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Employment Practices Liability Insurance | EPLI Insurance Claims on the Rise

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Written by Brett Lipton   
Monday, July 21, 2008

Employment Practices Liability Insurance Claims are Increasing

Employment Practices Liability Insurance EPLI

According to the Equal Employment Opportunity Commission (EEOC*1) the average number of Employment Practices Liability cases filed from 1996 to 1999 was a staggering 80,000 per year. Employment Practices Liability Insurance

Employment Practice Liability Insurance Judgments, or EPLI Judgment awards increased almost 3 fold at 275% from 1994 to 1999. The total employment practices liability judgments awarded exceeded $100 million. The average verdict in Employment Practices Liability cases now approaches a half million by 1999, at over $450,000 per judgment, and Employment Practices Liability issues comprise 30% of all civil litigation in the U.S. Court. Age discrimination liability suits are rising more than any other sector of EPL Cases. The fact about Employment Practices Liability cases is that, according to court verdicts, the employee is deemed right most of the time. The Department of Labor cites that, employees and other plaintiffs won almost half or 41% of all jury decided trials and 26% of all non-jury trials in 1999, with punitive damages being assessed 19% of the time.

Increase in EPLI Litigation

Skyrocketing Legal Fees impact Employment Practices Liability InsuranceEmployment Practices Liability Judgments

According to Scott R. Edelman, Managing Partner of Marulli, Lindenbaum, Edelman & Tomaszewski, LLP , a New York Based Defense Law Firm states, "Although there is certainly a disparity between cases against small companies and large companies the number of Employment Practices Liability lawsuits agains small companies is increasing at a faster pace.”

Award Trends in Employment Practice Liability Insurance Cases

According the data noted in the chart below, in 2005 there was a 50% chance that an Employment Practices Liability Litigation award would fall between 60,321 an $600,000.

Eployment Practices Liability Insurance EPLI Trends
The Median Employment Practices Liability Award in 2005 Was Over $250,000, (50th percentile) and well as the award range at -25% (25th percentile) of the median and +25% (75th percentile) i.e. in 2005 the award in the 25th percentile was $60, 321, the median (50th percentile) was $250,632 and the award in the 75th percentile was $600,000 so there was a 75% chance of the award exceeding $60,320 exclusive of legal fees. Also, this indicates that there was a 25% chance that the judgment would exceed $500,000.

Employment Practices Liability Cases can Bankrupt a Company

An article in the Small Business Review (*2) comments on how: The “sue-your-terminator” trend is no longer relegated to Fortune 500 corporations, and has trickled down to smaller businesses. “No company is immune, no matter what the size…” It goes on to say that "in 2006 alone, 75,768 employment discrimination charges were filed with the Equal Employment Opportunity Commission… another 30,000 small businesses are sued in federal court each year for wrongful termination and other matters", according to a study conducted for the Small Business Administration. Additionally “However erroneous the charges may be, litigation can easily drive any small business into bankruptcy.” For a small business owner the horror of being dragged into an EPLI suit with our Employment Practices Liability Insurance can not only be financially destructive but also stressful and mentally debilitating.

The Cost to Defend an Employment Practices Liability Lawsuit.

According to national data from Jury Verdict Research®, for smaller companies that do not have Employment Practices Liability Insurance or maintain EPLI, the average cost to defend employment practices law suits are in excess of $100,000 for a single plaintiff and class action suits ranging over $3,000,000. For small to medium sized companies, a face-plant expense of this size can easily put the company under. The mass layoffs that began in 2007 are bringing rise to plaintiffs claiming sex discrimination, age discrimination and race discrimination.  We even see sexual harassment suits being brought on months after an employee is laid off for financial reasons. I can only see the trend continuing with the increase of joblessness and the increased perception of plaintiffs’ potentially being awarded judgments for employment practice suits. If more companies were protected by a simple Employment Practices Liability Insurance Policy, EPLI, the insurance carrier will typically cover the cost to defend the suit, and to pay the judgment if one is awarded. Most times the legal cost exceeds the cost of the settlement or judgment, making the EPLI a very wise option."

Rising Employment Practices Liability Insurance Costs

Brett Lipton, President of Castle Rock Insurance Agency , a New York Based Property and Casualty Insurance Agency, Inc. states, "The demand for EPLI is on the rise. More business are acknowledging the importance of having a business insurance coverage that will provide Employment Practices Liability Insurance against claims and suits arising from issues of age, race and gender discrimination as well as wrongful terminations, sexual harassment, and even sexual misconduct. We insure several restaurants and nightclubs where liquor is served, staff is young, turnover is high, and in some cases the young women that work there are minimally dressed. This is a catastrophic equation for an EPLI suit. In fact Nightclub manager, Jacqueline A. of New York, specifically called inquiring about EPLI by referred to it as "Pinching and Grabbing Insurance". For other firms, the concern tends to be layoffs that invoke older, more tenured, higher paid employees that sue for age discrimination."  When you consider the average cost of an EPLI, or Employment Practices Liability Insurance policy is about the cost of a few hour legal consultation with a reputable law firm, and the insurance

coverage includes defense, it does not pay to forego having the Employment Practices Insurance coverage."

Statistical Employment Practices Liability Data

HORSHAM, Pa. - The national jury-award median for employment practice liability cases, which includes discrimination and retaliation claims, rose 44% in one year — from $151,000 in 1999 to $218,000 in 2000 — according to Jury Verdict Research®'s report, Employment Practice Liability: Jury Award Trends and Statistics - 2001 Edition.


Compensatory Award Medians for Employment Practices Liability Cases

 YEAR
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006

 MEDIAN EPLI AWARD
$093,000
$114,248
$130,400
$150,000
$150,000
$151,000
$218,000
$142,000
$200,000
$170,000
$200,000
$251,000
$200,000

Source: Jury Verdict Research® - Horsham, Pa.

The study showed that of all discrimination types, age discrimination plaintiffs won the most money from 1994-2000. The overall median jury award in discrimination cases was $150,000 for the seven-year span.

Compensatory Award Medians by Type of Discrimination Case (1994-2000)

for Employment Practices Liability Cases

Type
Sex
Race
Overall
Disability
Age

MEDIAN
$100,000
$120,951
$150,000
$175,001
$268,926
Source: Jury Verdict Research® - Horsham, Pa.

Plaintiff Recovery Rates for Employment Practices Liability Cases

  
Year

1994
1995
1996
1997
1998
1999
2000

Employment-
Practice Liability
50%
59%
58%
58%
62%
69%
67%

Race
Discrimination
43%
41%
45%
33%
58%
60%
62%

Sex
Discrimination
50%
70%
64%
67%
64%
70%
69%

Source: Jury Verdict Research® - Horsham, Pa.

Brett Lipton is the President of Castle Rock Agency, Inc. a Professional Insurance Agency Offering EPLI, Employment Practices Liability Insurance in New York, NY, New Jersey, NJ And Pennsylvania, PA. Scott R Edelman is the Managing Director of Marulli, Lindenbaum, Edelman & Tomaszewski, LLP, a New York Defense Law Firm.

Click Here for More Information on EPLI - Employment Practices Liability Insurance

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Click Here for More Information on EPLI - Employment Practices Legal Defense

 

Brett Lipton

President
Castle Rock Agency, Inc.
419 Lafayette Street 2 fl
New York, New York 10003
Tel:  212-360-2334
Fax: 800-978-5182
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Scott R. Edelman

Managing Partner
Marulli, Lindenbaum, Edelman & Tomaszewski, LLP
5 Hanover Square, 4th Floor
New York, New York 10004
Tel:  212-553-3200
Fax:  212- 406-7590
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(*1)EEOC - www.eeoc.gov
(*2)http://smallbusinessreview.com/for_the_boss/protect_business_from_employment_practices_litigation

Employment Practices Liability Insurance - EPLI Insurance Claims on the Rise
Employment Practices Liability Insurance Claims are Increasing

 
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