Lunch and Learn Series: “The Sky Is Falling!” (Maybe)—Insurance for Product Manufacturers
Wednesday, May 23, 2018 Noon–1 p.m.
1 General CLE credit
Employment Practices
iiEmployment Practices
EMPLOYMENT PRACTICES
The materials and forms in this manual are published by the Oregon State Bar exclusively for the use of attorneys. Neither the Oregon State Bar nor the contributors make either express or implied warranties in regard to the use of the materials and/or forms. Each attorney must depend on his or her own knowledge of the law and expertise in the use or modification of these materials.
Copyright © 2018
OREGON STATE BAR16037 SW Upper Boones Ferry Road
P.O. Box 231935Tigard, OR 97281-1935
iiiEmployment Practices
TABLE OF CONTENTS
Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Faculty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Presentation Slides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ivEmployment Practices
vEmployment Practices
SCHEDULE
Presented by Chris Keefer, KEEFER, Portland.
11:30 Registration
Noon Employment Practices
F Rising attention to harassment and discrimination
F Types of discrimination under the law
F Avoiding hiring and firing exposure
F Employment practices liability (EPL) insurance
F Creatively using your EPL policy
1:00 Adjourn
FACULTY
Chris Keefer, KEEFER, Portland. Mr. Keefer guides brands and product manufacturers through complex insurance and risk management scenarios. He has assisted manufacturers around the world in developing risk management strategies and has led the insurance program of a global medical device manufacturer. He has presented nationally on risk management and insurance issues. Mr. Keefer is a member of the Oregon Entrepreneur Network and is admitted to practice law in Oregon and Indiana.
viEmployment Practices
1Employment Practices
“The Sky is Falling!” Insurance for Product Manufacturers May 23, 2018Part 4: Employment Practices
22
Session 3 RecapCyber Events• Increasing risk affecting businesses
• Practice cyber hygiene and then purchase cyber insurance
What can cyber insurance cover?• 1st party coverage (forensics, data recovery,
PR, business interruption, ransom)
• 3rd party coverage (customer notification, credit monitoring, regulatory fines, lawsuits)
2Employment Practices
33
Session 3 RecapPitfalls
• Sub-limits
• Retro Date
• Varying Waiting/BI Periods
• PCI DSS
• Contract Exclusions
• Cyber Terrorism
• Overlapping Provisions
Retain coverage and risk counsel solelyrepresenting your interests
Recap
Cap
44
EPL OverviewCovers claims against employers for unlawful employment-related conduct asserted by:• Applicants
• Employees
• Former employees
• EEOC (on their behalf)
Typical claims covered• Discrimination• Harassment• Wrongful termination
Sometimes covers “injuries”• Defamation (libel, slander)• Invasion of privacy
3Employment Practices
55
DiscriminationIt is unlawful to discriminate on many bases when making hiring or employment decisions (e.g., wage/salary, benefits, promotions, termination)
• Race
• Color
• Gender
• Pregnancy
• Age
• Ethnicity
• Religion
• Disability
• Genetic info
• Credit history
66
Discrimination LawsTitle VII of the Civil Rights Act
Equal Pay Act
Civil Rights Act
Pregnancy Discrimination Act
Americans with Disabilities Act
Genetic Information Nondiscrimination Act
Immigration Reform and Control Act
Bankruptcy Code
Equal Employment Opportunity Act
Age Discrimination in Employment Act
Family Medical Leave Act
4Employment Practices
77
HarassmentAs with discrimination, it is unlawful to engage in unwelcome behavior in the workplace based on a person’s race, gender, age, orientation, etc.
Harassment comes in many forms• Suggestive, insensitive, or offensive
comments• Telling lewd jokes or stories• Threats and insults• Sharing inappropriate images or
emails• Inappropriate staring, touching,
gestures
88
Termination that violates anti-discrimination or laws
Termination in violation of employer’s disciplinary policies
Termination in breach of contractual obligations
Retaliatory discharge for either failing to perform illegal acts or whistleblowing (numerous whistleblower protections for employees under Oregon law)
Wrongful Termination
• ORS 652.355• ORS 653.060• ORS 654.062• ORS 659.030(1)(f)• ORS 659A.199
• ORS 659A.200, et seq.• ORS 659A.230• ORS 659A.233• ORS 659A.236• Others
5Employment Practices
99
Defamation and Invasion of Privacy
Defamation (libel/slander) claims may be applicable where employer makes false statements about the employee to his/her co-workers, colleagues clients (hint, if you don’t have anything nice to say, don’t say anything)• However, what about a negative
performance review that is recorded in a report and is the basis for termination? (may be difficult to prove publication element)
Invasion of privacy claims may be applicable where employer regulates and monitors employee’s phone, e-mail, and internet usage (e.g., social media)
1010
Social Media and Invasion of PrivacyHot issue in context of social media, involving both job applicants as well as existing employees• Example of manager discovering birth
year, gender, race, sexual orientation or marital status
Most states have enacted legislation prohibiting employers from asking or requiring access to social media accounts• Oregon (HB 2654, January 1, 2014)
6Employment Practices
1111
2015 ORS 659A.330Employer CAN NOT• Request job applicant or employee to maintain a social media
account or disclose password to personal social media account
• Require applicant or employee to authorize employer to advertise on his/her personal social media account
• Compel applicant or employee to add the employer as a social media contact (e.g., LinkedIn connection, Facebook friend)
• Compel applicant or employee to access password-protected social media content in presence of employer to permit viewing
• Retaliate against, penalize, or make adverse hiring decision with regard to an applicant or employee for refusing to do any of these things
1212
2015 ORS 659A.330Employer CAN• Require employee to disclose user name and
password to access an account provided by employer or to be used on employer’s behalf
• Conduct an investigation after receiving specific information about activity of employee on personal social media account • For purposes of ensuring compliance with applicable laws
and regulations against employee misconduct• And as long as employer doesn’t require access to
username and password
• Access publicly-available information about the applicant or employee (hint, just don’t discriminate, harass, or wrongfully terminate based on this info)
7Employment Practices
1313
Develop Robust SOPsAnti-Discrimination, Bullying and Harassment• Zero tolerance and examples
• Reporting and complaint procedures
• Confidentiality, privacy, and assurance of no retaliation
• Investigation procedures
• Informal/formal resolution procedures
• Disciplinary actions
Conduct regular training on this policy, incorporate into the employee handbook, and have each employee sign and acknowledge understanding
1414
Do You Really Need EPL Insurance?
7 out of 10 businesses don’t carry EPLI
2017 EEOC Stats (some multiple filings)
• 41,097 Retaliation (48.8%)
• 28,528 Race (33.9%)
• 26,838 Disability (31.9%)
• 25,605 Sex (30.4%)
• 18,376 Age (21.8%)
41.5% of lawsuits brought against private companies < 100 employees
Average lawsuit exposure:
• $75,000 if settled out of court
• $217,000 if go to trial and lose
Employee lawsuits ↑ 400% last 20 years
8Employment Practices
1515
EPL = Claims-Made PoliciesClaims-made policies• Duty to notify carriers of potential
liability (i.e., claim) is a condition precedent to the carrier’s liability
Know the policy language• What is a “claim,” and how must
“notice” be effected?• Fax, e-mail, overnight?• Track receipts/acknowledgments• Bordereaux reporting permitted?
Err on side of notice (to underlying AND excess)
Do NOT rely on your broker to notify!
1616
Beware of “Claim” DefinitionKnow when the obligation to notify is triggered!• If you fail to notify during the policy period, you
lose
• Make sure “claim” is limited to written, non-verbal demands or proceedings
Try to negotiate that obligation not triggered until the “claim” is received by the Insurance Manager, Risk Director, General Counsel, HR representative• Basically someone in the company who would
have specific knowledge of what to do
9Employment Practices
1717
What if I Didn’t Timely Notify?If the carrier catches it immediately and denies coverage, you lose
If the carrier does not catch it, begin preparing your defenses by extensively involving the carriers (underlying and excess) and papering your correspondence file accordingly• Lack of prejudice = insurer prohibited from denying
coverage based on an insured’s untimely notice of a claim unless that late notice prejudiced the insurer (Employers Ins. Of Wausau v. Tektronix, Or. Ct. App. 2007) (refusing to hold that a 12-year delay was prejudicial)
• Waiver
1818
Common Exclusions
Breach of contract
Claims for wages/benefits
Worker’s safety and compensation
Failure to act, fraud, punitive damages
10Employment Practices
1919
Breach of ContractGrievances under collective bargaining agreements (and NLRA claims generally) are typically excluded . . . unless termination based on exercising right under NLRA
Employment contract claims often excluded• However, to the extent the employer’s breach
of employment contract gives rise to a non-contract claim (e.g., wrongful discharge, defamation, etc.), that that may be covered
• Make sure an artfully plead claim or complaint (with multiple counts) doesn’t sink your coverage
2020
Claims for Wages/BenefitsWage/hour claims (e.g., Fair Labor Standards Act, ORS 653.261)• Judge Posner: “Insurance against a
violation of an overtime law, whether federal or state, would enable the employer to refuse to pay overtime and then invoke coverage so that the cost of the overtime would come to rest on to the insurance company.” Farmers Auto. Ins. Ass’n v. St. Paul Mercury Ins. Co. (7th Cir. 2007)
Employee benefit claims (e.g., ERISA)• These may instead be covered in a
fiduciary liability insurance policy
11Employment Practices
2121
Worker’s Safety and CompensationWorker safety (e.g., OSHA violation)
• Similar to Posner rationale that you can’t permit a dangerous situation at work and then receive an insurance windfall
However, if a worker is injured as a result of that unsafe condition then you may have coverage . . . just not under your EPL policy
• Typically covered under a separate worker’s compensation policy (statutory medical expenses, wages, and permanency for work-related injury)
Discriminating or making employment decisions based on such injury can give rise to EPL coverage (ADA claim) . . . consider developing a Return to Work policy
2222
Failure to Act, Fraud, Punitive DamagesYour EPL policy may exclude a claim involving a manager who is aware of ongoing wrongful conduct in the workplace but does nothing about it
Also, there may be no coverage if the claim is based on that same manager misstating what is occurring• This could further give rise to yet another
exclusion (dishonest and fraudulent acts)
• To the extent punitive damages are claimed in connection with such behavior, those are typically excluded too
Once again, make sure an artfully plead claim or complaint (with multiple counts) doesn’t sink your coverage
12Employment Practices
2323
Be Careful of Settling Claims
Often companies attempt to make the business decision of negotiating and settling employment claims on their own
Beware . . . doing so may lead to lost coverage (no consent from insurer)• This can be particularly problematic
if that claim you settled without the insurer’s consent becomes the basis of a class action later on
2424
Creatively Using Your EPL PolicyYou bring a lawsuit against a former employee who absconded with confidential company information and begins competing against you after termination• This would not be covered (no EPL claim is
being made against you)
That former employee counterclaims asserting wrongful termination and defamation (publishing termination and circumstances in the fact-plead complaint)• Now you may have an insurable claim
13Employment Practices
2525
Key TakeawaysMake sure your employment-related decisions and actions in the workplace are appropriate
Have robust SOPs in place to prevent instances of discrimination, bullying, and harassment and make sure to regularly train employees on them
Make sure all potential EPL claims are identified within the claims period for purposes of timely reporting to insurer
Know what acts are excluded under your EPL policy and, if commercially feasible, make sure additional commercial lines are in place to patch any holes
Thank You.Thank You.
14Employment Practices