2007 International 2007 International ConferenceConference

The Employer Strikes The Employer Strikes Back,Back,

or so the Retaliation Claimant Says

The Employer Strikes Back The Employer Strikes Back

Panel MembersPanel Members

• MODERATOR: Thomas Paschos, Attorney at Law, Thomas Paschos & Associates, PC

• Wendi Barish, PartnerWeber Gallagher Simpson Stapleton Fires & Newby LLP

• Thomas Katona, Managing MemberApogee Insurance Group LLC

• Gene Mason, Vice PresidentW.R. Berkley Company (Watch Hill Division)

• Anthony J. Fowler, Assistant Vice President & Claims Counsel

The Hartford

Why and How Burlington Why and How Burlington has Changed the Game has Changed the Game

• What are the trends in retaliation claims post Burlington?

• What is the affect on underwriting?

• What is the market doing in light of Burlington?

Why and How Burlington Why and How Burlington has Changed the Gamehas Changed the Game

• What can Insurers/Employers/Legal Counsel do to Protect Against Retaliation Claims?

• How is the EEOC reacting in light of Burlington?

• How Proactive Must Insurers/ Insureds/ Employers/ Legal Counsel be in light of Burlington?

Burlington NorthernBurlington Northernv. Whitev. White

• Supreme Court, 2006• Employee reassigned to another position

with same pay and benefits• Employee claims higher scrutiny lead to

suspension which was overturned• Court found conduct could be found to be

retaliatory• Reasonable employee standard emerges

(a/k/a employers’ nightmare created)

McGowan v. City McGowan v. City of Eufalaof Eufala

• Third Circuit, 2006• Employee claimed retaliation for supporting

a co-worker’s claim• Suspension, denial of reassignment,

harassment• Termination/Suspension for prisoner

hanging with belt• Court found retaliation claim lacked

evidentiary support to show proximate cause

• Lesson: document, document, document

Williams v. W.D. SportsWilliams v. W.D. Sports

• Tenth Circuit, 2007• Female hockey player claims retaliation

after claiming sexual harassment• President confronts her with rumors of

sexual relations with players, coaches, season ticket holders; suggestion to resign as continuing might ruin marriage

• Court found President’s conduct could be retaliatory

• Lesson: don’t go there!

Jenks v. Modern Jenks v. Modern Woodman of AmericaWoodman of America

• 2007, Tenth Circuit• Employee was a manager at an insurance

company.• Demotion and termination results in settlement of

claim.• Reapplies after receiving form letter and is denied

employment based on release• Court found conduct did not constitute retaliation.• Lesson: do not invite people who have sued you to

reapply for a position. Make sure release includes language specifying no re-employment.

Michael v. Caterpillar Michael v. Caterpillar Financial ServicesFinancial Services

• 2007, Sixth Circuit• Employee gets involves in a dispute and is placed

on leave, files EEOC Complaint same day claiming race discrimination.

• Internal investigation of dispute results in places on 90 day performance plan or job transfer. Successfully completes performance plan.

• Ultimately transferred and promoted.• Court found no retaliation. • Lesson: employees can still do wrong in the eyes

of the court.

Hare v. PotterHare v. Potter

• 2006 Third Circuit• Postal worker claims sexual harassment

and files EEOC claim.• Requested time off for deposition and was

told not so nicely by Supervisor to drop case and starts receiving harsher treatment by Supervisor.

• Postal worker has mental breakdown, ends up on leave and Supervisor changes locks.

• Court found conduct = retaliation.• Lesson = order your stamps online.

Kessler v. Westchester Kessler v. Westchester County Dept. of Social County Dept. of Social

ServicesServices

• 2006, Second Circuit• Employee claimed he was denied

promotions due to age, gender, and religion.• Transferred to Yonkers, same pay and

benefits but less people to supervise• Court found conduct could be considered

retaliatory.• Lesson: Do not transfer people who claim

discrimination just because you can.

How is Burlington Impacting How is Burlington Impacting the the

Underwriting Side?Underwriting Side?

• Burlington has changed the game

• Retaliation exposure touches all industry groups and risks of all sizes

• Reinsurance underwriters are digging deeper

• Underwriters updating forms and applications

• Plaintiff lawyers desire to get into the courtroom

• Concern over increased defense costs and up tick in claims

Market ImpactMarket Impact

Comparison from 2000 to 2006

Retaliation claims, all statutes, have risen from 27.1% of all EEOC claims to 29.8% or up 2.7%

Retaliation Claims for Title VII only, has gone from 24.7% to 25.8% in 2006 or 1.1% increase

Age discrimination risen from 2000 to 2006 by 1.8% Sex discrimination gone down from 31.5% to 30.6% Race down from 36.2% to 35.9%

*Source EEOC.gov charge Data System

Market ImpactMarket Impact

Insurance Carrier Reaction

• Soft market impact is far greater than Burlington Northern, competition still aggressive

• Offering multiple year terms sometimes without renewal application

• Higher Deductibles in larger employee insured’s

• Little impact on under 200 employee accounts

• Carve back for retaliation, especially union NLRA exclusions

• More documentation required

•Mark

Claims ImpactClaims Impact

Frequency of claims• Retaliation tacked on to discrimination claims• Liability analysis-Change the game, broader

standard-reasonable person-(inherently broader)• Damages analysis- huge potential for greater

damages due to retaliation component (Isaiah Thomas case)

• Cases more difficult to settle early• Advantage Plaintiff• High Plaintiff demands likely

Market ImpactMarket Impact

Still seeing: Full Prior acts Defense outside the limits Deductibles as low as $1000 for under 200

employees, higher deductibles for over 200. Policy Language changes coming Typical exclusions like FSLA (Fair labor) NLRA

(Labor Relations) OSHA etc can evolve into Retaliation defense but have specific language excluding retaliation.

NLRA typical provisions exclude “discharging or discriminating” outdated definition

Helpful Tips for Employers Helpful Tips for Employers to Protect Against to Protect Against Retaliation ClaimsRetaliation Claims

• Employer should modify their employment policies and handbooks to include reference to retaliation as a prohibited practice.

• Managers must be trained on compliance and understand the new definition of retaliation.

• Employees must be advised of the company policy prohibiting retaliation for any type of protected activity.

Helpful Tips for Employers Helpful Tips for Employers to Protect Against to Protect Against Retaliation ClaimsRetaliation Claims

• Standard best practices consist of written procedures on how to report a complaint of retaliation, insuring prompt and effective investigation and giving feedback to the complaining party about the results of the investigation.

• Consider immediate separation of the complaining party from the alleged harasser.

• Assign a neutral party (i.e. human resource representative) to monitor the situation after a complaint is made.

• Establish a moratorium on any potential adverse action against a complaining employee.

Underwriting Underwriting Considerations Considerations Post- Burlington:Post- Burlington:

• Updating applications to address retaliation exposure

• Use of higher deductibles • Breakdown prospective Insured’s

policies and procedures for reporting a claim, investigating a claim, providing feedback

• Documentation procedures

Underwriting Considerations Underwriting Considerations Post-Burlington:Post-Burlington:

(cont’d)(cont’d)

• Whether or not the prospective insured’s policies include the appointment of a neutral party to monitor a situation after a complaint has been made?

• Appointment of an Ombudsman

• Employers history of complaints

Underwriting Considerations Underwriting Considerations Post-Burlington:Post-Burlington:

(cont’d)(cont’d)

• Employee turnaround

• Recent mergers or acquisitions

• Changes in senior management (possible “whistle blower” potential)

Market Conditions: Impact Market Conditions: Impact on Claimson Claims

• Broader terms

• Greater frequency and severity

• Increased limits and deductibles

• Carriers have increased skin in the game

Five Key Lessons: Burlington Five Key Lessons: Burlington hashas

Changed the Game Changed the Game

1. Burlington has dramatically changed how we handle employment discrimination actions.

2. Everyone must be proactive. Retaliation exposures touch all industry groups and risks of all sizes.

3. Increased frequency potential and increased defense cost potential.

4. Education and training is critical all the way around. Market will dictate increase in EPLI sales.

5. Employers must modify employment policies to prohibit retaliation.

AudienceAudience

Q & AQ & A

Many thanks to …Many thanks to …

• Wendi Barish

• Anthony J. Fowler

• Thomas Katona

• Gene Mason

• Thomas Paschos