Bill Gates, one of the richest people in the world, may now be the biggest billboard around for Employment Practices Liability Insurance, or EPLI.
In case you missed the latest bit of alleged sordidness, the Wall Street Journal recently reported that Microsoft executives warned Gates way back in 2008 about inappropriate emails he had sent to a female employee.
Gates, who at the time was a full-time employee and the company’s chairman, asked the employee out on a date.
“These emails proposed meeting outside of work and off campus,” Frank Shaw, a Microsoft spokesman, told reporters. “While flirtatious, they were not overtly sexual, but were deemed to be inappropriate.”
Gates’ own spokesperson called the claims false.
The Microsoft founder left the company (but not its board) soon after the email caper in a long-planned departure. The scrutiny and bad press have only intensified ever since.
Just this past summer, an activist investment firm, Arjuna Capital, called on Microsoft to release an annual transparency report detailing its sexual harassment policies and investigations into alleged incidents across the company.
“Microsoft is under intense public scrutiny due to numerous claims of sexual harassment and an alleged failure to address them adequately and transparently,” Natasha Lamb, Arjuna Capital's managing partner, said in a statement. “Reports of Bill Gates’ alleged inappropriate relationships and sexual advances towards Microsoft employees have only exacerbated concerns, putting in question the culture set by top leadership.”
Bill Gates. Tech titan. Investor. Philanthropist. And now, sexual harasser?
But what is clear is that if you’re running a business without an Employment Practices Liability Insurance policy in place, you’re taking on a distinctly unnecessary risk.
Even baseless claims can result in significant defense costs. Any employee or third party can file a lawsuit that can cost your company tens of thousands of dollars in defense costs alone.
EPLI covers businesses against claims by workers that their legal rights have been violated. These policies provide protection against more than sexual harassment. They also cover:
- Discrimination of any sort;
- wrongful termination;
- breach of employment contract;
- negligent evaluation;
- failure to employ or promote;
- wrongful discipline;
- deprivation of career opportunity;
- wrongful infliction of emotional distress;
- mismanagement of employee benefit plans.
An EPLI policy also will cover the costs of defending a lawsuit in court and for judgments and settlements. Better still, EPLI covers legal costs whether your company wins or loses in court.
The more robust EPLI policies will sometimes offer coverage for punitive damages – often the largest financial exposure presented by EPL claims. The better policies also cover cases involving independent contractors and leased employees.
EPLI isn’t new, of course. Nearly half of the nation’s largest employers have EPLI coverage. But too few smaller employers don’t carry it and that leaves them dangerously vulnerable.
At the same time, the number of sexual harassment claims in the workplace has increased at a dizzying pace. And although most of the suits are filed against large corporations, no company is immune to such lawsuits.
Just consider that the U.S. Equal Employment Opportunity Commission receives thousands of sexual harassment reports each year. It also helps victims recover tens of millions of dollars.
One more important, if not obvious, point in this discussion: EPLI coverage doesn’t mean your people can just go out and commit employment-related acts of harassment or discrimination without consequence. The damage to reputation can be far greater than the monetary losses that arise in these cases, and there’s no insurance policy anywhere to fix that.
Reducing the Risk of EPLI Lawsuits
To help reduce the likelihood of an EPL claim, and reduce the risk if a claim is filed, you’ll want to start with training.
The Mahoney Group can provide you and your team with training on sexual harassment and discrimination, as well as a model employee handbook and HR workplace bulletins.
It’s also a good idea to have in place an anti-retaliation policy clearly stating that it's your corporate policy not to retaliate against employees over accusations of discrimination or harassment.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the nation. For more information about employment practices liability insurance coverage, contact us online or call 480-730-4920.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.