In an as yet unpublished opinion, the Supreme Court of South Carolina ruled in May that the defamation of a former employee by a current employee did not constitute an employment-related practice.
In Owners Insurance Co. vs. Clayton, the court ruled that the lawsuit should be covered by the company's commercial general liability coverage, even though an employment-related practices exclusion was attached to it. The court reasoned that the substance of the defamation was employment-related, but that it occurred outside the context of employment.
Therefore, one could say, the company got lucky and the CGL insurer had to pay.
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