Presented by Employment Practices Liability And Litigation Trends

Employment Practices Liability And Litigation Trends Overview EPL Exposures EEOC Class Action Initiative Current Trends  Genetic Discrimination Legislation  Retaliation Claims  Mental / Psychiatric Disabilities  Age Discrimination Claims  Whistleblower Claims  Sexual Orientation/Same Sex Harassment  FMLA / ADA Mixed Claims Market Update

EPL Exposures  Broadly speaking, EPL policies cover:  Wrongful discharge, also wrongful demotion or discipline;  Harassment, including sexual harassment, whether arising from a “quid pro quo,” or hostile work environment;  Discrimination, including but not limited to actions based upon age, gender, race, color, national origin, religion, sexual orientation, pregnancy or disability;  Retaliation for exercise of statutorily protected rights;  Defamation in connection with a perofrmance evaluation or employee reference;  Wrongful failure to promote or deprivation of career opportunity  “Third party” (i.e., non-employee) civil rights claims.

Employment Practices Liability And Litigation Trends EEOC Class Action Initiative Increased commitment on part of EEOC to filing more class actions over systemic discrimination. High cost of defending against class actions may prove burdensome for employers. Probable cause findings by EEOC on the rise, from 2.3% (1992) to 6.1% (2003). Settlements by EEOC have increased from $136M (1995) to $272M (2005).  Figure does not include private party litigation, only cases brought by EEOC itself on behalf of aggrieved employees.

Employment Practices Liability And Litigation Trends Genetic Discrimination Legislation Bill barring discrimination by employers & insurers based on genetic information nearing congressional approval. Proposed law would forbid employers from using genetic information to make hiring, firing and personnel decisions. Currently, no federal law that protects employees from this type of job action. Today, few EPL policies contain language expressly covering such claims.

Employment Practices Liability And Litigation Trends Retaliation Claims Fastest growing area of EPL litigation. About 30% of charges filed with EEOC in 2006 included charges of retaliation. In 2004, EEOC settlements in this area alone totaled $90 million. Supreme Court’s 2006 decision in Burlington Northern broadened retaliation to include job transfers or changes in work schedule. Plaintiff no longer needs to prove monetary loss, only that the action could have a chilling effect on the exercise of workers’ rights.

Employment Practices Liability And Litigation Trends Mental / Psychiatric Disabilities The data suggests that plaintiffs with psychiatric disabilities are faring worse in court than those with physical disabilities. Surveys of such plaintiffs indicate that they are less likely to obtain monetary or other relief, and more likely to be dissatisfied with the adjudicatory process. This lack of a sense of efficacy on the part of plaintiffs could translate into fewer settlements and increased litigation costs. Conditions qualifying under ADA include: –Schizophrenia; –Bipolar Disorder; –Depression; and –Anxiety disorders (depending on severity).

Employment Practices Liability And Litigation Trends Age Discrimination Claims Age discrimination claims are likely to grow as the workforce continues to age. Supreme Court’s ruling in City of Jackson, essentially held that disparate impact claims are permissible under the ADEA. Some claims arising under ERISA also contain allegations of age discrimination. Most EPL policies exclude ERISA claims. However, coverage is available either through an endorsement to the EPL policy, or as a stand- alone “Fiduciary Liability” policy. Movement of energy industry away from Defined Benefit plans and toward 401(k) plans could spur additional age-based litigation.

Employment Practices Liability And Litigation Trends Whistleblower Claims Sarbanes-Oxley prohibits retaliation against an employee for reporting violations. False Claims Act, which permits employee recovery of overpayments made by Government to a private party, also prohibits retaliatory action by employer. Claimants increasingly take advantage of state laws prohibiting retaliation for the exercise of statutorily protected rights.

Employment Practices Liability And Litigation Trends Sexual Orientation / Same Sex Harassment Same-sex harassment claims under Title VII increased by 14% in 2006; EEOC recently settled an older male-younger male harassment case for $765,000. Additionally, state and local laws increasingly prohibit discrimination on the basis of sexual orientation or preference.

Employment Practices Liability And Litigation Trends FMLA / ADA Mixed Claims More workers using family leave to care for ailing parents. Claimants may also assert, under ADA, that discriminatory action was taken because of employee’s relationship with disabled person. Talk in Congress of amending FMLA to mandate paid time off (currently employer’s discretion whether to offer paid or unpaid).

Employment Practices Liability And Litigation Trends Market Update Capacity: Over $1 Billion Contract Terms: Insurers are willing to modify/broaden the policy Punitive Damages: US – where insurable Bermuda: Wrap policies Pricing: Declining