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HOW EMPLOYERS’ INSURANCE CAN COVER COVID-19 LAWSUITS

  • 31 July, 2020

Businesses have taken a strong hit from the current pandemic, as millions of employers were forced to shut down out of concern for public health. What swiftly followed was an economic crisis that led employers to either cut pay, cut hours, and even furlough and lay off  workers.

The consequences of this are starting to present themselves as those employees who might have been laid off due to pandemic are now pursuing litigation against their employers.

In these situations employers would regularly turn to their employment practices liability (EPL) insurance that defends them from these types of claim. EPL policies tend to vary slightly depending on the insurer,  but overall, they will generally cover discrimination, harassment, retaliation, wrongful termination, and other similar claims. However, because the consequences of COVID-19 have truly never been experience by society in over a century employers might not know that COVID-19 related lawsuits, despite not fitting the major categories like discrimination or harassment, can also be covered by their EPL insurance.

Below are three common examples depicting how employees might decide to pursue litigation for perceived or alleged unfair treatment. However, in all three examples, employers also have the right to turn to their insurance for coverage.

The first deals with employees who were let go as a direct result of the economic fallout caused by COVID-19. These employees will most likely claim wrongful termination, and despite these claims being related to COVID-19 and not to other common categories like discrimination, it should still be covered. This is because nearly all EPL policies will insure against wrongful termination. Moreover, EPL policies  tend not to define the term “wrongful,” thus,  it can be interpreted in a variety of different ways to cover all types of improper termination. Constructive termination should also be covered and can be used for the claims made by employees whose hours were substantially cut or who were furloughed.

The second example concerns hand on employees, or in other words employees who must be physically present at the business location to work. These workers, once it is deemed safe for them to return to work by health officials, might still refuse to go back. Their refusal stems out of their concerns of contracting COVID-19 on the job. Even so, once restriction have been lifted, employers are no longer required to hold their positions and can thus terminate these employees for not returning to work. If litigation then arises from these past employees, be it if they claim disability discrimination or not, the EPL insurance should also come to cover these claims.

The final example sees to those employees who might refuse their employer’s requirement to submit to a COVID-19 test. These employees will most likely allege that their rights to their private medical information is being infringed. These claims should also be covered as most EPL policies cover matters related to invasion of privacy by an employer. Additionally, it should be noted that due to current circumstances the Equal Employment Opportunity Commission is following the Centers for Disease Control and Prevention’s guidelines in protecting public health by allowing employers to administer COVID-19 tests to their employees.

It is also a good practice to understand what exclusions EPL policies might contain. In terms of COVID-19 there are no specific EPL policies that exclude the coverage of viruses. However, what EPL coverage can exclude is bodily injury. Thus, if an employee claims they contracted COVID-19 at the job they cannot turn to EPL but instead turn to workers compensation/employer’s liability policies for coverage.

Employers are probably aware that the cost of defense is incredibly high. Therefore, it is important to have EPL coverage in order to protect one’s business from such costs. The biggest benefit about EPL coverage is that it contains a duty to defend policy which ultimately requires them to defend the entirety of a case as long as some of the claims made are covered.

Overall, employers should dispel their doubts that allegations made against them are excluded from their insurance coverage solely because they are related to COVID-19.

Source: Law360

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