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Business Insurance

Remote Work Heightens Liability Risks In Employment Practices

Employers remain vulnerable to employment liability risks, even when their workforce operates remotely.


Even though some companies are beginning to require employees to work in an office full-time, a number of people are still working remotely, either some or all of the time.

This begs the question: "What employee-related issues and challenges could arise from maintaining a remote or hybrid staff?" And, what steps should employers take to limit exposures?

Below, Chris Williams, the Employee Practices Liability product manager at Travelers, addresses common employer liability questions related to remote workers.

Question: What does discrimination in the remote workplace look like, and where does EPL fit into it?

Williams: Treating employees who work from home differently with regards to the terms and conditions of their employment compared to those employees who come into the office could be considered discriminatory activity. However, Congress has not passed any laws mandating that remote workers are a protected class. So an employee’s status as a remote worker does not have the same protections as groups identified by race, sex, religion or age, for example.

But treating remote workers differently does carry certain risks. If remote workers are members of a legally protected class, and they are subjected to different working terms and conditions than in-office workers, they could allege that they were discriminated against.

Question: What coverages are available to protect employers against accusations of remote-work discrimination?

Williams: Employment Practices Liability insurance helps protect companies from lawsuits by employees, applicants and former employees for employment discrimination, wrongful termination, retaliation, and sexual harassment. EPL policies can provide coverage for damages, verdicts, defense expenses, and plaintiff attorney fees, which the defendant is often responsible for if the plaintiff prevails.

Question:  What preventative measures should employers take to avoid lawsuits?

Williams: Nothing guarantees that a lawsuit will not be filed. However, a prudent employer will consult with counsel before completing an employee termination to ensure the action is in accordance with company policy and any applicable laws and regulations. Employment counsel can also review a company’s change in terms or conditions of employment to ensure that the terms do not improperly impact members of a protected class.

Employers should also consider securing an EPL policy to help respond in the event a claim is filed. Insurance carriers can provide customers with risk management resources, training materials and updates on employment laws to help the employer mitigate their risk to employment lawsuits. In addition, if an employer is involved in litigation, carriers often have negotiated rates with defense firms that can be lower than what is available in the open market.

Question: How has an increase in retaliation claims over the past few years affected the EPL market?

Williams: The percent of charges alleging retaliation submitted to the U.S. Equal Employment Opportunity Commission increased every year from 2002, when 27% of all EEOC charges alleged retaliation, to 2021, when that number rose to 56%. While the percentage of EEOC charges alleging retaliation dropped to 51% in 2022, these claims continue to the most commonly pled.

The cost of these claims has also increased. According to the 2022 edition of Employment Practice Liability: Jury Awards, Trends and Statistics, the median award in a retaliation claim in 2015 was $63,600 in federal cases. That median figure increased to $208,022 in 2021. These numbers are significant, but bear in mind that, according to the same publication, the average award in these cases in 2021 was more than $700,000 ($726,271).

The EPL market has sought to help employers by providing risk management resources, including termination checklists, issues to consider before terminating employees, and hotlines to help employers address general employment questions.

Source:  PropertyCasualty360

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