Employment Practices Liability Insurance &

Worker’s Compensation

Cleve Daigle, C.P.C.U. – Vice President

Discrimination occurs when an employee suffers from unfavorable or unfair treatment due to their race, religion, national origin, disabled, veteran or other legally protected status.

Federal law prohibits discrimination in a number of work-related areas, including recruiting, hiring, job evaluations, promotion policies, training, compensation and disciplinary action.

What is Workplace Discrimination?

Title VII of Civil Rights Act, Equal Pay Act, Age Discrimination in Employment Act

Protected categories:◦ Race ◦ Color◦ Sex & Sexual Orientation◦ Medical Condition◦ Religion◦ National Origin◦ Age◦ Disability◦ Veteran Status

Discrimination

Common Claims of Discrimination:◦ Sexual Harassment ◦Wrongful Termination◦ Breach of Employment Contract◦ Negligent Evaluation◦ Failure to Employ or Promote◦Wrongful Discipline◦ Deprivation of Career Opportunity◦ Hostile Work Environment

Discrimination cont…

Litigation has increased dramatically in the last two decades as a result of…◦ Americans with Disabilities Act of 1990◦ Civil Rights Act of 1991◦ Family Medical Leave Act of 1993

Discrimination cont…

EEOC Charge Stats

A total 405,903 charges were brought to the EEOC from 2000-2004.

10% of the Federal Court docket is comprised of employment law cases.

Statistics show an employer is more likely to have an employment claim than a property or general liability claim.

There are 200,000 EEOC and State Agency charges per year.

Over 20,000 employment related charges go to litigation each year resulting in an award of $167,000 with average legal fees in excess of $100,000.

6 out of 10 employers have faced employee lawsuits within the last five years. 41% of all EPLI claims are brought against small employers consisting of 15-100 employees.

EPLI Facts to Remember

Does coverage include coverage for “prior acts”?

Coverage forms can vary greatly. Look for broad coverage including “third party” and “punitive damage” coverage.

Common coverage limits are $500,000 and $1,000,000. Deductibles usually start at $2500 and premiums for small employers with 10-20 employees usually start at $1500-$2000 per year.

Look for coverage with “defense costs” outside the limit of liability.

EPLI Checklist

Create effective hiring and promoting programs to avoid discrimination.

Post corporate policies throughout the workplace and in the employee handbook (review them annually for updates).

Provide employees with clear, written steps to follow in reporting acts of sexual harassment or discrimination.

Provide annual training to managers/supervisors on how to handle discrimination claims from employees.

Document, Document, Document! Be sure all actions related to harassment and/or discrimination situations are documented.

Identify workplace issues that create employment related lawsuits.

Purchase EPLI coverage.

Best Defenses for Employers

EEOC – Equal Employment Opportunity Commission◦ Responsible for enforcing Federal Laws that make it illegal to

discriminate job applicants and employees

◦ Investigate charges of discrimination

◦ Employers with at least 15 or more employees must comply

◦www.eeoc.gov This site offers free training resources, guides and compliance

information.

EEOC

What is Worker’s Compensation?◦Workers' compensation is a system which pays benefits to the

injured worker by the employer regardless of fault or negligence. Even if the injury was the employee's fault, the employer must pay.

◦ An accidental injury must arise out of employment and in the course of employment.

Worker’s Compensation

History of Worker’s Compensation◦ 1911 – the first worker’s compensation laws were enacted

◦ Prior to Worker’s Compensation Laws, injured employees had to prove their injuries were due to employer negligence. Slow, costly and uncertain legal process.

◦ In exchange for employees relinquishing their right to sue employers for employee-related injuries, employers agreed to assume costs of the occupational injuries and disabilities without regard to fault.

Louisiana Worker’s Compensation

1. Provide sure, prompt and reasonable income and medical benefits to work-accident victims, or income benefits to their dependents, regardless of fault.

2. Provide a single remedy and reduce court delays, costs and workloads arising out of personal-injury litigation.

3. Relieve public and private charities of financial drains – incident to uncompensated industrial accidents.

4. Eliminate payment of fees to lawyers and witnesses as well as time-consuming trials and appeals.

5. Encourage maximum employer interest in safety and rehabilitation through an appropriate experience-rating mechanism.

6. Promote frank study of causes of accidents – reducing preventable accidents and human suffering.

Six Basic Objectives Underlie Worker’s Compensation Laws

In order to be compensated, the following must occur…◦ An accidental injury must arise out of employment and in the

course of employment.

Compensable Benefits (distributed by Worker’s Comp):

◦ Disability◦Medical◦ Survivor◦ Rehabilitation

Compensable Factors

Designed to cover claims not subject to worker’s compensation laws.

Common suits involve claims filed by spouses and children of the injured worker.

Employers Liability

Louisiana has a compulsory law with exemptions for Real Estate Agents, certain farm workers and domestic workers.

Owners and officers of companies have the option to exclude themselves from coverage.

Louisiana law provides for fines and/or imprisonment for failure to provide coverage.

Louisiana law also offers exemptions for uncompensated officers of non-profit charitable, fraternal, cultural or religious corporations or associations.

Compulsory Law

Consider the following:◦ Reductions in premium may not be significant if officer/owner is in a

sales or administrative position.

◦ Health Insurance policies can vary. Some policies will not pay medical expenses for injuries if the owner was “eligible” to purchase worker’s compensation.

◦ Health benefits are limited in most cases; worker’s compensation medical benefits are unlimited.

◦ Secure written confirmation from your Health Carrier that they will pay for losses incurred during the course of employment.

If You Exclude Yourself

Questions

?