The U.S. Equal Employment Opportunity Commission (EEOC)announced this past January that in 2009, more than 93,000workplace discrimination charges were filed with the federal agencynationwide. This is the second highest level ever recorded.

In the private sector, job bias cases alleging discriminationbased on disability, religion and/or national origin actually hitrecord highs, with the number of age-based discrimination chargesreaching new heights.

The 2009 results continue a decade-long trend of employeesincreasingly alleging discrimination based on race, retaliation,age and sex, among other charges. This trend is due to amultiplicity of factors, such as increased diversity anddemographic shifts in the labor force, employees having a greaterawareness of their rights under the law, and, more recently, a morepro-labor EEOC under the Obama administration.

There also is no doubt that claims to the EEOC have spiked dueto the economic conditions of the last 18 months. Employmentlawyers say that when jobs are harder to obtain, many forms oflitigation, including discrimination, increase.

The changing face of litigants

In fact, the profile of the average worker filing a complainthas been rapidly shifting. The Wall Street Journal recentlyreported that a growing number of sexual harassment claims havecome from men since the start of the recession in the fourthquarter of 2007. This increase in male sexual harassment claimscoincides with a recession that has hit men harder than women: fromSeptember 2008 to January 2010, 4.4 million men lost their jobscompared with 2.3 million women, according to the Bureau of LaborStatistics.

Historically, harassment cases were filed by women against men,but the number of cases filed by men has steadily grown since alandmark 1998 Supreme Court ruling held that same-sex harassment isa valid claim under federal anti-discrimination laws.

Recently, Congressman Eric Massa (D-NY) resigned from hisposition after allegations of sexual harassment of a male employee.While a formal complaint has not been filed in this case, itdemonstrates an increasing awareness in the workplace of sexualharassment complaints filed by men. Antics that previously wouldhave been called "fraternity-type horseplay" are no longer beingtolerated in the workplace. The EEOC has been filing more lawsuitsinvolving male victims, stating that it wants to send a messagethat such behavior is unacceptable and unlawful.

All employers are vulnerable

As a result of this climate, employers of all types and sizesare much more vulnerable to an employment practice claim than evena couple of years ago. This environment should have a direct impacton the risk management practice of every employer in the U.S.

As a result of company downsizing or business bankruptcies tomeet the changing needs of the economy, many employees have beenlaid off or terminated.

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

1. A 66-year old secretary with the City of North Lauderdale,Fla. was awarded $75,000 in damages by a Broward civil court juryin March 2009. Photos of the weeping grandmother--facing theprospect of being homeless and without a car--were run ontelevision for mass consumption.

2. A complaint was filed in February 2009 with the CaliforniaDepartment of Fair Employment and Housing on behalf of 440employees who were laid off by Lawrence Livermore NationalLaboratory in May 2009. This group included scientists, engineers,financial analysts and facilities technicians. Ninety-four percentwere over the age of 40.

3. A former manager at Google--now 58 years old--filed suit in2004, claiming age discrimination. The plaintiff claimed thatyounger Google staffers routinely referred to him as "old man." Hisattorneys contend that he never received a negative performancereview, and that his firing was related to the IPO that Google didin 2004. The case has been making its way through the Californiacourt system, and is now on its way to the California SupremeCourt, which will soon be hearing arguments from both sides.

4. In November 2009, it was announced that more than 200 WestVirginia coal miners over the age of 40 will share an $8.75 millionsettlement in an age discrimination lawsuit they filed 3 yearsbefore. The previous owner of the mine had gone bankrupt, and theminers all 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 yet 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.

Wage-and-hour lawsuits which have been measured by the number offilings and the size of settlements have surpassed employeediscrimination suits, according to a new report from AdvisenLtd.

"Publicity surrounding changes made to the Federal LaborStandards Act in 2004 has been a catalyst for class actionlawsuits," said John Molka III, author of the report. "Enforcementefforts by the U.S. Department of Labor have further stimulatedclass actions. American businesses are exposed to very large lossesfrom these suits."

Wage-and-hour issues are not only limited to hourly employees,the Advisen report indicated. Companies employing salariedprofessionals also have been subject to large class actionsuits.

Mitigating the risk

Professional insurance agents and brokers have a clear role toplay in working with their clients to identify and mitigate theexposures to loss arising out of discrimination claims.

Insurance professionals should make sure that their clientsconduct an analysis of their business practices regardingemployment and human resources. If best practices were put in placepreviously, it is important to ascertain that the employer iscomplying with them. Are the employment practices policiesunderstood by all employees--no exceptions? More importantly, arethey being followed--no exceptions?

If the client has little or no awareness of its exposure toemployment practices claims, the insurance professional shouldadvise them to develop a comprehensive corporate policy that coversphilosophy, process and procedure. If the client has a humanresources department, then it should be involved from step one. Itwould also be a good idea for the client's attorney to be a part ofthis process.

The insurance agent or broker can suggest this review at thetime other insurance risks are being evaluated--during thepre-renewal discussions that take place annually with theinsured.

Agents should make this discussion topic a reason for a mid-termget-together. It will demonstrate to the client that the insuranceagent is on top of current events and issues that may affect theclient's operations. It also shows a value-add in therelationship.

A key element in the risk management process is obtainingadequate employment practices liability coverage (EPLI). From thebuyers' perspective, there is good news. In the first quarter of2010, there is ample capacity in the market and coverage is readilyavailable for all sizes of employers. Many insurance carriers areinterested in competing for this business. There is no immediateevidence that the market will harden anytime in 2010. Even thoughthere is general concern among carriers about the acceleratedevolution of the exposure due to the socio-economic climate, nonehave indicated a reticence to afford EPLI coverage. The pricing andavailability trend for EPLI products will remain favorable through2010, and probably into 2011.

Entrants into the EPLI marketplace have increased. Coverage isavailable on an admitted basis, as well as the traditionalnon-admitted approach. Standard underwriters have entered themarket, sometimes offering the coverage on a sub-limited basis intheir general liability or package policies. Some E&S carriershave broadened their coverage offerings, which is a positive forthe insurance buyer. For example, third-party coverage--fordiscrimination and harassment claims brought by non-employees--hasbecome available in the last couple of years.

If nothing else, an employer should seriously considerpurchasing an EPLI policy for the defense coverage. Having a policycover the defense costs during an expensive litigation processcould be the single most important reason to have theinsurance.

There also is a distinct element of insurance agents' E&Oexposure to be considered. The standard commercial generalliability policy does not cover EPL, so if insureds are under theimpression that they are covered by their conventional businessinsurance policies, they are in for a rude awakening if they areserved with a discrimination suit.

The first recipient of their anger and distress is likely to betheir insurance agent. It is therefore critical that the insuranceagent/broker clearly outline the costs/benefits of purchasing thiscoverage, and then obtain written acknowledgement from theirinsured that this option was offered to them.

The professional insurance agent or broker can providetremendous added value to his or her insureds by staying informedof the current environment, educating insureds on the risks andpotential negative economic impact of doing nothing, and assistingin the implementation of a sound program of risk management whichincludes the purchase of a comprehensive EPLI policy.