Hair Trigger Headaches: Employment Cases are Tough

Depositphotos_72536359_l-2015The upshot of a Lexus Nexis article which cited a study in the NY Times purporting that “employment cases are tough” and ”it’s true that defendants who refuse to settle and lose average about a $1.1 million loss for their error1

An extra 1.1 million dollars on average? Those are huge stakes and could require a very large check for a defendant to write. And it might be fair to assume most employers are likely to become defendants in employment situations.  Claims that arise in this area can be very emotional, expensive, complicated and punishing.

You may have heard workplace claims and wrongful acts like allegations of Wrongful Termination, Discrimination, Workplace Harassment and Retaliation and such are contemplated on a Employment Practices Liability Insurance (EPLI) type policy.  There are others claims and policies possible so please use common sense on courses of action and claims contemplated herein.

Large claims do happen and unfortunately frequently. Any employment claim can take up an incredible amount of time and cause huge amounts of research, copying, paperwork and meetings. It also can be draining physically and financially. Its small solace to be ready and to be able to blunt those allegations where you believe were wronged or incorrectly accused. It’s been said, “Nobody wins a lawsuit.” But it may mitigate fair amount of the agony of a legal battle to find there was no injury after feeling the sting of the plaintiff’s insult either.

Employers should have strategies to understand this area and avoid its pitfalls as best as practical. Below are SOME not ALL ideas of things to do to be better prepared.

Check with your HR:

  • Prepare before you have a problem not after – “an ounce of prevention” mentality
  • Have you spent adequate time reviewing, researching and updating your company handbook?
  • Have you audited your HR practices and are they correct, contemplated and current?
  • Has appropriate management and ownership been apprised and input their context?
  • Have you examined your recordkeeping practices to make them current and proper?
  • Do you have capability to search your records and or recreate them?
  • Have you decided what to retain in risk and what to transfer and why?
  • Are prevalent workplace claims afforded to you by your EPLI at a minimum?
  • Is your EPLI working in concert with your primary D&O, E&O, CGL or other coverage(s) if any?
  • Here are some common but NOT all workplace issues causing complaints… are you fully prepared to manage these (In alphabetical order not based on frequency or severity)
    1. Alternative Work Arrangements
    2. Class action
    3. Data Breeches
    4. Discrimination
    5. Duty to defend
    6. FLSA
    7. FMLA
    8. Gender and Sexual Orientation Claims
    9. Retaliation
    10. Sex Harassment
    11. Social Media
    12. Wage and Hour Claims
    13. Whistle blower

Check with and involve your agent, broker and or insurance provider

Your insurance providers should be able to handle these questions and other areas.  It is not uncommon for an agent or broker to have relationships with people who are experts in these matters. That can help. Try to talk to them and share your concerns, questions, gaps etc. Remember, coverage for these areas could be contested or difficult to find. Have a complete strategy and meet with your providers.

  • What policies and coverages do you have past and present and are the applications correct?
  • What do they cover or not – There are many approaches to coverage why pick yours?
  • What do they recommend to make you comfortable while keeping coverage still affordable?
  • What concerns do they have now, in the future and in the past?
  • Should additional coverage or policies be considered or have any ambiguities cleared up?
  • If not on an insured basis, where are you at least entitled to a defense. Are there any areas that should worry you?
  • Is your recordkeeping proper? Do you get things in writing?
  • What are your duties in case of any claim or any policy?

Check with your lawyer. 

No matter how many times one has been through the process of being involved in a complaint, it is never a good feeling for the defendant. There are any number of accusations about the employer and they may seem personal and untrue and unfair.  Be ready in case of a claim, you may need support from forensic accounting down to private detectives.

  • Do they have a satisfactory practice in employment law and necessary specialists like ERISA?
  • Have you had a discussion with all the attorney(s) who would be involved with you including litigation?
  • Have they read and reviewed your company policy(s) procedures and handbook, forms etc?
  • Have they read your company’s insurance policy(s)
  • Have you acted on their recommendations?
  • Will they be added as the defense team or will other arrangement be required?

Perhaps the above reminders can prove useful.

This article includes a disclaimer. Use professional assistance. This information is not intended to represent legal advice and has been prepared solely for educational and reminder purposes. You should consult your attorney regarding any issues due to the fact the text of this article is similar to ordinary telephone or face-to-face conversations and in no way reflects the level of factual or legal inquiry or analysis which would be applied in the case of a formal legal opinion.

Remember preparation may bring you luck plan to organize not agonize.


Source Exhibit 1 – (Study Finds Settling Is Better Than Going to Trial By Jonathan D. Glate NY Times)

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