The stories that dominate your social media feed and the evening national news often have significant ripple effects into the business world. The last few months have brought on a number of high profile cases of workplace harassment and abuse. These cases are difficult, controversial, polarizing, and expensive. This year in Yonkers NY, Rosanna Mayo-Coleman was awarded a $13.4 million verdict from her employer, American Sugar Holding, after she was sexually harassed by her supervisor.
I will spare the details for the sake of this blog, but in a nut shell there were extreme levels of negligence from different levels of management within the organization that led to years of harassment towards Ms. May-Coleman. The verdict, which included $11 million in punitive damages, is going to set the precedent for cases to follow.
Social media initiatives like #metoo have captured headlines and brought a huge spotlight onto workplace behavior. Employers continue to have a tremendous responsibility to the people they hire to provide a safe and harassment free environment. Today's employment marketplace is too competitive for employers not to have this workplace safety as a top priority. Yet still, even in the best intentioned businesses, breakdowns in that core responsibility happen.
Well, a lot. But I'm in the insurance and risk management world, so I'm going to keep this focused on what I know. Can these businesses look to insurance to help defend them in these kinds of cases? What responsibility does the employer have in regards to the actions of their employees?
The standard ISO Commercial General Liability policy excludes coverage for any "Employment-Related Practice." Fortunately, insurance companies offer options to buy back the coverage in the form of an endorsement or separate policy. The policy that would need to be in force to respond to such a claim is the Employee Practice Liability Insurance Policy, which is more commonly referred to as "EPLI." Depending on the carrier and terms of the policy, this is intended to cover companies against claims or lawsuits filed by employees, current, former, or prospective, regarding their interaction with the employer. Claims could range from discrimination, sexual harassment, wrongful termination, emotional distress or breach of contract.
I have said this before in these blogs and I will say it again here: insurance is the last stop. It is a contract between an insurance company and an individual or business to financially indemnify if a covered event in the contract occurs. These contracts are 40+ pages that specifically outline what is and isn't covered. Just because you buy an EPLI policy, do not assume you have done all the due diligence needed. The best risk management technique when it comes to internal claims is proactive mitigation. From every aspect you can think of, it is important to put in place a culture of best practices, procedures, and policies that clearly outline what is and isn't acceptable in the workplace. Make sure all staff is clearly aware of these policies and reporting methods. Take every report seriously, regardless. Consult with your HR team, attorney, and insurance agent to develop these plans. A lot of these policies may seem like common sense, and they probably are. But common sense is not a very effective defense. As a successful corporate attorney once said to me, "wouldn't you rather have it and not need it, versus need it and not have it?"
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