Transcript Employment Practices

Employment Practices
Exposures – Solutions – Insurance
Bernd G. Heinze, Esq.
AAMGA Executive Director
UFO Annual Meeting
Whistler, British Columbia
September 5, 2008
1
I.
A.-F. Evolution of NonDiscrimination Laws
Federal Laws
1.
Civil Rights Act 1964
(a/k/a Title VII)
2.
EPA 1963
3.
ADEA 1967
4.
ADA 1990
5.
USERRA
Common Law Claims
1.
2.
3.
4.
5.
6.
7.
8.
Defamation-LibelSlander
Contractual Interference
Invasion of Privacy
Negligent HiringSupervision-Retention
Emotional Distress/P&S
Economic Advantage
Loss of Consortium
Inability to Power Walk
{State Specific Law Applies}
2
Fair Labor Standards Act (FLSA)
 Minimum wage
 Overtime
 Child labor standards
 Federal statutes => state laws
3
ISO EPLI Insuring Agreement
 Sums insured legally obligated to pay
resulting from an “injury.”
 Claims made trigger of claim received and
recorded with notification in writing to
company as soon as practical.
 Requires prompt notice of incident which
might result in a claim if insured has
knowledge. [Not a notice of claim]
4
What Is “Injury” Per Contract?
 Demotion, failure to promote, negative
evaluation, reassignment or discipline of
current “employee” or wrongful refusal to
employ.
 Wrongful termination – Law/public policy or
violation of contract, other than contract
stipulating financial considerations if such
action on consideration is the result of a
breach of contract.
 Wrongful denial of training, career
opportunity or breach of contract. [Continued]
5
“Injury” Defined Continued

Negligent hiring/supervision resulting in any of the other
offenses listed in definition.

Retaliatory action.

Coercing “employee” to commit unlawful act or omission.

Work-related harassment.

Employment-related libel, slander, invasion of privacy,
defamation or humiliation.

Other work-related verbal physical, mental or emotional
abuse arising out of “discrimination.”
6
II. A. The Regulatory Maze
Law
Guidelines
 Congress
 Executive Branch
 Federal Courts
 EEOC
 State Courts
 Labor Department
7
B.1. General Remedies
1.Title VII and Americans With
Disabilities
a. Injunctive order for promotion,
promotion quotas and hiring
b. Backpay
c. Attorney’s Fees
d. Compensatory/Punitive damages
between $50,000 and $300,000 for
intentional discrimination
8
WHERE DID THE LITIGATION
EXPLOSION COME FROM?
 CHANGING
WORKFORCE –
UNION TO
EMPLOYMENT AT
WILL
 THE JURY TRIAL
 IT’S ALL ABOUT THE
BENJAMIN’S
 HIGH PROFILE CASES
 EMPLOYEE
AWARENESS OF
RIGHTS & CLASS
ACTION LAWSUITS
9
PROTECTED CLASSES
UNDER TITLE VII
HARASSMENT FROM:
 Race
 Color
 Religion
 Sex
 National Origin
 Age
Chewing Gum Debacle
10
B.2. Equal Pay Act
Equal Pay for Equal Work Act of 1963
a. Back Pay
b. Liquidated Damages Equal to Back
Pay
c. No Compensatory or Punitive Damages
11
C. Benchmark Developments
1.a. Burden of Proof – Plaintiff must go
beyond proving an employer’s
stated legal reason for its actions
were a pretext for discrimination
and must prove that bias was the
motivating factor. St. Mary’s
Honor Center v. Hicks, (1993)
12
Pretext Bias Cases
 Employee must establish a “prima
facie” case of discrimination
 The burden then shifts to the
employer to proffer a legitimate ,
non-discriminatory reason for the
adverse employment decision
 If employer meets the burden, the
employee must prove illegal pretext
13
C.1.b.. Mixed-Motive Bias Cases
 U.S. Supreme Court in 2003 established a two
step process: (Desert Palace, Inc. v. Costa)
1. Employee must prove impermissible motive
played motivating role in adverse employment
decision
2. Employer must then counter that action would
have been taken in spite of the employee’s
protected status.
14
C.2. Defense: Employee Misconduct
McKennon v. Nashville Banner Pub. Co.
U.S. Supreme Court (1995)
 Prior wrongdoing by employee does not
necessarily shield an employer that has
violated law.
 Court ruled that such conduct does not
have to be disregarded and if proved the
employee may receive limited damages.
(Back pay)
15
C.3. Reverse Discrimination
Murray v. Thistledown Racing Club-1985
Harding v. Gray-1993
 Requires direct evidence or
intentional discrimination
 Carry burden that employer is the
unusual employer that discriminates
against the majority
16
C.4. Individual Liability Under Title
VII
Johnson v. University Surgical – 1994
a. Title VII defines “employee” to
include “any agent” of employment
b. Individual liability of a “supervisor”
is based on issue of authority over
an employee
c. Split Federal Decisions
17
What Constitutes A Supervisor?
Mack v. Otis Elevator Co.–April, 2003
2nd U.S. Circuit Court of Appeals ruling:
 Special dominance over others at a
work site is controlling factor
7th U.S. Circuit Court of Appeals ruling:
 Concisely defined as anyone with
authority to “hire, fire, demote,
promote or discipline an employee”
18
III.
Five Basic Unlawful
Discrimination Theories
A. Disparate Treatment
B. Disparate Impact
C. Stereotype Class Assumptions
D. Failure To Accommodate Religion Or Disability
E. Retaliation
19
Winning & Losing
48% of Plaintiffs Win
Average Defense Cost - $107,000
Win or Loss!
20
Winning & Losing
“Folks, this is your Captain speaking. Please don’t
worry, the pumps are working perfectly, return
to your staterooms and await further
instructions.”
21
Disparate Treatment
 Direct or Indirect Evidence
 Four Point Test
1.Member of Protected Class
2.Qualified Employee/Applicant
3.Adverse Effect on Employee or Applicant
4.Other Qualified, Non Protected Not
Adversely Affected by Action
22
Disparate Impact
 Applies Even in the Absence of Intent
 Federal Courts’ Three Point Test:
1.Practice that discriminates on basis of race,
color, religion, sex, origin
2.Plaintiff must show adverse effect falls more
heavily on protected class
3.Plaintiff must show practice caused a
disparity (Real harm)
23
IV. Scope of Regulation-ADEA
1.
2.
3.
4.
5.
Ground Rules
Employees 40+
Employee 20 +
Disparate Treatment:
Requires proof of intent
ADEA Covers Disparate
Impact & Treatment
Disparate Impact not
recognized in ADEA
Willful Violation Doubles
Damages / What is
Knowing or Reckless
Disregard?
Case Law Rulings
 Employer must prove a
training program about
age discrimination exists
to avoid willful violation
(2001)
 Mixed motive may apply
(2000)
24
Disparate Impact Claims……..
Smith v. Jackson, MS. 2005 WL 711605 (2005)
 The U.S. Supreme Court noted that, “to
state a disparate impact claim, an
employee must isolate and identify the
specific employment practice responsible
for the age-based disparate impact.”
 Recognizes the “reasonable factors other
than age” provision when action is
attributable to a non-age factor that was
reasonable from a business perspective.
25
B. Sex Discrimination – Title VII
1.
2.
3.
4.
Pregnancy Related Issues
Paramour’s Advantage
Inadequate Mentoring or Training
Sexual Harassment
Opposite Gender – Original Intent
Same Gender – Expanded Reality
Split by Districts
26
SEXUAL HARASSMENT
 What is it?
 Unwelcome sexual advances
 Requests for sexual favors
 Verbal or physical conduct of a sexual
nature
 Incidental and unintentional exposure of
sexual or explicit materials, e-mails,
photographs, etc.
27
SEXUAL HARASSMENT
 Inappropriate Behavior Looks Like:
 Sexually harassing behavior








Leer
Grope
Off color joke, banter
Taunt, tease, flirting
Dare
Reckless conduct
Targeting
Would you do this to your Mother?
28
SEXUAL HARASSMENT
 Under what circumstances?
 When submission to such conduct is made
either explicitly a term or condition of an
individual’s continued employment (quid pro
quo)
 Submission to or rejection of such conduct by
an individual is used as the basis for
employment decisions affecting such
individual
 Such conduct has the purpose or effect of
unreasonably interfering with an individual’s
work performance or creates an intimidating,
hostile or offensive work environment
29
More Lawsuits on the Horizon
30
WHO CAN BRING A COMPLAINT?
 FEDERAL LAW
Employees
Applicants for employment
Those not promoted or given a raise
Those who are laid off, subjected to
consolidation or reduction in force
 Reference checks/Recommendations




31
WHO CAN BE SUED FOR
DISCRIMINATION?
 FEDERAL LAW
 EMPLOYERS with 15
or more employees
 LABOR
ORGANIZATIONS
 EMPLOYMENT
AGENCIES
 VENDORS
 SUPERVISORS &
MANAGERS
 STATE LAW
 EMPLOYERS (no
minimum number
of employees)
 LABOR
ORGINZATIONS
 EMPLOYMENT
AGENCIES
 INDIVIDUALS WHO
AID AND ABET
32
MOST LIKELY DEFENDANTS
 BANKS
 INSURANCE AGENCIES
 AEROSPACE INDUSTRY
 MUNICIPAL ENTITIES
 SCHOOLS
33
FROM WHAT ACTIVITIES?
 HIRING
 TESTING
 TRAINING
 ON THE JOB ACTIVITIES
 SUPERVISION, EVALUATIONS,
PROMOTIONS
 DISMISSAL OR TERMINATION
34
WHEN ARE YOU MOST LIKELY TO HAVE
A PROBLEM?
 DISMISSAL OR TERMINATION
 HIRING
 ON THE JOB ACTIVITY
35
WHY DO PLAITNIFF ATTORNEYS LIKE
THESE CASES?
 MOST PLEADINGS ARE ALREADY
TEMPLATES AND ARE AVAILABLE ON-LINE
 PUBLICITY
 REPRESENTING THE SMALL CLAIMANT
AGAINST THE BIG CORPORATION
 TITLE VII ALLOWS AN AWARD OF
ATTORNEY FEES IF SUCCESSFUL
36
WHY BRING A COMPLAINT?
 THREE SIMPLE LETTERS:
SEX
37
WHERE IS THE
COMPLAINT BROUGHT?
 FEDERAL LAW
 MUST EXHAUST ADMINISTRATIVE REMEDIES
 COMPLAINT MUST BE FILED WITH THE EEOC
WITHIN 180/300 DAYS
 MUST OBTAIN RIGHT TO SUE LETTER
 ACTION FILED IN FEDERAL COURT
 COMPLAINT CAN INCLUDE STATE LAW CLAIMS OR
OTHER RIGHTS TO RECOVERY
 DEFAMATION; LOSS OF CONSORTIUM; BREACH
OF CONTRACT;
38
PROVING SEXUAL DISCRIMINATION
UNDER STATE AND FEDERAL LAW
 TYPES OF
DISCRIMINATION
 Hostile Environment
 Explicit or implicit
physical contact or
conduct as a term or
condition of
employment
 Comments, slurs or
innuendos
39
HOW DOES THE PLAINTIFF
PROVE IT?
 Must establish sexual harassment and its “prima
facie” case by a preponderance of the credible
evidence
 Claim (negligence/breach of contract/common law &
derivative)
 Damages (compensatory/punitive/equitable/attorney fees)
 Employer must then show a legitimate nondiscriminatory basis for the conduct or treatment
 Plaintiff then has the chance to prove by a
preponderance of the evidence that legitimate
reasons offered by the employer or actor were a
“pretext” to cover a discriminatory motive
40
PRIMA FACIE CASE OF
HOSTILE WORKPLACE HARASSMENT
 TITLE VII
1. Discrimination was pervasive and regular;
2. Discrimination detrimentally affected employee;
3. Employee suffered intentional discrimination
because of his or her sex;
4. Discrimination would detrimentally affect
reasonable person of same sex in that position;
and
5. Existence of respondeat superior liability
41
CONSTRUCTIVE DISCHARGE
 “Constructive Discharge" occurs when
the employer has imposed upon an
employee working conditions so
intolerable that a reasonable person
subject to them would resign.
42
INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS
Plaintiff must establish the following elements:
1) defendants acted intentionally or recklessly;
2) the conduct was “extreme and outrageous”;
3) defendants’ actions were the proximate cause of
the plaintiff’s emotional distress; and
4) plaintiff suffered “severe emotional distress.”
Court must determine, as a matter of law, that
employer’s conduct was so outrageous in
character, and so extreme in degree, as to go
beyond all possible bounds of decency, as to be
regarded as atrocious, and utterly intolerable in
a civilized community
43
Defending the Complaint
 The best defense is a good offense…as long
as it not “offensive”
 What are the claimant’s motives?
 Confidentiality
 Immediate investigation
 Avoidance = Death
 Documentation
 Forensic Investigation
 Facts, venue, parties, attorneys, impact on
insured
44
Defending the Complaint
 Pursue appropriate discovery
 Everything is discoverable
 Use of experts





Human factors
Forensic economists
Psychologists
Independent medical physicians
Industry specialists
45
Defending the Complaint
 Quid Pro Quo Case:
 Prove no illegal conduct occurred by
establishing:
 No sexual favors were sought
 No sexual advances were made
 Plaintiff was not subjected to an adverse
employment act
 If plaintiff was subjected to an adverse
employment action:
 Must establish a legitimate non-discriminatory
reason for the action
 Establish the sexual advances were not objected
to or welcomed by the plaintiff
46
Defending the Complaint
 Hostile Environment Sexual Harassment:
 Prove the abusive conduct did not occur
 Prove the events were isolated (rather than repetitive
or continuing) and trivial (rather than pervasive or
egregious)
 Establish that the conduct or actions were not beyond
society’s acceptable norms of behavior
 Establish the plaintiff willingly participated in the
conduct or activity
 Prove the employer had no knowledge of the action
47
Defending the Complaint
 Advance the employer’s training
program and investigation
 Employee Handbook
 Professionalism
 Care and treatment for the victim,
psychological help
 Reassigning, transfer, suspension,
demotion, probation or firing the actor,
if claim is substantiated
48
Why do Jurors Love to Hear &
Decide EPL Cases?
 Ever meet 12 people who all love their boss?
 The theory of “indirectly transferred divine
retribution”
 Jurors feel a kinship with the “victim” of
discrimination, and therefore:
 Arbitrarily shift burden to employer
 Evaluate evidence on own life’s experience
 Are suspicious of employers categorizing employee’s
problem as one of “attitude” or “initiative”
49
HOW DO YOU LIMIT EXPOSURE TO
EMPLOYMENT CLAIMS?
Compliance with the law
Unequivocal policy statement
Effective employee handbook
Use internal procedures
C.Y.A. – Document everything
Common sense
Training program – educate employees and
managers
 Identify a specific individual to receive
complaints







50
HOW DO YOU LIMIT YOUR EXPOSURE
TO EMPLOYMENT CLAIMS?
 Observe confidentiality
 Advise employees that every complaint
will be investigated thoroughly and
immediately
 Fully document all actions
 We live in a C.Y.A World
51
Duty of Reasonable Care &
Effective Reporting Procedures
 In order to satisfy its duty of reasonable care, an
employer must
 Establish
 Disseminate and
 Enforce
 an anti-harassment policy and complaint procedure and
 take other reasonable steps to prevent and promptly
correct harassment that occurs.
See Quinones v. Dep’t of Homeland Security, EEOC
Appeal No. 01A53109 (March 31, 2006).
52
COMPLIANCE WITH THE LAW
 FOLLOW HUMAN RECOURSES
PROCEDURES
 TREAT ALL EMPLOYEES THE SAME
 IF YOU ARE NOT SURE, ASK HUMAN
RESOURCES
53
EMPLOYEE HANDBOOK
 Know what the employee handbook
says
 Consult the employee handbook to
determine if the company has a policy
 Has every employee signed the
receipt and “review” sheet?
 Use AAMGA Handbook as a guideline
54
INTERNAL PROCEDURES
 Use internal policies and procedures
consistently
 Consult HR is you are unsure of policies and
procedures
 If you feel a policy or procedure is
ineffective or could be improved, let HR
know
 Eliminate policies and procedures which are
not used or are not complied with as a rule
55
Show of Hands:
How many of you have an antiharassment policy within your agency
or company?
56
Why Create an Effective AntiHarassment Policy?
 May limit agency liability
 Prerequisite for establishing “reasonable care”
affirmative defense
 Remedy harassing conduct before it
becomes pervasive
 Avoid poor public image of agency
 Avoid lower productivity and morale
associated with harassing conduct
 Avoid good employees from leaving to work
in a better environment
57
Establishing An Effective
Anti-Harassment Policy
 Policy should be written and well disseminated
 Protect against retaliation
 Define workplace harassment, and include all
prohibited bases (e.g., race, color, gender, religion,
national origin, age, disability and protected activity)
 Cover harassment by anyone in the workplace –
supervisors, co-workers, or non-employees
 Encourage employees to report harassment before it
becomes severe or pervasive
58
Establishing An Effective
Anti-Harassment Policy
 Clarify that the employer will stop harassment before
it rises to the level of a violation of federal law
 Clearly define roles and responsibilities
 Create multiple impartial paths to complain about
harassment, including a path outside the supervisory
chain of command
 Provide for prompt and impartial inquiries
 Assure that report of inquiry is created and reviewed
promptly by appropriate impartial management
59
Establishing An Effective
Anti-Harassment Policy
 Assure that immediate and appropriate corrective
action, including discipline, will be taken if harassment
is found by impartial management officials, or if the
harassment policy was otherwise violated (e.g.,
second level supervisor failed to timely inform
Harassment Coordinator of allegation of harassment)
 Ensure confidentiality to the extent possible
 Clarify that this internal harassment process is over
and above the EEO complaint process, statutory
appeals process and/or grievance process and that
reporting harassment under this policy is not
equivalent
60
DOCUMENTING EMPLOYEE
PERFORMANCE
 Sufficiently document unsatisfactory
performance
 Documentation should be effective and
concise – don’t beat around the bush
 Do not over document
 Be consistent in internal; investigations
 Use training and other intervention to
address unsatisfactory performance when it
occurs
 Intermittent training
61
Employee Performance
62
COMMON SENSE
Screen applicants
Intervene early with problem employees
BE CONSISTENT
Use all your resources (policies,
documentation, HR, legal counsel), and
those from outside as well to reinforce the
message
 Use caution when an employee has a
pending or previous complaint




 Copy Cat Claimants
63
Top 10 Ways to Prevent – uh – Prepare
for a Sexual Harassment Claim
1. Train all employees in sexual harassment
awareness and prevention: multi-media,
highly inter-active and with skills practice
2. Retrain annually
3. Offer classes and speakers on sex-role
stereotypes, language issues, conflict
resolution, communication, assertiveness
and stress management
64
Top 10 Ways to Prevent – uh – Prepare
for a Sexual Harassment Claim
4. Offer counseling to victims
5. Inform clients and vendors of policies
6. Appoint an office advocate to receive
complaints
7. Write an employee handbook at an 8th
grade level; include essentials of policy
8. Offer recognition to employees serving as
positive role models by treating people
with dignity, respect and equity
65
Top 10 Ways to Prevent – uh – Prepare
for a Sexual Harassment Claim
9. Survey employees to learn of sexual
harassment in the office, suggestions on
how to make the workplace more
comfortable
10. Encourage employees to speak up if
victimized. Don’t wait for complaints –
many are not reported
66
5. Remedial Action - Mitigation
a. Must be prompt and effective
b. Well-defined policy communicated to
all employees
SEX DISCRIMINATION
INSULTS – INNUENDOES – ABUSIVE ENVIRONMENT
Remedial Actions
Prompt Mitigating Action • Investigation
Meet With Parties • Non-Punitive Transfers
Reprimands • Counseling • Training
Termination • Policy Reinforcement
67
C. Race Discrimination – National
Origin – Title VII
1. English Only Rule / Dual Language
2. Lack of Command of English
Language
3. Disparate Treatment vs. Impact
4. Grooming and Dress
68
D. Reduction In Force - RIFs
1. WARN Act
a. 100 plus full-time employees or
100 plus working a combined total
of 4,000 non-overtime hours per
week
b. Various notification rules are
stipulated by law
69
E. Americans With Disabilities Act
1. Title 1 – Disability based
discrimination against “qualified
persons” with a protected disability
2. What Organizations Must Comply?
15 or more employees
3. Wide Scope – All Employment
Practices
70
E. Americans With Disabilities Act
4. Individual With A Disability
a. Physical/Mental impairment that
substantially limits one or more major
life activity
b. Record of such impairment
c. Regarded as having such impairment
(Phantom disability)
d. Otherwise qualified for job
71
WHO IS ADA DISABLED?
YES
Cancer
Heart Disease
AIDS (HIV Positive)
Diabetes
TB – MS – MD
NO
Broken Bones
Temp. Non-Chronic Illness
Temp. Recovery from
Injury/Surgery
Obesity
Pregnancy
“MAJOR LIFE ACTIVITIES”
Walking • Breathing • Seeing • Hearing
Learning • Working • Sitting • Standing
Lifting • Reading • Caring for Oneself
Performing Manual Tasks • Speaking
72
5. Statutorily Excluded Conditions
a.
b.
c.
d.
e.
f.
g.
h.
Homosexuality
Bisexuality
Transvestism
Transsexualism
Pedophilia
Kleptomania
Pyromania
Exhibitionism
i.
j.
Voyeurism
Gender identity
disorders
k. Sexual behavior
disorders
l. Compulsive gambling
m. Psychoactive
substance disorders
(Current)
73
6. The Burning Issue – What Is A
Protected ADA Disability?
a. No formal definition in law
b. Case-by-case legal decisions defining
impairment of “major life activity”
c. EEOC identified non-protected
conditions only absolute exclusions
74
7. Substantial Limitation
 Impairment which prevents individual
from performing a “major life activity”
or when the condition significantly
restricts an individual’s ability to
perform the activity.
75
What Disabilities Are ADA
Protected?
 Toyota Motor Mfg. v. Williams (2002)
Supreme Court ruled the issue is not
whether the condition substantially
limits employee’s ability to perform
job related tasks….The issue is the
limitation on one or more of the
employee’s “major life activities”.
76
8. “Qualified Individual”
a. Regular and dependable attendance is
valid requirement
b. Complete disability which precludes an
individual from working in any job is not
protected
c. Employer can adopt standards that
employee not pose direct threat to own
safety or safety of others in health care
industry, motor vehicles/equipment
operations an public safety jobs.
77
9. Reasonable Accommodations
a. What is “reasonable’?
b. Light Duty Requests – Caution!
1) Essential job function
2) Restructuring or marginal function
c. Undue Hardship
1) Impact on others
2) Pure cost-benefit analysis not test
3) Can’t burden work of others
4) Negative morale alone not sufficient
d. EEOC – Fact Sheet – www.eeoc.gov
78
ADA Reasonable
Accommodation Case Law
Seniority-Based policy which acts
against the transfer of a disabled
employee to another employee’s
position is allowed.
Indefinite leave is not a reasonable
accommodation.
79
UNDUE HARDSHIP FACTORS
1.
2.
3.
4.
5.
6.
7.
Nature and cost
Financial resources of employer
Number of employees at facility
Effect on expenses/resources on facility
Overall financial resources of employer
Overall size of employer
Type of operations to include composition,
structure and functions of the work force
along with geographic, administrative and
fiscal relationships
80
10. Medical Exams or Inquires
a. “Disability-related” questions
b. Post-offer exam if required of all in
same job category
c. Prior occupational injuries
d. Rejection must be “job related and
consistent with business necessity”
81
11. Substance Abuse & ADA
a. Limited protection for alcoholism and drug
addiction.
b. Current illegal drug use does not qualify.
Addiction to legal drugs does.
c. Rehabilitated employees or those in
current rehabilitation program no longer
using are protected.
d. Alcoholic is not protected on job or
condition adversely affects productivity
e. Distinction – Action based on alcoholism
per se vs. employment action based on
alcohol-related misconduct.
82
12. ADA Damages
a. Actual
b. Punitive
c. Future Earnings
83
13. Property Exposure – Title III
Public Access Issue
a. Mandates equal excess to public
areas except religious organizations
or private clubs. (Gov’t per Title II)
b. Commercial property forms typically
exclude ordinance or law coverage.
c. ADA triggers the exclusion.
d. Add Endorsement CP 04 05.
e. Add Endorsement BP 04 46.
f. Problem is HOW MUCH?
84
G. Family & Medical Leave Act
1. Employers with 50 + employees
2. Defines eligible employee by time of
employment (12 mos./1,250 hours)
3. Rights and Obligations
a. Unpaid 12 workweeks during any 12
month period
b. Group health must continue
c. Reinstatement at end of leave unless
“Key Employee” exception
d. 30 day notice to employer if practical
85
G.4. Qualifying Situations
a. Newborn Child – Adoption/Foster
Care
b. Serious health condition of:
● Spouse
● Son
● Self
● Daughter
● Parent
86
G.5. Intermittent Leave
G.6. Damages & Fines
5. Intermittent leave can be taken
hourly, daily, weekly
6. Damages & Fines – Average of
$78,000 to defend, win or lose /
16,000 complaints in 2003
Caution: Individual supervisors/
Managers can have exposure.
87
Why conduct employment
background checks?
 Hiring an employee is like making an
investment.
88
Beware of the unexpected
89
Costs associated with Hiring the
Wrong Employee





lawsuits, litigation, and lawyers;
loss of productivity;
negative affect on employee morale;
high employee turnover;
negative impact for clients and the
general public.
90
Negligent Hiring
 Claims by Co-Workers Against
Employer
 General Rule - Claims by employees
against an employer are dismissible as
worker's compensation is often deemed
exclusive remedy to an employee injured
on the job.
 Exceptions to the General Rule
 Negligence of third party
 Intentional tort by employer
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Negligent Hiring
 Third party claims against employer
 Respondent superior – employee must
be acting within the scope of
employment
 Negligent hiring, supervision or retention
 Employer can be held liable even if
employee acts outside the scope of
employment
92
Drug and Alcohol Testing
 The basic prohibition against
discrimination:
 an employer may not discriminate
against an employee or prospective
employee based upon that employee's
disability, so long as the employee can
perform the essential functions of his or
her job with or without a reasonable
accommodation.
93
Drug and Alcohol Testing
 Liability can be minimized by taking the
following steps:
 have a drug testing policy;
 have the policy acknowledged by employees;
 have employees acknowledge the obligation to
be tested;
 ensure that the drug testing procedures are
designed to avoid discrimination and are
administered correctly;
 follow the policy uniformly.
94
V. Managing The Exposure
A. Risk Management Plan – Document
Plans
1. Uniform Employment Application
(Careful with the questions)
2. Specific & Complete Job
Descriptions (Written)
95
V.A.3. Personnel Manual
a.
b.
c.
d.
e.
f.
g.
NOT OPTIONAL
Consistent management positions
Establish required/acceptable conduct out
front
Describe complaint procedure
Communicate company benefit policy
Post mandated governmental notices
Manual consist with company bylaws,
policy & other organizational documents
Manual reviewed & edited by labor
attorney (Full-time specialty practice)
96
V.A.4.Uniform & Complete Personnel Files
a. Performance is a KEY issue!
b. Formal and honest review based on
established standards that have
been communicated in advance
It Isn’t About Congeniality
97
V.A.5.
Training & Policy
Reinforcement Materials /Meetings
 Employer must exhibit a commitment
by continuity of actions
 Multiple bulletins and training
meetings annually
 Don’t lose focus!
98
VI. Employment Practices Liability
Underwriting & Insurance
A.
The Underwriting Mix Factors
1. Hot Five Exposure States: CA, IL,
MI, NJ, TX
2. Standard Industry Code
3. Employee Census
4. Financial Condition
5. Prior claims or complaints
6. Employment Practices Policy/Manual
7. Turnover/Termination Ratio (3-5 years)
8. Re-engineering/Layoff Plans – Past Action
9. Historical Background of Organization
10. Reliance on Psychological Profiling
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VI.B. The Product - Structure
Stand Alone EPLI
1.
2.
3.
4.
5.
Good
Generally Broader
Risk Management/
Loss Prevention
Services
East to Design SelfInsurance options
No Shared Limit
Easy to Design Defense
Option
Bad
1. An Additional Policy
2. Higher Cost
3. An additional Claim
Philosophy (Different
company or claim unit)
100
EPLI Added To D & O Policy
Good
1. Lower Cost
2. Single Claim
Philosophy
3. One Less Liability
Policy/Easier to
Administer
Bad
1. Shared Limit
2. Coverage Not as
Broad
101
EPLI Added To CGL or Umbrella
Good
1. Lower Cost
2. One Less Policy/
Easy to Administer
3. Same Claim
Philosophy
Bad
1. Coverage Not as
Broad
2. Different Triggers
3. No Defense Option
102
VI.C. The Product – Marketplace
Opportunities
1. ISO – Employment-Related Practices
Liability Coverage Form (EP 00 01 02)
2. Proprietary Admitted Policies
3. Proprietary Non-Admitted Policies
Do Not Accept Original ISO 1998 Form
103
VI.D Coverage Analysis of Key
Policy Provisions – ISO EP 00 01 02
Insuring Agreement
a. Duty to Pay – Legally
Obligated Test
b. Duty to Defend “Suit”
c. Consent to Settle
d. Coverage & Defense
within limits
e. “Injury” must take
place in “Coverage
Territory”
f. Offense arises out of
“injury” after Retro
Date
g. Claim First Made
during policy period
h. 30 Day Automatic ERP
• Except if covered by
other insurance
• Even if “other
coverage” limits are
exhausted
i. Continuous “injury” to
same person is a
single claim as first
reported
104
“Suit” Defined
 “Suit” means a civil action to which
insurance applies because of
“injury”, including:
1. Arbitration Proceeding
2. Other Alternative Dispute Resolution
Proceedings
3. Any Administrative Proceeding/
Hearing by Governmental Agency
with authority (See page 35, Definition I.)
105
“Injury” Defined”
1.
2.
3.
4.
5.
Demotion- Non
Promotion- Negative
Evaluation – Refusal to
Employ – Reassignment
or Discipline of
“Employee”
Wrongful Termination
Wrongful Denial
Negligent Hiring or
Supervision
Retaliatory Action
6.
7.
8.
9.
Coercing to commit an
unlawful act
Work-related
harassment
Libel-Slander-Invasion of
Privacy – Defamation or
Humiliation
Other Verbal-PhysicalMental or Emotional
Abuse
(See page 35, Definition G)
106
D.2. Exclusions
a. Criminal, Fraudulent or Malicious Act
(Any Insured) *
b. Contractual Liability
c. Workers Compensation/Similar Laws
d. Violations of Laws Applicable to
Employers (Certain Exceptions)
e. Strikes & Lockouts
* Separation of Insureds applies
107
Reasonable Accommodation
Exception To Coverage
The policy does not pay for “injury”
arising out of failure to comply with any
reasonable accommodation required
under the ADA or other similar laws.
This includes any expenses incurred for
physical modifications of premises.
108
D.3. Supplementary Payments
a. Prejudgment Not Within Limits
a. Postjudgment Interest Not Within
Limits
109
D.4. Section II – Who Is An Insured
a. As Declared in Declarations:
• Individual & Spouse
• Partnership or Joint Venture
(Partners & Members)
• Limited Liability Company
(Members & Mangers)
• Organizations not a Partnership,
Joint Venture or Limited Liability
Company (“Executive Officers” &
Directors)
110
D.4. Who Is An Insured
b. Named Insured’s “Employees”
c. Named Insured’s Former “Employees”
(Unless otherwise excluded) only for
offenses while employed by Named
Insured
d. Until the 90th day for any organizations
newly acquired or formed with the
ownership or majority interest except:
Partnership, Joint Venture, LLC or any Prior
acts
111
D.5. Section IV. - Deductible
a. Applies to Damages & “Defense
Costs”
b. Company option to pay up front to
effect settlement and collect from
insured
112
D.6. Section V. - Conditions
a. Bankruptcy
b. Consent To Settle
c. Duties In The Event Of Loss
Normal duties plus: Incident report
for actions which may result in
“injury” (Not considered notice of
(claim”)
113
D.7. Other Insurance
a. Primary and shares with other
primary specifically designed to
provide coverage arising out of an
“injury”. (Equal Shares or by Limits)
114
D.8.-9-10 Misc. Conditions
8. Premium Audit
9. Separation of Insureds
10. Transfer of Rights of Recovery
Against Others to Us
115
D.11. If You Are Permitted To
Select Defense Counsel
a. Mutual Agreement or Court Order
b. Company retains right to settle, approve or
disapprove of settlement and appeal
c. Insured must continue to follow required
duties and direct defense counsel to inform
and cooperate with company counsel
d. If defense under reservation of rights
basis, insured must keep records of
“defense expenses” for purpose of
allocation
116
D.12. Transfer Of Duties When
Limit of Insurance Is Us Up
 Written notice to named insured of
withdrawal from defense
 Facilitate transfer of control to named
insured’s attorney
 Company will take steps to avoid
default during transfer
 Named insured reimburses company
for certain expenses in the transfer of
control for protecting position
117
D.13. Section VI – Extended
Reporting Period [ERP]
a. Right in event of cancellation or nonrenewal for any reason
b. Renewal or replacement with insurance
that has Retro Date later than existing
policy or to an occurrence policy
c. Three year period by endorsement for
additional premium
d. “Injury” must have occurred during policy
period and after any “Retro Date”
118
D.13. Extended Reporting Period
e. Written request for ERP within 30 days
after policy expiration or the effective date
of cancellation, which ever comes first
f. ERP not effective (even if requested)
unless:
• Additional premium paid
• All other premium/deductible
amounts due are paid
g. ERP may not be cancelled
h. Premium determination rules apply
(200%)
119
E. Non ISO Policy Form Issues For
Consideration
1. Indemnification Form
2. Separate “Legal Expense Reimbursement”
Limit
3. Coinsurance
4. Punitive Damage Exclusion
5. Application as Warranty
6. Awareness Provision or Condition
7. Counterclaim Expense Limit
8. Limited Definition of Insured
120
Final Thoughts………..
One of life’s most painful moments
comes when we must admit that we
didn’t do our homework, that we
are not prepared.
Merlin Olsen
If you don’t invest very much, then
defeat doesn’t hurt very much and
winning is not very exciting.
Dick Vermeil
121
Final Thoughts………..
"Give a man a fish and he will eat for a day.
Teach him how to fish and he will eat for a
lifetime."
Chinese Proverb
“Teach a man to sue and he will never go hungry”
Anonymous
122
Thank You
AAMGA
150 South Warner Road
Suite 156
King of Prussia, PA 19406
610-225-1999 (o)
www.aamga.org
123