EPLI and #MeToo
If the entertainment industry hasn’t made you rethink Employment Practices Liability Insurance, what will?
If you watched this year's Golden Globe Awards, you heard at least one of Seth Meyers’ jokes including: “For the male nominees in the room tonight, this is the first time in three months it won’t be terrifying to hear your name read out loud...”. Politically edgy, but if you’re a Seth Meyers fan, you note his comedic personality in this jab.
The Hollywood movements such as #MeToo, Time’s Up and others are empowering those impacted by sexual harassment to speak up. This means companies need to be prepared now more than ever to address sexual harassment allegations.
While 'Corporate America' has embraced a zero-tolerance policy, being a victim of sexual harassment (at least until recently) still seemed to carry a certain stigma or accuser-perceived stigma. This social movement of zero-tolerance is gaining momentum; and as we know, the entertainment industry tends to be a trend setter.
So, how can companies protect themselves? Falling back on the popular saying, "the best offense is a good defense", is the exact way to ensure your company is prepared. This defense can be broken down into two key elements, your company policy and your Employment Practices Liability Insurance (EPLI).
Your company policy will provide your leaders with a playbook on how they’ll be expected to respond. As a best practice, this policy should be reviewed with the company’s employment attorney (who ideally understands your company, and is approved counsel with your EPLI carrier) to ensure it’s comprehensive and addresses both state and federal considerations for the jurisdictions in which you operate. Your policy should consider:
- How employees are informed of the policy
- How managers respond when notified
- How employees can confidentially submit a complaint
- How the privacy of the accused and the accuser will be maintained during and after investigation
- How the investigation will be conducted, and then communicated back
- What safeguards will be in place during the investigation to protect both parties
- What disciplinary measures are in place to address founded complaints
A policy is only as good as it’s execution. Be sure, as a company, you’re prepared to comply with and execute this policy when required.
Employment Practices Liability Insurance (EPLI)
While a policy will provide the ability to defend an allegation or complaint, it won’t prevent allegations, founded or otherwise, to be made against you. This is where an EPLI policy can assist in protecting your company’s bottom line. Employment practice complaints (suits) are most commonly filed in federal court and average defense costs can range anywhere from $60,000 - $150,000. These costs can be incurred regardless of the ultimate finding, which if adverse will result in additional costs. All in all, not an expense to be taken lightly.
When reviewing your coverage, these critical questions should be considered and understood:
- Does your policy include both first party and third-party coverage?
- Do the defense costs erode the coverage available to pay damages?
- What’s the policy definition of a claim and incident, as well as when must the insurer be notified?
- What are the exclusions on the policy (especially any subject matter exclusions)?
Navigating employment practices liability issues can be tricky. Thoughtful preparation is key to help you best understand and manage your exposures. For more information, contact a member of the ‘A’ Team today.
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