Two years ago, sexual assault allegations against Harvey Weinstein rocked the entertainment industry and ignited the #MeToo movement across the country. Today, claims of sexual misconduct are on the rise across all industries and types of businesses.
Employment practices liability insurance (EPLI) is the most common type of insurance used to respond to sexual harassment and misconduct allegations. Because of the recent dramatic increase in claims against EPLI policies, insurance companies are demanding that organizations make changes. For example, no longer will it suffice for a company to submit an application with a checked box as proof that employees have completed anti-harassment and discrimination training. Companies applying for EPLI insurance must update their policies and training. Additionally, insurers require that management better protect employees against retaliation for reporting harassment on the job.
What Can You Do?
All employers should provide a safe, respectful working environment for their employees. In addition, they should take steps to both mitigate potential exposures and address insurers’ concerns. Some of these include the following:
- Conduct in-person, interactive training of employees.
- Establish proportional discipline for offensive conduct.
- Maintain records of anti-harassment and anti-retaliation policy publication and training.
- Offer employees multiple channels through which they can anonymously report misconduct.
These measures can help stave off future liability, which can affect corporate brands and bottom lines, as well as position employers more favorably in the eyes of EPLI insurers.
Beyond EPLI coverage, traditional directors and officers (D&O) liability coverage can also be triggered by sexual harassment claims. To better understand the breadth of coverage under your D&O policy, ask the following questions:
- What triggers your D&O policy coverage?
- What are the reporting obligations?
- Are there exclusions in your policy that might apply to a D&O claim arising out of a #MeToo-related matter?
- How broad is the investigations coverage in your D&O policy?
- Do you have sufficient policy limits, including Side-A coverage (coverage only for directors and officers for non-indemnifiable loss)?
Although the impact of the #MeToo movement is not limited to potential D&O coverage considerations, D&O insurers are now looking at ways to assess the “tone at the top” of an organization. Insurance buyers should be prepared to answer questions about their employment policies, including but not limited to, how often they update their anti-harassment and anti-retaliation policies, whether those policies are supported by senior leadership, and what guidance and channels are available for reporting workplace misconduct.
In the wake of the #MeToo movement, businesses and individuals who commit, enable or fail to prevent misconduct are being held accountable through litigation and regulatory action. Make sure your organization understands that sexual harassment and misconduct will not be tolerated. Then, make sure your insurance coverage will respond as intended if an issue arises.
The above information does not constitute advice. Always contact your insurance broker or trusted adviser for insurance-related questions. This post was first shared in a publication from the Business Women of Northeast Indiana.