These are certainly unprecedented times: Organizations and businesses have been forced to shut down for months, and employees have been sent home to work remotely (with no end in sight for some), resulting in the essential shutdown of the U.S. economy.
How has all this impacted employers and employees? As the economy reopens, the workplace challenges and legal uncertainties in the employment sector are becoming more prevalent. Entire industries have been devastated, and many others are struggling to survive.
Employers who are considering layoffs, salary reductions, furloughs or reduced hours for their workforce, must also be concerned about the potential liability implications of these modifications. Such liability increases often lead to employment practices liability insurance (EPLI) claims, which are designed to protect organizations in the event of employment-related claims.
Drivers of losses
Employees nationwide have already filed more than 500 COVID-19-related lawsuits (this number is expected to increase over time) against their employers and former employers, according to several U.S. employment law firms. Many of the employment practices liability-related claims have been for disability discrimination under the Americans with Disabilities Act (ADA), age discrimination, national origin discrimination, disparate impact claims, retaliation and wrongful termination.
Although many of these claims are related directly to COVID-19, changes in the workplace, layoffs and furloughs, and increased unemployment are also driving claims. Particularly hard-hit areas include retail, transportation, leisure and hospitality. And in recent months, unemployment has also hit financial institutions, professional services, construction and manufacturing.
Other drivers of loss center on discrimination or retaliation related to inconsistent application of company policies. These include requests for personal time off (PTO), paid sick leave, Family Medical Leave Act (FMLA) benefits, and allowance or accommodation to work from home. Other drivers include such allegations as
- Mistreatment or harassment due to illness or suspicion of illness,
- That the employee is forced to work in unsafe conditions, or
- That an infected employee’s identity has been released.
Insurers are already seeing several claims for coverage under EPLI policies, and they anticipate more in the fourth quarter of 2020 and into 2021. The following are examples of the kinds of claims that employers and insurers are or will be facing.
One of the types of discrimination claims we have seen is national origin discrimination or harassment suits in which employees claim they are mistreated because of their national origin, which is alleged to be related to the spread or origin of COVID-19.
There have also been some religious discrimination claims that have been tangentially related to COVID-19. For example, in a lawsuit filed in California state court, an employee alleged religious discrimination because he began praying at the workplace after his mosque shut down due to COVID-19. The employee claimed that after a manager witnessed him praying while at work, he was terminated.
Employees have also filed discrimination claims for stereotyping vulnerable populations that have been identified by the Center for Disease Control (CDC), such as older workers and pregnant employees. These claims have generally alleged that an older worker or pregnant employee was terminated because they are at higher risk of contracting COVID-19. The claims have also alleged that these “vulnerable” employees have not been given reasonable accommodations to allow them to continue working remotely due to their high-risk status.
In addition to discrimination claims, insurance carriers also anticipate privacy-related claims. As businesses reopen and employees return to the workplace, many new procedures are in place. The procedures require questioning employees about their personal health, their own health history or their family health history.
With temperature-taking requirements and certification forms to fill out, there is a concern that some employees may feel as though their privacy has been invaded, particularly if records and information don’t remain confidential.
That’s an area insurers are keeping an eye on.
Section 7 of the National Labor Relations Act (which also applies to non-union employees) protects concerted activities by employees. In the context of COVID-19, this is already an issue with employees expressing their concerns over social media about their employers’ lack of safety measures or personal protective equipment (PPE).
Retaliation can also come about as a result of employees exercising their rights under the FMLA and other benefits laws such as workers’ compensation or paid sick leave. Suits have been filed by employees who inquired about or sought FMLA leave due to their own risk factors and claimed they were terminated due to their request.
An increase in wage-and-hour claims is also expected. Although EPLI policies don’t provide coverage for wage-and-hour claims, there is a separate stand-alone policy that does cover such claims. With so many employees continuing to work remotely, significant wage-and-hour issues are coming to light. These include:
- The inability to track time to determine how much, if any, work is being done off the clock,
- Failure to pay overtime, and
- The inability to track whether and at what time meal breaks and rest periods are taken.
For those returning to the workplace, those extra requirements — such as temperature taking or filling out questionnaires — may lead to off-the-clock issues as well.
In addition, if a business must cut down on its workforce and uses exempt employees to do non-exempt work, the strategy can lead to claims of misclassification and failure to pay overtime.
These are some of the claims insurance carriers see or anticipate seeing and what the EPL market will be looking at. Businesses will need to be prepared to talk about the claims they’ve had at renewal and what they’re doing to mitigate exposure to claims.
Talene M. Carter ([email protected]) is the national employment practices liability thought & product leader for Willis Towers Watson. Her two-part series focuses on the drivers of loss, the claims arising from COVID-19, and best practices for employers. Part II will discuss what businesses can do to reduce the risk of EPLI claims from COVID-19.