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EPL Insurers Brace For Severe Recession Claims

As employment practices liability lawsuits fueled by the recessionary job cuts move forward, experts see mixed signals for claims severity, including a possible fourfold spike in the level of emotional distress awards in successful cases.

By Susanne Sclafane | Updated on December 05, 2010

As employment practices liability lawsuits fueled by the recessionary job cuts move forward, experts see mixed signals for claims severity, including a possible fourfold spike in the level of emotional distress awards in successful cases.

“I’m not an insurer, but I am pretty sure that is doing something to the [loss] reserves” of EPL insurers, said Sarah Goldstein, a partner with Lewis Brisbois Bisgaard & Smith in Los Angeles, who provided the estimates of emotional distress damages during a panel discussion at the Professional Liability Underwriting Society’s International Conference in November.

Ms. Goldstein, participating in a session titled “Watch Out! Hidden Risks of Employment Discrimination Claims,” explained that she prepares her clients, who are defendants in employment lawsuits, for worst-case scenarios–providing figures for potential awards that might result if a jury found in the plaintiff’s favor on absolutely every allegation in the case.

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