As law firms mull ways to bring employees back to the office, employment practice liability insurance (EPLI) claims present a significant, ongoing exposure. Mandating an in-office schedule may open the door to more litigation, particularly from employees hired before and during the pandemic who have demonstrated their proficiency and productivity as remote team members. Some may use claims of discrimination, compounding EPLI risks.
EPLI Exposures in Law Firms
In addition to the issues of work-from-home employees, law firms already have unique exposures in the EPLI space:
- Knowledgeable Employees – Law firm employees are versed in the world of employment practices wrongful acts, and litigation.
- Discrimination – The partnership selection process can open the door for discrimination-based claims related to gender, race, disability, religion, age, and more.
- Wage Inequality – Pay parity is an exposure point.
- Sexual Harassment – Claims of misconduct continue to occur, despite increased awareness and training.
At the outset of the pandemic, public health mandates compelled employers to adopt flexible policies, and most law firms had the requisite IT infrastructure to facilitate a swift transition to remote work. Some legal professionals capitalized on the opportunity to work from any location, meaning they may no longer live near an office.
Economic volatility, social inflation, and other factors have adversely affected business performance in certain practice areas. In response, power dynamics in some firms are shifting from attorney-centric to management-centric. If law firms begin mandating in-office workdays, EPLI issues may follow.
WFH Still Leaves Firms Exposed
Firms maintaining a work-from-home or hybrid model still face exposure. The lack of physical presence does not exempt them from allegations of discrimination, wrongful termination, and harassment, or third-party claims. Progressive social justice movements heighten awareness of workplace inequality issues, leading to a rise in legal action as a means of seeking justice.
Senior leadership will often emphasize the importance of building the next generation of lawyers through in-person experiences, something greatly missed when work is done in isolation. Firms can be quick to cut those who do not fit into the office environment. In some cases, employees who do not participate onsite are potentially putting a target on their back for termination.
Mitigating Employment Practices Liability Exposures
In the current hard market for EPLI, even firms with stable year-over-year exposure and no claims history are experiencing renewal premium increases, higher retentions, decreased capacity, and more detailed underwriting.
To mitigate exposures if your firm is planning to call employees back to the office, consider engaging an HR consulting firm and/or labor and employment counsel to provide guidance, furnish best-practice recommendations, and identify measures to reduce risk. Also, explore updating employment policies regarding discrimination, harassment, and equal pay.
As part of reducing your firm’s overall risk, regularly engage a specialist to review your EPLI policy to ensure it still meets your needs (or if you don’t have EPLI, evaluate whether it’s time to add this coverage). EPLI is a risk management tool for defending against potential employment-related costs.