Tsunami of Employment Claims Ahead

By Bill Holden, National Resource, Executive Liability

Tsunami of Employment Claims Ahead

As the economy starts to reopen and states and municipalities across the country roll out phased plans, businesses are facing unprecedented challenges in bringing employees back to work safely. At the same time, we’re seeing an explosion of employment-related claims brought against employers for issues related to the pandemic.

At Risk Strategies, we’re closely following developments related to Employment Practices Liability Insurance (EPLI) policies as well as assisting our clients on ways to mitigate risk as they begin to reopen.

The mandatory lockdowns triggered by the coronavirus have already led to a never-before-seen volume in EPLI claims, stemming from layoffs and furloughs to how remote work conditions were managed. Those numbers are expected to spike further in the coming months as more businesses reopen and employees are required to return to the workplace.

  • Wage-and-hour related claims. Non-exempt employees who transitioned from the office to the work-from-home environment have led to wage-and-hour claims. Were employers able to supervise conditions remotely to ensure people weren’t working over 40 hours and that they were taking their required breaks? If not, they may face overtime pay claims. Employers’ EPLI policies may cover some defense costs in these claims.

  • Class action suits. Employers who furloughed or laid off workers during the shutdown and agreed to pay benefits may have fiduciary liability claims. A worrying trend right now are the number of these employment claims filing for class action status, which, if granted, will lead to higher damages.

  • Arbitration costs. Before COVID, many organizations had their employees sign arbitration agreements to avoid costly litigation over employment disputes. In these contracts, employers agreed to pay employees’ arbitration fees as incentivization. However, with the pandemic, we’re seeing law firms, particularly in California, filing hundreds if not thousands of arbitration suits against the same company, resulting in millions of dollars in fees even before damages. The courts are unsympathetic. They’re telling employers that if they required arbitration rather than litigation to settle claims, they can’t now get out of arbitration.

  • Leave and discrimination-related charges. There have been highly publicized allegations of discrimination in the COVID environment. Additionally, we’re starting to see a rise in whistleblower claims and allegations of retaliation like the ER physician in Washington state who was fired after criticizing his hospital’s coronavirus response on Facebook. As businesses reopen, they could be face exposure if they do anything retaliatory against employees who opt not to come back to the workplace. Whistleblower complaints filed with OSHA and the EEOC carry certain protections. If workers are reluctant to return, or complain about conditions, they may trigger whistleblower claims. Companies must guard against any perception of retaliation.

  • WARN Act violations. Throughout the pandemic, companies had to react or act quickly in response to government-mandated orders. If employers didn’t comply with the WARN Act notification time, they may face exposure.

Risks in Return-to-Work

As companies reopen, they must protect employees and clients from contamination by following all federal guidelines for social distancing, providing PPE, sanitizing workspaces, requiring face masks, staggering hours, etc. Additionally, they need to take extra measures to protect themselves from liability. We recommend employers take the following actions:

  • Document everything involved in return-to-work protocol

  • Put together and consult experts to formulate and enforce safety measures

  • Work with building managers to understand how common spaces like elevators, stairwells, lobbies and bathrooms are being managed

  • Adhere to all EEOC and ADA guidelines

  • Adhere to HIPPA regulations and ensure that personal health information (such as temperature checks) is not stored in personnel files

  • Update firewalls and electronic security

EPLI policies are a critical part of enterprise risk management. Our Management Liability Practice is here to ensure that companies have this vital coverage and to offer ideas for risk management.


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