The United States government signed a number of coronavirus stimulus bills in 2020, including the Families First Coronavirus Response Act (FFCRA), which expands employee rights and benefits to include expanded vacation reasons, increased entitlements, and shorter terms for vacation eligibility and improved unemployment insurance.
According to the FFCRA, private employers with fewer than 500 employees are required to grant their employees paid sick leave (EPSL) and family and emergency medical leave (EFMLA) under certain circumstances related to COVID-19. Employers who do not recognize, understand, and fail to comply with the new laws could easily find themselves caught up in a costly Employment Practices Liability (EPL) claim.
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The new laws put in place in response to the COVID-19 pandemic are creating increased EPL exposure for employers related to compliance, explained Jade Rabacal (pictured), Senior Underwriting Manager for Employment Practices Liability (EPL), Tokio Marine HCC – Cyber and Professional Lines Group.
“For example, most pre-COVID-19 employers’ EFMLA violations were related to denying workers permission to care for a sick family member,” Rabacal said. “The FFCRA has now expanded the scope of the EFMLA to include childcare. So if a daycare center closes due to COVID-19, the parent may be eligible for EFMLA leave. We feared that EFMLA violations and allegations of discrimination would arise among our policyholders, many of whom are franchisees and restaurant owners in a single location. We do not believe that the insured would deliberately try to deny employees leave. It’s just that they may not know or understand the new laws. “
As employers struggled to meet numerous new legal requirements related to pandemics, they also faced the toughest economic climate since the Great Recession. Due to the regular mandatory stay-at-home orders, the shutdown of non-essential businesses, and new health and safety measures related to social distancing, many companies have had to lay off their employees and take leave.
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“In times of economic downturn there will always be an increase in claims, particularly allegations of discrimination,” Rabacal told the insurance business. “Layoffs often lead to people claiming to have been singled out and discriminated against on the basis of factors such as age or health.”
Layoffs related to COVID-19 were not necessarily planned or (in many cases) permanent. To survive, many companies announced short-term layoffs with promises to get employees back to work when their prospects improved. However, policyholders were at increased risk on two fronts: through the layoffs of employees and through the way they handled the return of employees to work.
According to Chris Murphy (pictured directly above), Senior Vice President Underwriting at EPL, Tokyo Marine HCC – Cyber and Professional Lines Group, the subject of “robust risk management” is of crucial importance. He commented: “Since the pandemic began, our policyholders have really made use of the risk management and HR services that are free with our EPL policy. Our HR service team received four times as many calls in 2020 as in 2019, and most of those calls were related to COVID-related questions. “
Tokio Marine HCC – Cyber and Professional Lines Group policyholders who have made temporary redundancies due to the pandemic can receive support and guidance from HR and legal experts on how to safely and legally reinstate their employees. If they take a step-by-step approach and bring some employees back before others, they could face EPL lawsuits for discrimination in their HR strategy. These are problems that the insured should recognize and solve with the help of experts.
“Our HR services have always been robust,” said Lauren Wilke (pictured directly above), Underwriting Manager for EPL, Tokyo Marine HCC – Cyber and Professional Lines Group. “The COVID-19 pandemic has shown our policyholders how important these services are, how diverse they are, and how proactive they have been as the pandemic-related situation evolved. Right from the start, we worked quickly to provide our policyholders with easy access to important information through webinars, online support and unlimited calls to our HR services.
“Proactive risk management always proves to be successful for the insured in the long term. Employers never want to make EPL claims. They are often personal attacks on their business practices. As an insurer, it is really important to be able to provide the insured with unlimited risk management and staff support in order to put them in the best position to limit EPL claims and keep a happy workforce. ”
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