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No employer can guess who might sue for employment practices violations. Statistics show an employment claim is more likely than a property or general liability claim.
In a 1996 survey, 56 percent of the companies responding had a discrimination claim filed against them. By 1999, the average jury award was $2 million, up from $300,000 in 1996. Claims under the American Disabilities Act rose from 999 in 1992 to 13,470 in 1996.
At that rate, at least 181,575 such claims will be filed this year. More than 15,000 sexual harassment claims were filed in 1996 and the number is rising astronomically.
Here are a couple of recent claims:
An employee accidentally e-mailed an off-color joke to the company’s entire workforce. The employer made the employee send a follow-up e-mail apologizing to everyone. When the company later downsized, another employee sued for a hostile work environment and used the e-mail as evidence.
A law firm with multiple offices hired a minority associate and offered assurances that there was plenty of work and opportunity for him. Two years later, the chief rainmaker left the firm taking his clients with him and the firm downsized considerably. The new associate declined to transfer to another office and left the firm. He filed suit alleging he was constructively discharged, discriminated against in salary and assignments and not considered for partnership, all due to race discrimination. He was awarded $1 million compensatory damages plus $1.5 million punitive damages.
The court systems are overloaded with employment practice lawsuits. Defense costs are running $125,000 and more prior to trial.
Businesses need sound risk management plans to respond to claims alleging sexual harassment, wrongful termination, discrimination and other charges. Can you afford a $1 million employment claim? If not, ask your insurance agent for an Employment Practices Liability insurance quote.
(Editor’s Note: Barbara Seitz is a professional liability underwriter with National Insurance Professionals Corporation (NIPC) in Poulsbo. The firm is an insurance wholesaler and acts as program administrators for a number of specialty lines of insurance and is a source for many types of insurance not available directly to retail agents. She may be reached at (800) 275-6472.)
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