When David Letterman recently revealed that he had engaged insexual relations with members of his staff, it was at oncefunny–with his deadpan delivery–and yet disturbing to the liveaudience and the viewing public. Much discussion ensued, but thequestion remains: Did he improperly use his position of power in anemployer-employee relationship?

This story was followed by yet another case of ahigh-profile affair, between ESPN commentator Steve Phillips and a22-year-old staffer. The employer, ESPN, took swift and decisiveaction, and terminated both employees.

As of this writing, no legal action has been taken by any of theyoung women involved, but we can be certain that aggressivepersonal injury attorneys have made contact, hoping to convincethem to initiate a lawsuit against their former employers.

These two stories are clear reminders that sexual harassment–andemployee accusations of sexual harassment–in the workplace arealive and well as we move into the second decade of the 21stcentury. As such, employers must protect themselves from lawsuitspertaining to these actions.

Many institutions in both the public and private sectors havetaken steps during the past couple of decades to promote aworkplace that is free of sexual harassment. These effortsrepresent a wide variety of actions–from staff training, to policychange, to outright cultural change.

Many entities have changed by learning the hard way–from costlylitigation resulting from employees who believe they were sexuallyharassed.

Employers should be vigilant that best practices instituted sometime ago are still being adhered to by employees at all levels ofthe organization. It is a good idea for employers to conduct aperiodic review of their policies and the degree to which they areunderstood and are being followed by the employees.

The professional insurance agent can suggest this review at thetime other insurance risks are being evaluated–during thepre-renewal discussions that take place annually with the insured.If an agent has not typically done this in the past, now might bethe perfect time to begin this practice.

NEW POLITICAL LANDSCAPE

Employer awareness of the importance of fostering a non-hostilework environment is at an all-time high. We've come a long waysince the Clarence Thomas/Anita Hill hearings in 1991, the definingevent which brought the issue of workplace harassment front andcenter to the American people.

Employment practices liability insurance–a coverage that barelyexisted 20 years ago–is now considered an important component ofgood risk management practice.

But even employers whose businesses are free of hostility andsexual harassment can fall victim to today's recessionary climate.As more employees lose their jobs, more employers risk exposure tocharges of incorrect or illegal “employment practices” by peopleseek financial retribution.

The political landscape has changed dramatically over the lastyear, and the consequences of this change will continue to be feltby employers across the spectrum.

Congress is committed to an agenda of what it construes to befairness. In October, three Democratic lawmakers, chairing threeseparate Congressional committees, jointly announced they wouldmove to overturn a June 2009 U.S. Supreme Court ruling that made itsignificantly harder for workers to win many age discriminationcases.

The three politicians–Sen. Tom Harkin, D-Iowa; Sen. PatrickLeahy, D-Vt.; and Rep. George Miller, D-Calif.–introduced theProtecting Older Workers Against Discrimination Act to restore“vital civil rights protections for older workers in the face ofthe Supreme Court's decision in Gross v. FBL Financial,”they said in a statement on Oct. 6.

(Editor's Note: The 5-4 Supreme Court ruling in Grosssaid that a worker has the burden to prove age was not just amotivating factor but the key factor in a negative employmentdecision.

In the language of the ruling, a plaintiff bringing a“disparate-treatment claim” filed under the Age Discrimination inEmployment Act of 1967 “must prove, by a preponderance of theevidence, that age was the 'but-for' cause of the challengedadverse employment action.”

Sen. Leahy launched his initial attack with a statement releasedon the day of the ruling, and experts predicted that legislativeaction would soon follow. (Key points of the ruling and thesenator's reaction were captured by National Underwriterin June–on NU's Online News Service at http://bit.ly/3LE1AF and in the leadarticle of NU's E&S/Specialty Lines Extra e-newsletterhttp://bit.ly/37yc1C.)

In his own separate October statement, Sen. Leahy thanked Sen.Harkin for introducing the new bill, and noted the hard work thatSen. Harkin put into getting another law expanding workerprotections last year–the enactment of amendments to the Americanswith Disabilities Act.

The Americans with Disabilities Act Amendments Act of 2008(ADAAA) took effect on January 1, 2009. This act imposes heightenedobligations on the employer. The most challenging component of thislegislation for the employer is to determine what exactly is meantby “reasonable accommodation,” “undue hardship” and “essential jobfunctions” to establish compliance with the new law.

Experts in employment law believe that as a result of this morestringent version of the ADA, employers will find it more difficultto get charges dismissed or summary judgments on the grounds thatan individual is not disabled. As a result, many employers willneed to revisit their current approach to how they handle medicalconditions in the workplace.

Many illnesses and impairments that were not previouslyconstrued to be disabling will now be ADA-covered disabilities.This will entail time and additional resources on the part of mostemployers. It also opens up new grounds on which an employee cansue for a purported violation of the act, augmenting the need forinsurance coverage.

Rep. Miller, in the October announcement unveiling the new agediscrimination bill, commented that “the same conservative SupremeCourt justices responsible for the backward ruling against LillyLedbetter have now thrown another legal barrier in front ofhard-working older Americans,” echoing comments made by Sen. Leahyin June on the day of the Gross ruling.

In January of this year, President Barack Obama signed into lawthe Lilly Ledbetter Fair Pay Restoration Act, which was intended tobe a significant symbolic move on behalf of “workers' rights” inthis country, and presented it as the opposite of the pro-businessagenda of the last eight years.

(Editor's Note: In Ledbetter v. Goodyear Tire & RubberCo. in 2007, the court had held that if employees did not fileclaims of sex-based discrimination under the Equal Pay Act of 1963within 180 days of their employers' decisions to pay them less,they were barred forever from challenging the discriminatorypaychecks that followed.

The act clarified that discriminatory pay decisions occur eachtime compensation is paid, making every paycheck a potential startpoint for a wage discrimination suit.)

With the turn in political tide coinciding with an economicdownturn, employers of all types–in the public and privatesector–must now be more mindful of the potential for claims arisingdue to alleged age discrimination, and from a much larger employeepool than in the past.

These claims historically arose from the lower ranks andless-compensated employee population. There will now be anincreased amount of claims arising from a previously unlikelysource–the established male white collar employee, who now findshimself jobless.

The Lilly Ledbetter Act allows current employees to sue for pastwage discrimination, in addition to the legions of recentlylaid-off employees who may claim past discrimination due to gender,race or religion. The pool of potential litigants just got muchlarger.

Some recent examples of claims making their way through thecourt system capture the essence of the rapidly evolving nature ofthe exposure:

o A 66-year-old secretary with the City ofNorth Lauderdale, Fla., was awarded $75,000 in damages by a Browardcivil court jury in March 2009 in connection with an agediscrimination suit.

Photos of the weeping grandmother, facing the prospect of beinghomeless and without a car, were run on television for massconsumption.

o A group of 100 laid-off laboratory employeesfrom the Lawrence Livermore National Laboratory filed a complaintwith the California Department of Fair Employment and Housing inFebruary 2009.

The filing was made on behalf of 440 employees, includingscientists, engineers, financial analysts and facilitiestechnicians, who were laid off by the laboratory in May 2008.Ninety-four percent of them were over the age of 40.

o A former manager at Google–now 58 yearsold–filed suit in 2004, claiming age discrimination. Theplaintiff claimed that younger Google staffers routinely referredto him as “old man.”

His attorneys contend that he never received a negativeperformance review, and that his firing was related to the initialpublic offering that Google did in 2004.

The case has been making its way through the Californiacourt system and is now on its way to the California Supreme Court,which will soon be hearing arguments from both sides.

o 200 West Virginia coal miners over the age of40 will share in an $8.75 million settlement in an agediscrimination lawsuit they filed three years ago, according to alate October 2009 announcement from the United Mine Workers ofAmerica.

The previous owner of the mine had gone bankrupt, and the minersall lost their jobs. They weren't picked up by the successorcompany, Spartan Mining Co.

It is worth noting that all of these cases began before thepolitical actions described above, meaning that the watershed ofevents to come had not yet begun at the time they were filed.

It should also be apparent that the burden on the employerpopulation will continue to increase, as long as there areperceived economic injustices in our economy and a government thatbelieves itself charged with rectifying them.

COVER OPTIONS EXPAND

The good news is that the insurance marketplace offers manyoptions, provided by multiple carriers. Coverage can be obtained onboth an admitted and a nonadmitted basis, depending on the class ofbusiness, state of domicile and carrier. We are also seeing moreinsurance companies offering EPLI on a sublimit basis as part of amiscellaneous errors and omissions policy.

In the standard marketplace, carriers are offering sublimits of$25,000 to $250,000 as part of a package policy.

Coverage can vary widely from carrier to carrier, so it isimportant to analyze each quote carefully.

We have seen carriers broaden their coverage offerings, which isa positive for the insurance buyer. For example, third-partycoverage–for discrimination and harassment claims brought bynon-employees–has become available in the last couple of years.

All EPLI policies and forms include some degree of defensecoverage–and this alone could well be the element of coverage thatkeeps a small business going as it fends off any EPL claims.

Thanks in large part to the ongoing soft insurance market, thepricing for these products remains fairly reasonable. We see thispricing and availability trend continuing well into 2010.

The professional agent can provide tremendous added value to hisor her insureds by staying informed of the current environment,educating insureds as to the risks and potential economic impact ofdoing nothing, and assisting in the implementation of a soundprogram of risk management which includes the purchase of an EPLIpolicy.

Marla Donovan is vice president of productdevelopment at Burns & Wilcox headquartered in FarmingtonHills, Mich. She may be reached at [email protected].