Employment Practices Insurance & Liability

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The Brown Insurance Group can guide you through the broad spectrum of employment related concerns, helping you to mitigate this exposure and protect your business.

Today, businesses have a lot more than the competition to worry about. The unfortunate truth is some of the most debilitating and costly challenges develop from within your own operation – from your employees.

It is undoubted your employees have learned of others who have successfully sued their employers in both frivolous and meritorious cases. The escalating frequency and severity of suits alleging employment-related wrongful acts such as wrongful termination, discrimination, and sexual harassment come from a variety of factors, not the least of which is our legal system. A person claiming a rights violation has nothing to lose and everything to gain.

Aside from settlement, mounting an employment practices defense with experienced labor law council can be extremely expensive and potentially crippling in terms of lost productivity to your business. It does not take hundreds of employees to put your business at risk, it takes just one. Prevention and financial protection are certainly the best course of action. The Brown Insurance Group can guide you through the broad spectrum of employment related concerns, helping you to mitigate this exposure and protect your business.

Employment Practice Liability Statistics

The EEOC can issue a dismissal along with a right to sue letter OR issue an award with compensable damages…

Over 75,000 discrimination charges filed with the EEOC in 2006
$419,000,000 in compensatory damages awarded just at the EEOC level
Including State agencies, over 150,000 charges per year
50,000+ Employment Practices lawsuits per year (Federal and State Courts)

Consider…
Unless you have a heavy products liability, premise / operations or contracting exposure, a business is more likely to be sued by its employees than by a third party.

Employment Practice Liability Median Award Amounts (1998-2004)

Discrimination (overall): $187,583
Age Discrimination: $262,405
Disability Discrimination: $211,272
Race Discrimination: $138,800
Sex Discrimination: $186,250
Other Discrimination: $101,563
Retaliation: $140,000
Wrongful Termination: $125,880
Whistleblower: $270,000

Employment Practices and Fiduciary Liability Exposures*

*Absent applicable governing acts, statutes, and codes, the courts generally refer to those in existence for guidance

Civil Rights Act of 1964 (TITLE VII)
Racial discrimination in employment banned. Applies to employers with 15 or more employees.
Civil Rights Amendments of 1991
Further illegality for additional types of discrimination, including “sexual harassment”. Also damage caps provided for suits brought in federal courts; Jury trial mandated if requested by employee. Applies to employers with 15 or more employees.
Age Discrimination in Employment Act of 1967 (ADEA)
Amended to ban forced retirement to age 70 in 1978; to employees over 40 in 1986; workers cannot waive their right to sue under this act unless the waiver is “knowingly and voluntary” in 1990. Applies to employers with 20 or more employees.
Employee Retirement Income Security Act of 1974 (ERISA)
Established liability for welfare benefit plans from employees and mandated employee dishonesty insurance in maximum amounts. Subject to numerous amendments. Applies to employers of all sizes based on ERISA standards, directly applicable to firms with 100 or more employees.
Omnibus Reconciliation Act of 1985
Banned termination of an employee’s pension because of age; incorporated COBRA. Applies to employers with 20 or more employees.
Immigration Reform and Control Act of 1986
Banned illegal hiring of immigrants; provided offence for refusal to hire one found not to be illegal. Applies to employers with 4 or more employees.
Worker Adjustment and Retraining Notification act of 1988 (WARN)
Requires 60 day prior notice of large-scale layoffs and plant closings. Applies to employers with 50 or more employees.
Americans with Disabilities act of 1990 (ADA)
Banned employment discrimination on the basis of a “disability” – the term is vaguely defined – as well as mandatory premise access for persons with disabilities. Applies to employers with 15 or more employees.
Older Workers Benefit Protection Act of 1990
Brought employee benefits/pensions/early retirement incentives under ADEA. Applies to employers with 20 or more employees.
Family Medical Leave Act of 1993 (FMLA)
Mandates up to 12 weeks for wife or husband upon birth/adoption of child or family sickness or illness. Applies to employers with 50 or more employees.
Uniformed Services employment and Reemployment Rights Act 1994 (USERRA)
Provides for job security, and in some cases, benefits security – for military personnel. Applies to employers of ALL sizes.
Health Insurance Portability and Accountability Act of 1996 (HIPPA)
Designed to eliminate employee discrimination on the basis of pre-existing health conditions of employee or dependant spouse/children; affects COBRA; addresses long-term care, corporate owned life insurance, accelerated death benefits, health insurer reform aspects, medical savings accounts, health care fraud and other related and unrelated issues. Applies to employers with 2 or more employees.
Newborns’ and Mothers’ Health Protection Act of 1996 (NMHPA)
Mandates group plans and HMO’s which provide coverage for childbirth must offer minimum required inpatient hospital stays; also addresses several aspects of care for newborns and their mothers. Applies to employers with 2 or more employees.
Mental Health Parity Act of 1996 (MHPA)
Mandates group insurance aggregate lifetime benefit amounts for mental illness benefits be not less than that for medical/surgical benefits. Applies to employers with 50 or more employees.
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)
Requires retirement savings plans to allow for an increase in the maximum allowable annual contribution; allowing workers over age 50 to make “catch-up” contributions; allowing easier transfer of assets between different types of plans; tax credits for lower income employees and additional favorable provisions to employees. Applies to employers with 100 or more employees.
Fair Labor Standards Act (FLSA)
Establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time employees in all sectors, as well as requiring overtime pay (at 1.5x regular rate) after a 40 hour work week. Applies to employers with 2 or more employees.