In the wake of the media spotlight on sexual misconduct and the activist culture developing around the #MeToo movement, employers across all industries are taking a critical look at their workplace culture and compliance. We are fortunate to have Kristy Fahland and Kris St. Martin with us today to outline proactive steps for employers to mitigate risk and ensure compliance with state and federal human rights laws, including Title VII.
A Shareholder with Messerli Kramer, Kristy is an experienced litigator in the area of employment law. Kristy also serves a number of clients as a skilled employment counselor, drawing on her litigation experience and knowledge to help guide employers’ policies and procedures to prevent future disputes. Kris is a key member of the CBIZ Banking & Financial Services practice and Director of the CBIZ Bank Insurance Program. He offers the unique perspective of an experienced bank executive and business advisor, specializing in risk mitigation through insurance.
Q: Sexual harassment allegations against high-profile individuals such as Harvey Weinstein and Matt Lauer have led to many speaking out through the #MeToo movement. Do you anticipate that this will lead to increased related litigation outside of the entertainment industry?
Kristy Fahland: I believe that it has caused increased awareness and sensitivity within the employee population that is likely to lead to increased internal complaints. These complaints, in turn, can give rise to future litigation throughout a variety of industries.
Q: As we all know, lawsuits lead to insurance claims. What is the insurance industry anticipating for claims at this point?
Kris St. Martin: At this point, the insurance carriers are not seeing an increase in claims, but they definitely are seeing an increase in coverage questions and insurance being purchased. The assumption is that claims will be coming down the road. Sexual Harassment (Harvey Weinstein), Failure to Supervise (Miramax Board) and Wrongful Termination (Matt Lauer may sue NBC) are the types of claims that the carriers are preparing to handle.
Q: As an attorney that represents employers, what are the comments and concerns that you have been hearing from your HR contacts at your client companies?
KF: Companies are concerned about how to proactively address the issue in the workplace, while at the same time protecting themselves against the risk of claims and/or lawsuits. This really involves two issues: employer practices and management awareness, as well as employee communication. It can be a very fine line to walk to address the issues with employees in a way that does not unnecessarily invite claims, while also implementing important protective measures for the company and not appear self-serving.
Q: What are best practices to remain a compassionate employer while minimizing your client’s risk?
KF: Employers should review their handbooks and other written policies to ensure they have the best protection in place, including anti-retaliation policies, harassment reporting polices and workplace relationship policies. Employers should also take this opportunity to roll out new policies and communicate general policies and procedures with employees in a way that is sensitive to the employer’s specific environment. Management training and developing a process and protocol for handling and investigating internal complaints are also key.
Q: What type of insurance provides protection for sexual misconduct allegations?
KSM: Most claims are going to be handled under an Employment Practices Liability (EPL) policy or a Directors and Officer’s (D&O) policy. Typically the EPL policy will handle Sexual Harassment and Wrongful Termination claims and the D&O policy will handle Failure to Supervise claims. The vast majority of financial institutions and publicly traded companies carry both D&O and EPL policies. Privately owned companies are much less likely to have this protection.
Q: Are all Employment Practices Liability policies equal?
KSM: I will say that EPL policies have a great deal of commonality between carriers, but there are still areas to focus in on and compare. It is important that companies that interface frequently with the public, like financial institutions, include third-party harassment coverage in their policy. Also, pay special attention to the definition of a claim within the policy. Under the definition of a claim, the time allowed to report a claim starts when certain employees, or perhaps when any employees, become aware of the circumstances that could lead to a claim. Make sure that the timer starts only when knowledge is elevated to specific executive management titles. Also, deductibles should be closely watched. Most EPL claims end as settlements that run between $10,000 and $75,000, which is well under the $100,000 deductible in many policies.
Many thanks to Kris and Kristy for these valuable insights. If you have questions or require additional information, don’t hesitate to contact Kristy Fahland (firstname.lastname@example.org, 612-672-3795), Kris St. Martin (email@example.com 763-549-2267) or your local CBIZ MHM professional.