2007 International Conference Washington, D.C. ~ November 7-9, 2007 The Employer Strikes Back, Or, so the Retaliation Claimant Says

The Employer Strikes Back Panel Members MODERATOR: Thomas Paschos, Attorney at Law, Thomas Paschos & Associates, PC Wendi Barish, Partner Weber Gallagher Simpson Stapleton Fires & Newby LLP Thomas Katona, Managing Member Apogee Insurance Group LLC Gene Mason, Vice President W.R. Berkley Company (Watch Hill Division) Anthony J. Fowler, Assistant Vice President & Claims Counsel The Hartford

Why and How Burlington has Changed the Game What are the trends in retaliation claims post Burlington? What is the affect on underwriting? What is the market doing in light of Burlington?

Why and How Burlington has Changed the Game What can Insurers/Employers/Legal Counsel do to Protect Against Retaliation Claims? How is the EEOC reacting in light of Burlington? How Proactive Must Insurers/ Insureds/ Employers/ Legal Counsel be in light of Burlington?

Burlington Northern v. White Supreme Court, 2006 Employee reassigned to another position with same pay and benefits Employee claims higher scrutiny lead to suspension which was overturned Court found conduct could be found to be retaliatory Reasonable employee standard emerges (a/k/a employers’ nightmare created)

McGowan v. City of Eufala Third Circuit, 2006 Employee claimed retaliation for supporting a co-worker’s claim Suspension, denial of reassignment, harassment Termination/Suspension for prisoner hanging with belt Court found retaliation claim lacked evidentiary support to show proximate cause Lesson: document, document, document

Williams v. W.D. Sports Tenth Circuit, 2007 Female hockey player claims retaliation after claiming sexual harassment President confronts her with rumors of sexual relations with players, coaches, season ticket holders; suggestion to resign as continuing might ruin marriage Court found President’s conduct could be retaliatory Lesson: don’t go there!

Jenks v. Modern Woodman of America 2007, Tenth Circuit Employee was a manager at an insurance company. Demotion and termination results in settlement of claim. Reapplies after receiving form letter and is denied employment based on release Court found conduct did not constitute retaliation. Lesson: do not invite people who have sued you to reapply for a position. Make sure release includes language specifying no re-employment.

Michael v. Caterpillar Financial Services 2007, Sixth Circuit Employee gets involves in a dispute and is placed on leave, files EEOC Complaint same day claiming race discrimination. Internal investigation of dispute results in places on 90 day performance plan or job transfer. Successfully completes performance plan. Ultimately transferred and promoted. Court found no retaliation. Lesson: employees can still do wrong in the eyes of the court.

Hare v. Potter 2006 Third Circuit Postal worker claims sexual harassment and files EEOC claim. Requested time off for deposition and was told not so nicely by Supervisor to drop case and starts receiving harsher treatment by Supervisor. Postal worker has mental breakdown, ends up on leave and Supervisor changes locks. Court found conduct = retaliation. Lesson = order your stamps online.

Kessler v. Westchester County Dept. of Social Services 2006, Second Circuit Employee claimed he was denied promotions due to age, gender, and religion. Transferred to Yonkers, same pay and benefits but less people to supervise Court found conduct could be considered retaliatory. Lesson: Do not transfer people who claim discrimination just because you can.

How is Burlington Impacting the Underwriting Side? Burlington has changed the game Retaliation exposure touches all industry groups and risks of all sizes Reinsurance underwriters are digging deeper Underwriters updating forms and applications Plaintiff lawyers desire to get into the courtroom Concern over increased defense costs and up tick in claims

Market Impact Comparison from 2000 to 2006  Retaliation claims, all statutes, have risen from 27.1% of all EEOC claims to 29.8% or up 2.7%  Retaliation Claims for Title VII only, has gone from 24.7% to 25.8% in 2006 or 1.1% increase  Age discrimination risen from 2000 to 2006 by 1.8%  Sex discrimination gone down from 31.5% to 30.6%  Race down from 36.2% to 35.9% *Source EEOC.gov charge Data System

Market Impact Insurance Carrier Reaction Soft market impact is far greater than Burlington Northern, competition still aggressive Offering multiple year terms sometimes without renewal application Higher Deductibles in larger employee insured’s Little impact on under 200 employee accounts Carve back for retaliation, especially union NLRA exclusions More documentation required M a r k

Claims Impact Frequency of claims Retaliation tacked on to discrimination claims Liability analysis-Change the game, broader standard-reasonable person-(inherently broader) Damages analysis- huge potential for greater damages due to retaliation component (Isaiah Thomas case) Cases more difficult to settle early Advantage Plaintiff High Plaintiff demands likely

Market Impact Still seeing:  Full Prior acts  Defense outside the limits  Deductibles as low as $1000 for under 200 employees, higher deductibles for over 200.  Policy Language changes coming  Typical exclusions like FSLA (Fair labor) NLRA (Labor Relations) OSHA etc can evolve into Retaliation defense but have specific language excluding retaliation.  NLRA typical provisions exclude “discharging or discriminating” outdated definition

Helpful Tips for Employers to Protect Against Retaliation Claims Employer should modify their employment policies and handbooks to include reference to retaliation as a prohibited practice. Managers must be trained on compliance and understand the new definition of retaliation. Employees must be advised of the company policy prohibiting retaliation for any type of protected activity.

Helpful Tips for Employers to Protect Against Retaliation Claims Standard best practices consist of written procedures on how to report a complaint of retaliation, insuring prompt and effective investigation and giving feedback to the complaining party about the results of the investigation. Consider immediate separation of the complaining party from the alleged harasser. Assign a neutral party (i.e. human resource representative) to monitor the situation after a complaint is made. Establish a moratorium on any potential adverse action against a complaining employee.

Underwriting Considerations Post- Burlington: Updating applications to address retaliation exposure Use of higher deductibles Breakdown prospective Insured’s policies and procedures for reporting a claim, investigating a claim, providing feedback Documentation procedures

Underwriting Considerations Post-Burlington: (cont’d) Whether or not the prospective insured’s policies include the appointment of a neutral party to monitor a situation after a complaint has been made? Appointment of an Ombudsman Employers history of complaints

Underwriting Considerations Post-Burlington: (cont’d) Employee turnaround Recent mergers or acquisitions Changes in senior management (possible “whistle blower” potential)

Market Conditions: Impact on Claims Broader terms Greater frequency and severity Increased limits and deductibles Carriers have increased skin in the game

Five Key Lessons: Burlington has Changed the Game 1.Burlington has dramatically changed how we handle employment discrimination actions. 2.Everyone must be proactive. Retaliation exposures touch all industry groups and risks of all sizes. 3.Increased frequency potential and increased defense cost potential. 4.Education and training is critical all the way around. Market will dictate increase in EPLI sales. 5.Employers must modify employment policies to prohibit retaliation.

Audience Q & A

Many thanks to … Wendi Barish Anthony J. Fowler Thomas Katona Gene Mason Thomas Paschos