COVID-19;
  • Failing to implement, promote, and enforce federal and state social distancing guidelines;
  • Failing to provide the decedent and other employees with personal protective equipment such as masks, latex gloves, and other protective devices;
  • Failing to warn the decedent and other employees that various individuals were experiencing symptoms at the store and may have been infected by COVID-19, which was present and active within the store;
  • Failing to adequately address or otherwise ignoring other employees who had communicated that they were experiencing signs and symptoms of COVID-19;
  • Failing to follow Department of Labor and Occupational Safety and Health Act (OSHA) recommendations;
  • Failing to follow CDC guidelines to keep the workplace in a safe and healthy condition and to prevent employees and others within the store from contracting COVID-19;
  • Failing to develop an Infectious Disease Preparedness and Response Plan as recommended by the CDC;
  • Failing to prepare or implement basic infection prevention measures as recommended by the CDC;
  • Failing to conduct periodic inspections of the condition and cleanliness of the store as recommended by the CDC;
  • Failing to provide employees with antibacterial soaps, antibacterial wipes, and other cleaning agents as recommended by the CDC;
  • Failing to develop policies and procedures for prompt identification and isolation of sick people as recommended by the CDC;
  • Failing to develop, implement, and communicate to its employees about workplace flexibilities and protections as recommended by the CDC;
  • Failing to implement engineering controls designed to prevent COVID-19 infection including, such as installing high-efficiency air filters, increasing ventilation rates in the work environment, and installing physical barriers such as clear plastic sneeze guards, as recommended by the CDC;
  • Failing to cease operations of the store and to otherwise close the store when it knew, or should have known, that various employees and others present at the store were experiencing symptoms of COVID-19;
  • Failing to properly train personnel to implement and follow procedures designed to minimize the risk of contracting COVID-19;
  • Failing to periodically interview and/or evaluate employees for signs and symptoms of COVID-19;
  • Failing to prohibit employees who were exhibiting signs and symptoms of COVID-19 from working at the store or otherwise entering the premises; and,
  • Hiring employees via telephone and other remote means in an expedited process without personally interviewing or evaluating whether prospective employees had been exhibiting signs and symptoms of the COVID-19 prior to the commencement of their employment.

A second wrongful death lawsuit was filed in Texas state court against a meat packing company following the death of a forklift driver at the defendant’s plant. Plaintiffs alleged that the decedent was told he would be laid off if he didn’t report to work—despite exhibiting symptoms of COVID-19—and that the defendant “refused to take the pandemic seriously, and kept its functions as normal, taking no precautions and implementing no protocols for the safety of its workers.” The plaintiffs further alleged that, “[a]round April 8, 2020 it had become very clear that people in the factory were sick, and that Covid-19 was among them – factory owners and managers played the fiddle. [The decedent] contracted the disease at work, was forced to separate from his partner and children, in order to protect them, and then – became part of the statistic of over 60,000 people who have died in the USA since the pandemic took hold.” The plaintiffs asserted claims for negligence and wrongful death asserting the defendant failed to:

  • Supervise the environment, placing protocols, providing and requiring masks, gloves, and enforcing six feet social distancing as per CDC and local orders;
  • Provide safety tools and equipment that is the basis of this lawsuit;
  • Ensure company premises were maintained in a way to prevent illness and injuries to its employees;
  • Supervise the employee’s activities as per CDC and Dallas County protocols;
  • Warn employees as to the hazards of their employment post COVID-19 pandemic;
  • Install, adopt, or employ adequate safety measures to prevent COVID-19 incidents.

Undoubtedly, these lawsuits are just the tip of the iceberg. See, e.g., “2 Utah County businesses told staff to ignore COVID-19 guidelines, resulting in 68 positive cases,”Daily Herald, May 5, 2020 and “A Detroit Nurse Was Fired After Speaking Out About Her Hospital’s Handling Of The Coronavirus Outbreak. Now She’s Fighting Back,” Buzzfeed News, April 21, 2020. As more organizations attempt to reopen in the absence of a coronavirus vaccine, we will likely see a substantial wave of employment-related COVID-19 lawsuits, leading to claims under Employment Practices Liability Insurance (EPLI) policies.

We consider some of the likely EPLI coverage issues below.

COVID-19 EPLI Coverage Issues

We note at the outset that there is no standard EPLI policy, and coverage terms, conditions, and exclusions vary considerably. Accordingly, review of the precise language of the particular policy will be required. When considering COVID-19 EPLI claims, insurers should pay special attention to the following issues:

Notice

Although timely notice of a claim is a critical threshold issue under virtually every insurance policy, it can be particularly challenging in the EPLI context where verbal communications with employees could constitute notice under certain policy forms. Policy requirements for notice of claim and notice of circumstances, if applicable, should be closely considered in the context of the information provided by the insured. Since EPLI policies are typically written on a claims-made basis, it’s important to make sure the claim was reported within the timeframe specified in the policy. Prior notice issues also should be considered. Decisions concerning the disposition of notifications under EPLI policies should be consistently made, timely, and well documented.

Employment Wrongful Act

Another threshold issue to be examined is whether the claim falls within the policy’s definition of an “employment wrongful act.” Keep in mind that many EPLI policies contain manuscripted provisions, so it will be important to carefully review the entire policy and endorsements. The impact of COVID-19-related governmental orders may also need to be evaluated in connection with any claim. When considering claims brought against the insured by non-employees—such as customers, clients, and vendors—it will be important to ascertain whether the policy extends coverage to third-party employment practices.

Bodily Injury Exclusion

Bodily injury claims are typically excluded under EPLI policies, although such exclusions often contain an exception for emotional distress or mental anguish claims. Distinctions between exclusions for claims “for bodily injury” versus claims “arising out of bodily injury” could be important in some instances.

OSHA and FMLA Violations

COVID-19 claims for actual or alleged OSHA and Family and Medical Leave Act (FMLA) violations may be subject to OSHA and FMLA exclusions. Those exclusions typically will have a carve-out for related retaliation claims, such as an allegation that an employee was impermissibly laid off after exercising OSHA or FMLA rights, so careful review of the claim is imperative.

Wage and Hour and FLSA Claims

Most employers have instituted new work routines for their employees as result of COVID-19 and related government orders, including work from home, self-quarantine requests, procedures concerning time capture, and new work schedules. This could lead to compensation disputes giving rise to Wage and Hour and Fair Labor Standard Act (FLSA) claims. Depending on the terms of the policy, such claims may be excluded entirely, covered only for defense costs, or fully covered.

WARN Act Exclusion

In light of widespread COVID-19 layoffs and furloughs, employers are likely to face wrongful termination lawsuits. While EPLI policies generally cover claims for wrongful termination, retaliation, and discrimination, claims for Worker Adjustment and Retraining Notification (WARN) Act violations typically are excluded. The policy, however, may contain “employment events” coverage, which is triggered by terminations affecting a specified percentage of the workforce, i.e. 10-15% of employees.

Criminal and Fraudulent Acts Exclusion

Depending on the particular facts giving rise to a claim, a policy exclusion for malicious, fraudulent, and criminal acts or omissions may apply. The exclusion should be carefully reviewed with regard to the timing of its application; many exclusions are not be triggered until there is an adjudication of the deliberate act or omission. The exclusion may also have a carve-out for defense costs. An insurer’s reservation of rights concerning these issues should be carefully considered in light of the allegations at issue, the precise policy language, and the applicable law. Insurers should also check for potentially relevant exclusions for punitive and exemplary damages.

Issues Arising from PEOs

A growing number of today’s companies utilize the services of professional employer organizations (PEOs) to manage certain human resources functions and related administrative functions. Depending on the services provided by the PEO (for example, whether the PEO is the employer of record or a co-employer) and the legal relationship between the insured company and the PEO, a variety of issues impacting coverage under an EPLI policy may arise. Coverage for any given claim may also implicate the PEO’s EPLI policy, so insurers should review their policy’s “other insurance” provision, which may need to be addressed when considering its defense obligation and reserving rights.

Injunctive and Equitable Relief

Employers should anticipate lawsuits demanding they implement certain actions and/or make accommodations to remedy alleged unsafe employment practices and workplace conditions, including for employees who are members of a protected status. Typically, EPLI policies do not cover costs to comply with injunctive relief, costs of accommodations associated with disabilities, or other protected status, benefits due, or salary obligations. Front pay and back pay, however, are often covered in the policy’s definition of “loss.” These issues should be kept in mind when evaluating coverage and reserving rights.

Final Thoughts

EPL insurers should anticipate an increasing number of COVID-19-related claims , particularly as many companies are taking steps to reopen their businesses. In this regard, it’s worth noting that as an added benefit to policyholders, some EPLI policies provide access to pre-claim legal advice services from qualified employment counsel. Given the wide range and high stakes of COVID-19 risks confronting employers, some insurers have reminded their policyholders about taking advantage of this service.

credit to original article: https://www.jdsupra.com/legalnews/early-covid-19-liability-suits-raise-31472

written by: Hinshaw & Culbertson – Insights for Insurers

As COVID-19 Spreads, Beware of EPL Risks

As businesses of all sizes strive to protect their employees and preserve cash flow during the coronavirus pandemic, likely the last thing on most of their minds is employment practices liability (EPL) exposures. But EPL risks are higher during pandemics and other periods when employers are more likely to furlough, lay off or ask employees to work from home.

Despite federal legislation aimed at relieving financial burdens on workers and their employers, many businesses face difficult choices – and more complicated record keeping.

The Families First Coronavirus Response Act (FFCRA), which takes effect April 1, permits workers to take paid public health emergency leave to care for themselves or their children through the end of 2020. The law requires employers with fewer than 500 employees to provide up to 12 weeks of paid leave for employees who cannot work due to the closure of their children’s school or child-care provider during the public health emergency. The law generally requires employers to restore the employee to his or her former job after leave, unless the employer has 25 or fewer workers, or the position no longer exists due to economic conditions resulting from the public health emergency (source 12).

Several EPL risks for businesses can arise from the current coronavirus (COVID-19) outbreak. These include:

Wage-and-hour issues. Employers should carefully track employees’ working time, especially in work-from- home arrangements, as well as during a furlough. Work hours are common tipping points for eligibility under an employer’s employee benefits plan.

“A lot of employment issues arise from COVID-19. Frequent questions I get from employers concern furloughs, layoffs, and working from home,” said Kunal Shah, Of Counsel at Wilson Elser Moskowitz Edelman & Dicker LLP in Dallas. “If a business temporarily closes its doors, or significantly reduces its staff and hours, how do we navigate employee compensation and benefits? Insureds need to be mindful that furloughs, if not handled properly, can lead to significant wage-and-hour claims.”

If an employer requires employees to take unpaid leave through furlough, problems can arise if employees are asked to spend even a little bit of that time working, Shah cautioned. “An employer can furlough an exempt employee, but if the employee does one second of work, he or she is entitled to full pay for the entire pay period under the Fair Labor Standards Act,” he said.

“Employers need to be mindful of local and state ordinances, too. Employees of businesses that are deemed non- essential should not be working if they are under a shelter-in-place order,” Shah said.

Hours spent working matter, to workers and their employers. “Benefit plans may no longer provide benefits if hours fall below a certain threshold,” Shah explained. “For example, if a full-time employee goes below a certain hours minimum required for benefits under their group health plan, he or she may trigger coverage under COBRA,” or the Consolidated Omnibus Budget Reconciliation Act, a federal law that allows workers to obtain group health insurance temporarily, usually for up to 18 months.

“The reverse can also happen, where an employee works more hours than agreed upon, thus making him or her eligible for certain benefits otherwise not agreed to. For these reasons, timekeeping and logging hours are important steps for every employer, especially in a working-from-home arrangement,” Shah advised. Relying on employees to track their own time can be risky. “Asking employees to report their hours daily, even in an e-mail, is a good way to document work time if an employer lacks a logging system for remote workers,” Shah suggested.

“Also, employees who are on unpaid leave or working less hours due to furlough can still apply for unemployment benefits. An employer must be mindful of these sorts of situations to avoid wage-and-hour claims,” Shah advised.

Wrongful termination. Reductions in force (RIFs) are an unfortunate fact during economic downturns, such as the one that is occurring due to COVID-19. RIFs often lead to wrongful termination claims, and potentially even class-action lawsuits.

Because the coronavirus so far poses greater health risks to people over age 65, people with obesity and underlying uncontrolled health conditions such as diabetes or liver disease, and pregnant women, employers must proceed carefully with terminations. The Centers for Disease Control & Prevention offers information resources to help business and employers slow the spread of COVID-19 (source).

It might seem logical to some employers to lay off workers at greater risk of contracting COVID-19, but that is problematic and could invite lawsuits alleging discrimination and wrongful termination.

Americans With Disabilities Act (ADA) issues. The U.S. Equal Employment Opportunity Commission enforces anti- discrimination laws, including the ADA and the Rehabilitation Act. With the stress and anxiety over COVID-19, employees with disabilities might make more requests for reasonable accommodations under the ADA. Employers should consider any accommodation requests during the pandemic in the same manner in which they otherwise would. The EEOC also has published guidance for employers on COVID-19 (source).

The ADA allows employers to seek certain information about employees’ health and disabilities, insofar as such information is job-related and consistent with “business necessity,” but employers must remain aware of their obligations to apply it consistently and keep information confidential.

“Because we are dealing with a pandemic, it is now OK for employers to take employees’ temperatures or send an employee home if he or she is exhibiting COVID-19 symptoms, but any information an employer collects about an employee’s health must be treated as a confidential medical record,” Shah said. “During a pandemic like COVID-19, employees exhibiting symptoms consistent with the virus post a direct threat under the ADA, warranting an employer’s questions out of business necessity. Employers should remember that all other aspects of the ADA remain in effect. There is still the potential for retaliation claims under the ADA and other laws.”

Third-party discrimination. Another form of EPL exposure is third-party discrimination. Such claims may come from customers or others. For example, refusal of service or preferential treatment could be construed as third-party discrimination.

“Businesses all over the United States have been mandated to practice social distancing and not put their employees or customers in jeopardy. Businesses can’t prevent claims, but they may have lots of meritorious defenses,” Shah said.

Original article posted by CRC Group Wholesale & Specialty

Potential Wage and Hour Claims Due to New Overtime Rule

Woman working at desk

This article was originally published on InsuranceJournal.com.

Time is running out for employers to familiarize themselves with new federal rules on overtime pay.

Starting January 1, the threshold for who is entitled to overtime pay — and who is not — changes. It’s the first change since 2004.

The new rule raises the income threshold that employees must reach to $684 per week, or $35,568 per year, to qualify as exempt from overtime. Employers are allowed to count up to 10% (or $3,556.80 per year) in bonuses or commissions towards the threshold.

Workers making less than the threshold are entitled to earn one and one-half times their regular rate of pay for all hours over 40 during a work week.

Failure to properly implement the new regulations could expose employers to wage-and-hour type claims under the Fair Labor Standards Act (FLSA).

For some employers, that could mean employment practices liability insurance claims.

That’s one reason Chris Williams is trying to raise awareness. Williams is employment practices liability product manager for Travelers. He is responsible for employment practices underwriting strategy, including policy language, target markets, overall profitability of the book, marketing, and serving as a general resource for underwriters on employment practices.

In a recent talk with Insurance Journal, Williams discussed the overtime rule change and what it means for employers, employees and insurance.

There’s so much else going on in the area of employment practices, the overtime pay issue hasn’t gotten much attention.

“That is a concern because the law’s already fairly complicated for employers to comply with,” Williams said. “Then, anytime you have a change in a complex law, you’re likely to see one, compliance challenges, and two, potential litigation coming out of that.”

Williams said the starting point is understanding the basics of the current rule compared to the new rule that starts in January.

Under the FSLA, employees that satisfy three requirements — they are paid on a salary basis, they are paid more than $23,660 per year, and they perform certain functions considered executive, administrative, or professional duties — are currently not entitled to overtime wages.

“For example, if you’re an executive, you’re a manager in an organization, you’re managing folks, you have the ability to hire, to fire people, and you make more than $23,660 per year, you are not entitled to overtime,” he explained.

Exempt executive, administrative and professional employees include teachers and academic administrators in elementary and secondary schools, outside sales employees and employees in certain technology occupations, according to the Department of Labor. Certain casual, seasonal and farm workers are also exempt from the overtime requirement.

For the new year, while the definitions and exemptions for those doing executive, administrative, professional and other work remain, the key change for employers to be aware of is that the salary threshold is going up from $23,660 to $35,568 per year.

“As a result of that, you’re going to have folks that are now within that pay band that are going to be entitled to overtime that previously weren’t entitled to overtime,” Williams said.

“Employers are going to have to one, figure out who those individuals are. And two, they’re going to have to make sure they’re tracking their time, and if those folks are working more than 40 hours per week, they’re going to have to make sure that they’re compensated on a time-and-a-half basis for that time in excess of 40 hours per week.”

While $35,568 is the threshold and where the primary impact is felt, there is also an upper limit as well. The high threshold under what is called the highly-compensated employee rule is going from $100,000 to $107,432.

“In other words, if you make more than $107,000, you have some administrative or executive functions within the organization, and you’re doing non-manual work, you’re not going to be entitled to overtime,” he explained.

The upper limit rarely is an issue. “We don’t see very much claim activity arising out of those individuals. It’s much more on the lower spectrum,” Williams noted.

In addition to the federal rule, depending on the state they are in, employers may have state laws on overtime pay they must follow as well. California is one such state.

“Employers in those situations are obligated to comply with both the state and the federal law. For example, in California, most of our overtime wage claims that we see pertain to state law as opposed to claims under the Fair Labor Standards Act,” he said.

Williams sees a few potential trouble spots for employers.

“One of the things we see today is employers, and I don’t think a lot if it is malicious, I just think it’s a misunderstanding of what their obligations are, but they may not pay their employees overtime.

“They may not correctly classify individuals as exempt or not exempt, meaning they’re entitled to overtime. They may not track their time correctly.”

Another area is claims for not compensating workers for time they spend putting on their gear to prepare for work. “If you work in a meat processing plant or something like that, you have to put on protective gear, and then you weren’t compensated for that time,” he said.

There are things employers should do to prepare for the new overtime situation, according to Williams.

“Employers will want to go back and make sure that they’ve correctly identified who is now entitled to overtime and are they, in fact, tracking their time and making sure those individuals are compensated correctly.

“It’s probably a good idea, given this change in the law, to review all your employees and make sure that you classify them correctly and you’re tracking their time properly and that you’re compensating them appropriately.”

Williams also noted that some employers may decide to raise the salary of their workers above the threshold of $35,568 to avoid an overtime issue. However, in order to avoid paying overtime for those workers, the employer would need to make sure the worker also qualified for an exemption under professional, administrative or executive.

“In other words, if the employer raised the salary of a worker above $35,568 per year, and the worker did not qualify for one of the exemptions, the worker would still be entitled to overtime,” he said.

Williams recalled that happened in some cases after the Obama Administration in 2016 initiated an even high threshold of $47,000. Some employers increased the pay of some of the workers beyond that threshold. But then the Obama change was struck down in court in September 2017 when a judge ruled that the ceiling was set too high and might apply to some management workers who are supposed to be exempt from overtime pay protections. Business groups and 21 Republican-led states had sued to challenge the 2016 rule.

The Department of Labor estimates that 1.2 million additional workers will be entitled to overtime pay as a result of the increase to the standard salary level, while an additional 101,800 workers will be entitled to overtime pay as a result of the increase under the highly-compensated employee rule.

Williams urges agents to advise their clients to take advantage of resources available to them to be sure they are in compliance— whether that be a human resources department, payroll processor or general counsel. He also recommends the DOL’s website that has information about the final rule.

Williams added that a number of insurance carriers including Travelers also have resources available. “It’s sort of a matter, one, of employers educating themselves, and then, two, taking action on that information,” he said.

Wage-and-Hour Claims

Those caught not in compliance could face wage-and-hour claims. Defense costs only for such claims may be covered under employment practices liability insurance (EPLI) but only for those purchasing a separate endorsement under their EPLI. It’s not part of the traditional EPLI. (Coverage of unpaid wages may be available to large firms with sizable self-retentions but this coverage is not typically available to small and medium firms.)

“A lot of carriers, including Travelers, will provide a sublimit that applies to defense expenses only for wage-and-hour claims. That generally includes issues like failure to pay overtime, misclassifying workers as exempt, potentially misclassifying workers as independent contractors when they’re in fact employees,” Williams explained.

There are certain state statutes, like in California, where employers are obligated to provide rest and meal periods. The separate coverage would include defense expenses for those types of claims as well.

Travelers offers a sublimit up to $250,000. “I think the market’s generally between $100,000 and $250,000, and there may be some outliers beyond that,” he said.

Since it’s been 15 years since the overtime rule was changed, this is in a way a new exposure, one agents may want to explore with clients.

“I think that’s a good idea. We sell this coverage to privately held companies and nonprofits, and we try to be proactive in selling it because it’s an exposure for employers that’s out there,” Williams said.

He noted that these claims are attractive to the plaintiffs’ bar because there is a fee shifting provision in the statute so that if the plaintiff prevails on the claim, they’re entitled to their attorneys’ fees. “You can have cases where the actual recovery amount may not be that significant in terms of the unpaid wages, but the attorney fee is potentially significantly more than that unpaid wage portion,” he said.

Other EPLI Issues

Overtime is hardly the only pressure on employment practices liability insurance (EPLI) these days when workplace issues are in the news on a regular basis.

EPLI provides protection against many kinds of employee lawsuits including claims alleging sexual harassment; discrimination based on age, race, gender or disability; wrongful termination, hiring or promotions; retaliation and wrongful infliction of emotional distress.

According to Williams, there are two areas in particular where EPLI is currently seeing increasing claims activity: sexual harassment and privacy.

“I’ll start off with the sexual harassment, and there’s been an uptick, particularly in severity, on those claims. There’s been an uptick in the frequency of those claims as well. It’s a challenging environment to litigate one of those cases in,” he said.

The second issue is biometric claims, driven by the Illinois biometric information privacy act.

“One of the requirements under that is that if you’re going to use biometric information of your customers or employees, you have to get a signed release from the employee or customer,” he said.

A number of employers have been using fingerprint technology to scan employees in and out and to clock when they’re coming and leaving work. In many cases, they did not get a signed release from the employee. “That’s resulted in class action claims brought against those employers alleging violation of this statute, sort of quasi-invasion-of-privacy claims,” he said.

Other claims areas that are relatively new include websites not in compliance with the Americans with Disabilities Act. “The website isn’t compliant if it doesn’t allow the disabled individual full use of that website because it hasn’t been programmed properly,” he said.

Travelers is among the insurers that will provide workplace violence expense reimbursement coverage that reimburses employers for certain expenses in the event of a workplace violence event. The expenses might include counseling, additional security, and services of a public relations firm to help a business through the crisis.

An employment practice claim is not a recommended experience.

“No one’s ever gone through an EPLI claim— which is a tremendously burdensome process in terms of the documents that have to be turned over, all the emails, the personnel files, the deposition the employer has to go through— no one’s gone through that process and ever said, ‘Boy, we’d like to do that again,’” Williams said.

Will master Cyber policies be the next EPLI product for PEOs?

With two carriers now offering master PEO cyber programs, the question here is PEO’s be able to sell these as part of their overall package?

A recent 2017 RIMS survey has shown that 83 percent of organizations have a standalone cyber insurance policy (up 3 percent from 2016) and only 14 percent are utilizing the cyber coverage offered in their other insurance policies.

One reason for this statistic could be that Risk Managers want specific endorsements and add-on coverages that apply directly to their industry or are a result of a problem they’ve faced in the past.  This has been a crucial part of individual cyber policies over the past few years as the carriers try to keep up with the quickly evolving cyber space.

With the above in mind, it may be difficult for PEO’s to make this as part of their basic package as EPLI has become over the past decade.

I would like to note the PEO cyber program has one crucial endorsement, Social Engineering, that can be added on for an individual client company.  This has to be individually underwritten for each client company adding another layer for the PEO sales rep to cross-sell.

If you work in the PEO industry, please comment below with your thoughts of PEO’s offering cyber coverage to client companies. For more statistics from the RIMS survey please visit: http://www.insurancejournal.com/news/national/2017/08/25/462357.htm

 

-David Campbell

Risk Consultant at Libertate Insurance

Does your EPLI policy cover against employee harassment to a Third Party?

Most employers understand their Employment Practices Liability Insurance policy to cover against employee to employee or employer to employee harassment and discrimination.  But many of these employers could be liable for claims that they do not have coverage for under their current EPLI policy without the proper endorsements.  The most reoccurring of these claims have been third party claims against the behavior of your employee to the third party.  The language in a Lexington policy of an event resulting in a claim is: “allegation(s) of intentional or unintentional Discrimination, Harassment or any civil rights violations committed by an Insured and brought by a Third Party, whether such event against the Third Party occurs directly or through the Virtual Environment.”.  Their terminology for this coverage is Wrongful Business Environment.

So, we have coverage for your employee harassing or discriminating against a third party.  But what happens when the scenario is flipped and a third party discriminates or harasses your employee?  The employee would go to the employer or manager, and one of two things will happen: The employer will address the issue or the employer will ignore the issue.  In the first scenario, the employer and employee can work together on behalf of the employee to file a claim against third party’s employer.  Let’s hope they have third party coverage on their EPLI policy.  In the second scenario, where an employer fails to do anything, the employee can file a claim against the employer.  This would actually be looked at as a “hostile work environment claim” (your typical EPLI claim) and would be covered.  In this scenario, as well, the employee would also be able to go after the third party’s employer as well.

 

For more examples and details on this coverage, please visit: : http://www.propertycasualty360.com/2006/11/01/third-party-coverage-can-be-an-important-part-of-epli-policies

“Suppose a document messenger makes daily stops at a real-estate agency, where he greets the receptionist. After a number of visits, the messenger begins making suggestive sexual remarks. The receptionist complains to the owner of the business, who does nothing other than advise the receptionist to just tell the messenger to stop bothering her.

One day the messenger appears and makes suggestive remarks to the receptionist and even touches her inappropriately. Visibly shaken, the receptionist complains again to her boss, who takes no action. Not being able to endure the continuing harassment, the receptionist quits and sues her boss for emotional distress and failing to prevent an assault.

This is a clear example of an employer tolerating a hostile work environment, a typical EPL claim. The mere inaction of the employer makes him responsible. This also could be pursued as a third-party claim against the messenger’s employer.”

 

If you have any questions regarding your EPLI policy or would like a free audit of your current policy and coverage, feel free to reach out to David Campbell at dcampbell@libertateins.com or 407-613-5483.

Employment Practices Liability and the EEOC

The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.

This website is an essential resource for every Business Owner and HR Manager.  You will find useful information, such as enforcement and litigation statistics for all enforceable statutes and real world inquires received by the EEOC’s Legal Counsel.  Data is available by state and type of charge to help you better analyze your organization’s EPL exposure.  Combine this with an in-depth coverage analysis and you will be taking the right steps towards managing your EPLI risk.

EEOC Home Page