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Employment Practices

Posted on 07 Jan 09

This is an Employment Practices Announcement from storefront owner Professional Liability Insurance Services, based upon current national disability trends:

  • Average Jury Award = $217,000
  • Average settlement = $75,000
  • Disability claims account for 15% of all discrimination claims
  • 68% of disability claims have jury awards over $100,000

    The Question:
    Do your clients think they don’t need an Employment Practices Liability Insurance Policy (EPLI)? Or, did they decide the budget was too tight this year and went bare? In either case, your clients may be in trouble.

    Many state and federal laws changed in 2008 that should cause your client to think twice about EPLI before going bare.

    Americans with Disabilities Act
    Signed into law on September 25, 2008 (and effective January 1, 2009) the Americans with Disabilities Act Amendment Act of 2008 (ADAAA) changed disability law nationwide.

    California has the most cumbersome ADA regulations in the country. With the 2008 Amendment, the California standard has been surpassed.

    The new law amends the current one as follows:
  • New definition of “Disability” expands to individuals with far less severe impairments - lowers the bar for qualifying as disabled & now includes “activities that are of central importance to most people’s everyday life activities”:
  • Walking, standing, lifting, communicating, working, etc.
  • Bodily functions - normal cell growth, digestive, bowel, respiratory, etc.
  • Individual may now be “regarded as” disabled merely by showing he or she has been subjected to any adverse action because of an actual or perceived physical or mental impairment, even if it doesn’t limit a major life activity (major life activity previously required)
  • Those individuals who are able to control their impairment by medication or medical devices may now qualify for protection (this protection did not previously exist).

    Family and Medical Leave Act Amendments
    In January 2008, amendments to the Family and Medical Leave Act (FMLA) provided new military leave entitlements as well as updated the regulations under the 15-year old plan. The Department of Labor published its final rule (700 pages) on these new amendments on November 17, 2008. Some of the revisions, which go into effect January 16, 2009, include:
  • Clarification of a serious health condition
  • Intermittent Leave: Employees who take intermittent leave have a statutory obligation to make a “reasonable effort” to schedule such leave so as not to unduly disrupt the employer’s operations.
  • Light Duty: Time spent in “light duty” work does not count against an employee’s FMLA leave entitlement, and the employee’s right to job restoration is held in absence during the light duty period, unless the employee is voluntarily doing light duty work, then he or she is not on FMLA leave.
  • Gaps in Service: Although the 12 months of employment need not be consecutive, employment prior to a continuous break in service of seven (7) years or more need not be counted.
  • Plus many others!

    Military Leave (USERRA)
    As with most employment law issues, one employee situation may often fall under multiple causes of action. The ADA and FMLA laws often intertwine in many ways, and now USERRA changes impact employment law even more. If an employee is deployed, whether a full deployment or as part of or National Guard duties, the employer is required to hold their position open during active duty for a cumulative period of up to five years. Replacements can be hired, but only as temporary employees. In addition, if an employee is injured while on military leave, he may be considered disabled under USERRA, even if he’s not considered disabled under ADA statutes.

    For returning employees, USERRA removes the “employment at will” status for a period of six months to one year, depending on the length of service.

    The Cost of a Claim is High
    Let’s talk about the cost of a claim. Defense alone for an EPLI claim can climb up to $75,000 (to file for Motion for Summary Judgment) before reaching a courtroom. If a case does go to trial, defense costs can reach a minimum of $200,000, which does not include jury awards if the employer loses and those can vary greatly depending on the cause of action(s).

    Plaintiffs win 50-68% of the time, which means your client’s chance of winning is less than a flip of a coin. Those aren’t very good odds when you consider the amount of time and money involved in defending a claim.

    Aside from defense costs, jury awards or settlements, other factors to consider include the amount of time and resources invested when defending a claim. It can be as long as two years from the time a claim is filed until a settlement or a court decision is made.

    The Answer:
    Since 1997, Professional Liability Insurance Services, Inc. Underwriting Facilities (PLIS, Inc.), has offered one the broadest EPLI policies available, backed by the support of a dedicated detail-oriented claims department, experienced EPL panel attorneys and the Human Resources Specialists of Specialty Risk Management, Inc.

    In today’s unsteady economic climate, companies need comprehensive coverage, not limited endorsements. We offer coverages very few carriers even consider:

  • Family Medical Leave Act (FMLA) coverage
  • Worker’s Adjustment & Retraining Notification (WARN) coverage
  • Uniformed Services Employment & Reemployment Rights Act (USERRA) coverage
  • First dollar EEOC administrative proceedings coverage (up to $2500 for defense) – Before the deductible applies
  • Aggregate $2.5K/$5K administrative proceedings coverage option available
  • Certain Underwriters at Lloyd’s (A.M. Best Rated A)
  • Prior acts coverage available (premium discount available for inception coverage)
  • Third party coverage available (premium discount available for removal of coverage)
  • Punitive and exemplary coverage (where insurable)
  • Liquidated damages coverage
  • Broad inappropriate employment conduct definitions including tort causes of action & retaliation
  • Broad discrimination coverage including failure to promote
  • Broad reporting language for incidents or claims (complaints/demands) – both written or oral complaints
  • Equal Pay Act (EPA) coverage
  • Available limits from $100K/$250K to $5M/$10M
  • Additional defense outside the limits available
  • Deductible reduction endorsement available
  • Aggregate deductibles available
  • No minimum premium

    Additional Services
    Let’s face it, when people have concerns, they want to talk to someone. They need another human on the phone to answer their questions. For this reason, PLIS, Inc. teams up with Specialty Risk Management®, Inc. (SRM®), an independent consulting resource, to provide risk management and human resource services for the ESI-EPLI program. Insureds have access to the hotline for services including:

  • FREE review of Handbook (policies & Procedures) or they will furnish sample policies
  • FREE unlimited 1-800 Hotline (phone) real-time response for immediate issues such as investigations, employee reprimands and/or terminations, state and federal requirements, etc.
  • Additional risk management services available for nominal fee: Train the Trainer, Supervisor/Mgmt Training, On-Site Investigations
  • Comprehensive range of consulting and risk management services, including:
  • Case management;
  • Litigation support;
  • Risk assessments;
  • Human relations/personnel training and continuing education;
  • Human resource audits; and
  • Individual incident/issue problem solving.

    As the risk managers say, “Every call is free. Your client’s time is unlimited. Their access is immediate. Ideas and tactics when your clients need help during any employment issue.”

    For more information, visit their storefront at