Last year, claims of workplace retaliation topped the charts of claims filed with the Equal Employment Opportunity Commission (EEOC). In 2020, 37,632 charges were filed—including claims related to disability, race, sex and age discrimination—accounting for 55.8% of all charges filed with the agency.

How are retaliation claims impacting the employment practices liability insurance (EPLI) market? And as offices begin to reopen and people return to work, are agents and carriers expecting to see an increase in retaliation claims?

EEOC data indicates that the percentage of charges alleging retaliation has increased every year since 2003. Typically filed “in conjunction with another allegation, such as discrimination or wrongful termination, it is anticipated that the EEOC will continue to see an increase in retaliation claims as a result of the pandemic," says Sandra Tata, vice president, lead specialty liability, HSB.

Specifically, whistleblower claims from employees claiming to be subject to retaliation for bringing forward concerns about health and safety in the workplace are expected to rise further. “Some examples of these types of claims would be employees concerned about unsafe working conditions that may cause them exposure to other individuals in the workplace with COVID-19 symptoms or other situations where an employee complains that they were wrongfully denied a request for leave or workplace accommodation," Tata says.

As more offices reopen and employees are asked to return to work, employers are expecting to see an increase in discrimination and retaliation claims and whistleblowers reporting unsafe workplace conditions.

“The road for businesses to get employees back into work is littered with potential potholes," says Jenny Bergstrom, vice president, executive risks product head, Hiscox. “Seemingly innocent topics such as mandating vaccines and asking employees to come back into the office after working remotely for over a year are contentious and can elicit strong reactions."

For the market in general, an increase in claims and legal activity are creating a difficult environment for insurers, agents and clients alike, which could have an impact on rates further down the road.

“EPLI claims tend to be challenging to defend," says Chris Williams, employment practices liability product manager, Travelers. “Even if the underlying discrimination claim has no merit, there's the potential for the retaliation claims to have merit, and it's very difficult to get those claims dismissed."

In addition to the potential impact on EPLI rates from the coronavirus pandemic, social issues such as the #MeToo movement have led to an increase in EPLI rates over the past few years. “We have seen some carriers exit the EPLI space, while others have modified eligibility criteria and increased the premium charged," says Darryl McCallin, vice president, Rockwood Programs Inc. 

“An increase in retaliation claims will potentially drive additional rate increases and higher retentions in the EPLI insurance market," Bergstrom says. “Generally, the cost to defend and settle a retaliation lawsuit has increased considerably over the course of the last couple of years, and we don't anticipate that to slow down anytime soon."

Significant for the EPLI market and, in particular, retaliation claims, a number of U.S. Supreme Court cases “have expanded the scope of retaliation claims and lowered the requisite standard for a retaliation charge," says Yoora Pak, partner at the law firm Wilson Elser, who notes that two cases have had the most significant impact:

• Burlington Northern & Santa Fe Railway v. White: The Supreme Court held that retaliatory acts are not limited to acts directly related to employment or the workplace. There are post-employment actions such as a negative job reference that can serve as the basis for a retaliation claim.
• Thompson v. North American Stainless: The Supreme Court further lowered the bar by allowing third-party claims to proceed against an employer.

Agents are in a key position to assist their clients in getting the necessary EPLI coverage in place as “there are going to be an evolving list of exposures that we need to continue to monitor and watch closely," Tata says. In particular, agents should be cognizant to upsell recently added policy exclusions.

However, “some carriers are now adding COVID-19-related exclusions and invasion of privacy and biometric privacy act exclusions, both of which can significantly limit coverage under the policy," Bergstrom says.

Olivia Overman is IA content editor.