Demand has been rising for employment practices liabilityinsurance protection as layoff activity has sparked increasedemployee claims, an insurance brokerage expert warned.

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Speakers during a recent Marsh webinar said that in 2008, theEqual Employment Opportunities Commission reported discriminationclaims up 15 percent compared to 2007, with a growing number oflaid-off workers filing suit under a variety of federal and statelaws.

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“During these financial hard times, one trend in coverage is anincrease in the purchase of EPLI coverage,” said Brian Elowe,managing director of Marsh's global risk management division, basedin Boston, who moderated the webinar on “Hot Topics in EmploymentPractices Liability.”

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Passage in Congress this year of the Lilly Ledbetter Fair PayAct and amendments to the Americans with Disabilities Act has alsoadded to companies' exposure to EPL lawsuits, Marsh noted.

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Paul Siegel, a partner with Jackson Lewis LLP in Melville, N.Y.,advised during the webinar that layoffs due to restructuring ordownsizing are the most likely sources of an EPL lawsuit. Layoffsoften become a “tsunami of discharges and therefore claims andthreatened claims,” he said.

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EEOC filings were up by about 29 percent in 2008, and are risingagain this year, he noted.

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He said the biggest share of EEOC complaints–26 percent–involveage discrimination charges. While there isn't a big rise indiscrimination lawsuits at this time, there will be “because thecommission has a period to investigate before it issues aright-to-sue letter,” he explained, meaning that EEOC charges filedin 2008 or 2009 might not have yet matured into lawsuits.

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He cautioned that “employers are heading into a period whenthere will be a renaissance of lawsuits.”

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Another aspect of layoffs that are taking place, he said, isthat companies often are losing the services of middle-managers,“which tend to be excellent problem-avoiders and have moreinstitutional knowledge.”

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He added that companies' exposures are such that if “one doesn'tconsider risk management identification, appropriate use ofreleases and some form of EPL insurance, there will be morebusiness failures. This means more jobs lost and displacedworkers.”

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Elizabeth Grossman, regional attorney for the New York DistrictOffice of the EEOC, emphasized the importance of having “strongpolicies on the books.” She said these anti-discrimination policiesneed to be reviewed regularly and kept up to date.

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“Make sure you're sending the right message,” she emphasized. “Ilook at a lot of policies that don't mention the word 'pregnancy,'because the statute doesn't mention the word pregnancy, but I thinkemployers want to send the message that they don't endorsepregnancy discrimination.”

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Another point Ms. Grossman made is that employers need to makesure HR guidelines on employment practices end up in the hands ofemployees. “I've seen lots of employers with beautiful policiesthat never got communicated to any of the employees,” shecautioned.

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Brian Levine, an economist with Mercer, said organizations wantto know how, in the current environment of cost containment, theycan rationalize making pay adjustments in the context of pay equityreview.

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His response is that “the risk is real.” Secondly, he said, payadjustments are not made across the board “but are focusedadjustments to address risk looking at internalmisalignments–people who aren't paid the norm. By moving to paythose people appropriately, the risk is being addressed.”

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Mr. Levine added that budgets for such adjustments tend to besmall–tenths of a percentage point on payroll budgets, as opposedto a standard merit adjustment budget of 3 percent to 4 percent ina typical year.

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Adeola Adele, Marsh's employment practices liability practiceleader, said risk management is key for both pre- and post-lossrisk management. She advised risk managers to consult with outsidecounsel before making any significant employment-relateddecisions.

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Ms. Adele advised risk managers to notify their broker of anybig personnel plans such as layoffs, “or if you're planning to layoff senior employees, because there are ways we can help you toaddress these issues before you do get a claim.”

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Her recommendation to clients, she said, is that they considerrisk management both before and after a claim.

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