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RISKVUE ARCHIVE | INDUSTRY WATCH > EMPLOYMENT PRACTICES LIABILITY (EPL)
EPL Insurance With Amenities
By Holt Hackney
Some hazards in the workplace are invisible, but awfully dangerous: a sexually provocative joke from a male employee sent by e-mail to his female colleague; management’s decision to lay off an older employee because he lacks the computer literacy skills of a younger coworkers; or a racially insensitive comment shared electronically among two senior managers.
These scenarios could result in legal action costing a company tens of millions of dollars—while providing lots of free nasty p.r. Until recently, about the only way an employer could mitigate such costs was to educate the employees about proper conduct and purchase employment practices liability coverage.
Now there’s a stronger option. Three insurance firms, $7.8 billion Marsh Inc. of New York, $5.5 billion Chubb, based in Warren, N.J., and National Union Fire Insurance Co. of Pittsburgh, a unit of $194.4 billion (in. assets) AIG, have introduced coverage that is packaged with additional services. The policies contain standard employment practices liability insurance, plus free management, legal and labor advice.
Marsh calls its package Global Leaders. Among its features are a risk management audit—an assessment of a company’s most essential employee practices as well as practical suggestions to avoid liability—two free hours of employment law counseling from an attorney and an interactive human resources software program that identifies areas of greatest exposure.
A marketing gimmick? Perhaps. But Robert Pavone, corporate controller at privately owned Rich-SeaPack in St. Simons Island, Ga., a frozen seafood manufacturer, was convinced. “Just the threat of litigation made me think the package was worth the price,” he says. “We also liked the audit process.”
Peter Foster, vice president and national employment practices liability specialist at Marsh, says these features will help employers proactively stamp out potential problems. Furthermore, implementing them demonstrates the employer’s intent to prevent boorish conduct. That is an “affirmative defense,” according to two separate decisions last summer by the U.S. Supreme Court in cases involving sexual harassment.
Such packages deserve consideration, says Tom Wotring, a senior partner at Morgan, Lewis & Bockius, the largest employment practice law firm in the U.S., based in Washington, D.C. But, he adds, employers should also be aware of potential pitfalls.
Wotring suggests three questions to ask: Who will I have access to at the law firm, a junior associate or a senior partner? What is the financial relationship between the company brokering the deal and the law firm? And what is and isn’t covered? 
ABOUT THE AUTHOR
Source: Treasury & Risk Management, May/June 1999Copyright 1999 by CFO Publishing Corp.
riskVue | The webzine for risk management profesionals
June 1999
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