What is EPL Insurance?
If you own a business and have employees in Kernersville, High Point, Winston-Salem, Greensboro or anywhere, you need to be aware of the availability of EPL (Employment Practices Liability ) insurance coverage. Take a look at some of the examples of what can go wrong:
Employment Practices Liability
Wrongful Termination: McKenzie vs. Miller Brewing Co., et al A former Miller Brewing Company executive was awarded $26.6MM by a Wisconsin state jury for wrongful termination where his employment was terminated after a female colleague complained about his recounting of a racy episode of the Seinfeld television show at the office.1 The jury found that the incident was not sexual harassment.1 Miller argued that it made its decision to fire the executive due to his poor performance.2 However, the jury did not afford this explanation any credibility.3
Sexual Harassment: McIntre vs. Manhattan Ford, Lincoln-Mercury, Inc. A $6.6MM jury verdict was awarded to a woman for her claim that she was subjected to two and a half (2 ½) years of sexual harassment.4 The verdict was reduced to $3.7 million by the trial judge.5 The plaintiff presented evidence as to seventeen (17) separate incidents of harassment and alleged a daily barrage of abusive language. 6 The trial court, in refusing to vacate the award of punitive damages in its entirety, stated that “the amounts previously awarded to plaintiffs in Title VII cases have not been a sufficient deterrent in view of the significantly increasing number of employment claims.”7
1. Burch vs. Coca-Cola Co. A recovering alcoholic’s ADA claim was dismissed and the jury verdict vacated on appeal, after a jury had awarded the employee $109,000 in back pay, $700,000 in front pay, $300,000 in compensatory damages and $6MM in punitive damages.8 The Fifth Circuit dismissed the case holding that an employee’s claim of frequent inebriation falls short of the permanent impairment requisite of the ADA.9 The ADA is designed to remove barriers, the Court held, for permanently disabled workers.10 Although the employee was not held to have met the ADA’s threshold requirements of a permanent impairment in this case, the Court limited its decision and stated that it did not hold that an alcoholic was precluded from stating a claim under the ADA.11
2. Wal-Mart Stores, Inc. The EEOC filed suit on behalf of a paraplegic applicant for employment at Wal-Mart who was turned down despite his qualifications for several open positions.12 The claimant alleged that the store personnel manager indicated that there were “no openings for a person in a wheelchair.”13 The jury awarded $8,399 in back pay, $75,000 in compensatory damages and $3.5MM in punitive damages.14
Class Action EPLI Complaints
1. Race Discrimination: Shoney’s, Inc. Class action suit brought by African-Americans alleging they were denied employment or promotions between 1985 and 1993.19 The suit was settled for $105MM.20
2. Gender Discrimination and Sexual Harassment: Publix Supermarkets Class action suit by 150,000 past and present female employees at management and non-management levels who sued the company for keeping them in low-paying jobs.21 The case settled for $81.5MM.22
Third Party Discrimination / Harassment
1. Third Party Race Discrimination: Denny’s, Inc. A race discrimination lawsuit was brought by African American patrons in a Denny’s restaurant where they alleged that they were given inferior service as compared to white customers due to their race. 23 The African American plaintiffs made several claims including claims for public accommodation discrimination and discrimination in the making of private contracts. The total damages resulting from this case were $46 million.24
2. Third Party Harassment A woman filed a harassment claim against the employee of a gas station attendant and the employee who allegedly made lewd gestures and unwanted sexual advances when she stopped by the station to gas up her car and use the restroom. She logged a complaint with the company that owned the gas station regarding the employee’s conduct and demanded that the employee be fired. When the employee was not fired nor was any disciplinary action taken against him, she sued the employer alleging that the company was advised of this employee’s conduct but did nothing to prevent future actions. The case is still ongoing.
SEC/Shareholder (Private Companies)
1. D’s and O’s – owe a fiduciary duty to shareholders of the company. Can be sued for breach of duty of loyalty (not acting in the best interests of shareholders) and breach of duty of care (not acting as a prudent man would in a like situation) to the corporation and its shareholders. [Refer to Van Gorkom vs. Trans Union case to illustrate].