Many institutions in both the public and private sectors have taken steps during the past couple of decades to promote a workplace that is free of sexual harassment. These efforts represent a wide variety of actions–from staff training, to policy change, to outright cultural change.

Many entities have changed by learning the hard way–from costly litigation resulting from employees who believe they were sexually harassed.

Employers should be vigilant that best practices instituted some time ago are still being adhered to by employees at all levels of the organization. It is a good idea for employers to conduct a periodic review of their policies and the degree to which they are understood and are being followed by the employees.

The professional insurance agent can suggest this review at the time other insurance risks are being evaluated–during the pre-renewal discussions that take place annually with the insured. If an agent has not typically done this in the past, now might be the perfect time to begin this practice.

NEW POLITICAL LANDSCAPE

Employer awareness of the importance of fostering a non-hostile work environment is at an all-time high. We've come a long way since the Clarence Thomas/Anita Hill hearings in 1991, the defining event which brought the issue of workplace harassment front and center to the American people.

Employment practices liability insurance–a coverage that barely existed 20 years ago–is now considered an important component of good risk management practice.

But even employers whose businesses are free of hostility and sexual harassment can fall victim to today's recessionary climate. As more employees lose their jobs, more employers risk exposure to charges of incorrect or illegal “employment practices” by people seek financial retribution.

The political landscape has changed dramatically over the last year, and the consequences of this change will continue to be felt by employers across the spectrum.

Congress is committed to an agenda of what it construes to be fairness. In October, three Democratic lawmakers, chairing three separate Congressional committees, jointly announced they would move to overturn a June 2009 U.S. Supreme Court ruling that made it significantly harder for workers to win many age discrimination cases.

The three politicians–Sen. Tom Harkin, D-Iowa; Sen. Patrick Leahy, D-Vt.; and Rep. George Miller, D-Calif.–introduced the Protecting Older Workers Against Discrimination Act to restore “vital civil rights protections for older workers in the face of the Supreme Court's decision in Gross v. FBL Financial,” they said in a statement on Oct. 6.

(Editor's Note: The 5-4 Supreme Court ruling in Gross said that a worker has the burden to prove age was not just a motivating factor but the key factor in a negative employment decision.

In the language of the ruling, a plaintiff bringing a “disparate-treatment claim” filed under the Age Discrimination in Employment Act of 1967 “must prove, by a preponderance of the evidence, that age was the 'but-for' cause of the challenged adverse employment action.”

Sen. Leahy launched his initial attack with a statement released on the day of the ruling, and experts predicted that legislative action would soon follow. (Key points of the ruling and the senator's reaction were captured by National Underwriter in June–on NU's Online News Service at http://bit.ly/3LE1AF and in the lead article of NU's E&S/Specialty Lines Extra e-newsletter http://bit.ly/37yc1C.)

In his own separate October statement, Sen. Leahy thanked Sen. Harkin for introducing the new bill, and noted the hard work that Sen. Harkin put into getting another law expanding worker protections last year–the enactment of amendments to the Americans with Disabilities Act.

The Americans with Disabilities Act Amendments Act of 2008 (ADAAA) took effect on January 1, 2009. This act imposes heightened obligations on the employer. The most challenging component of this legislation for the employer is to determine what exactly is meant by “reasonable accommodation,” “undue hardship” and “essential job functions” to establish compliance with the new law.

Experts in employment law believe that as a result of this more stringent version of the ADA, employers will find it more difficult to get charges dismissed or summary judgments on the grounds that an individual is not disabled. As a result, many employers will need to revisit their current approach to how they handle medical conditions in the workplace.

Many illnesses and impairments that were not previously construed to be disabling will now be ADA-covered disabilities. This will entail time and additional resources on the part of most employers. It also opens up new grounds on which an employee can sue for a purported violation of the act, augmenting the need for insurance coverage.

Rep. Miller, in the October announcement unveiling the new age discrimination bill, commented that “the same conservative Supreme Court justices responsible for the backward ruling against Lilly Ledbetter have now thrown another legal barrier in front of hard-working older Americans,” echoing comments made by Sen. Leahy in June on the day of the Gross ruling.

In January of this year, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Restoration Act, which was intended to be a significant symbolic move on behalf of “workers' rights” in this country, and presented it as the opposite of the pro-business agenda of the last eight years.

(Editor's Note: In Ledbetter v. Goodyear Tire & Rubber Co. in 2007, the court had held that if employees did not file claims of sex-based discrimination under the Equal Pay Act of 1963 within 180 days of their employers' decisions to pay them less, they were barred forever from challenging the discriminatory paychecks that followed.

The act clarified that discriminatory pay decisions occur each time compensation is paid, making every paycheck a potential start point for a wage discrimination suit.)

With the turn in political tide coinciding with an economic downturn, employers of all types–in the public and private sector–must now be more mindful of the potential for claims arising due to alleged age discrimination, and from a much larger employee pool than in the past.

These claims historically arose from the lower ranks and less-compensated employee population. There will now be an increased amount of claims arising from a previously unlikely source–the established male white collar employee, who now finds himself jobless.

The Lilly Ledbetter Act allows current employees to sue for past wage discrimination, in addition to the legions of recently laid-off employees who may claim past discrimination due to gender, race or religion. The pool of potential litigants just got much larger.

Some recent examples of claims making their way through the court system capture the essence of the rapidly evolving nature of the exposure:

o A 66-year-old secretary with the City of North Lauderdale, Fla., was awarded $75,000 in damages by a Broward civil court jury in March 2009 in connection with an age discrimination suit.

Photos of the weeping grandmother, facing the prospect of being homeless and without a car, were run on television for mass consumption.

o A group of 100 laid-off laboratory employees from the Lawrence Livermore National Laboratory filed a complaint with the California Department of Fair Employment and Housing in February 2009.

The filing was made on behalf of 440 employees, including scientists, engineers, financial analysts and facilities technicians, who were laid off by the laboratory in May 2008. Ninety-four percent of them were over the age of 40.

o A former manager at Google–now 58 years old–filed suit in 2004, claiming age discrimination. The plaintiff claimed that younger Google staffers routinely referred to him as “old man.”

His attorneys contend that he never received a negative performance review, and that his firing was related to the initial public offering that Google did in 2004.

The case has been making its way through the California court system and is now on its way to the California Supreme Court, which will soon be hearing arguments from both sides.

o 200 West Virginia coal miners over the age of 40 will share in an $8.75 million settlement in an age discrimination lawsuit they filed three years ago, according to a late October 2009 announcement from the United Mine Workers of America.

The previous owner of the mine had gone bankrupt, and the miners all lost their jobs. They weren't picked up by the successor company, Spartan Mining Co.

It is worth noting that all of these cases began before the political actions described above, meaning that the watershed of events to come had not yet begun at the time they were filed.

It should also be apparent that the burden on the employer population will continue to increase, as long as there are perceived economic injustices in our economy and a government that believes itself charged with rectifying them.

COVER OPTIONS EXPAND

The good news is that the insurance marketplace offers many options, provided by multiple carriers. Coverage can be obtained on both an admitted and a nonadmitted basis, depending on the class of business, state of domicile and carrier. We are also seeing more insurance companies offering EPLI on a sublimit basis as part of a miscellaneous errors and omissions policy.

In the standard marketplace, carriers are offering sublimits of $25,000 to $250,000 as part of a package policy.

Coverage can vary widely from carrier to carrier, so it is important to analyze each quote carefully.

We have seen carriers broaden their coverage offerings, which is a positive for the insurance buyer. For example, third-party coverage–for discrimination and harassment claims brought by non-employees–has become available in the last couple of years.

All EPLI policies and forms include some degree of defense coverage–and this alone could well be the element of coverage that keeps a small business going as it fends off any EPL claims.

Thanks in large part to the ongoing soft insurance market, the pricing for these products remains fairly reasonable. We see this pricing and availability trend continuing well into 2010.

The professional agent can provide tremendous added value to his or her insureds by staying informed of the current environment, educating insureds as to the risks and potential economic impact of doing nothing, and assisting in the implementation of a sound program of risk management which includes the purchase of an EPLI policy.

Marla Donovan is vice president of product development at Burns & Wilcox headquartered in Farmington Hills, Mich. She may be reached at [email protected].