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FINEX Observer: Employment practices liability year in review

Employment practices liability

Financial, Executive and Professional Risks (FINEX)

January 18, 2021

COVID-19 and a hardening market impacted employment practices liability insurance in 2020 and will continue in 2021.

This year started off with the COVID-19 global pandemic, which shut down much of the world leading to record high unemployment rates. While the unemployment rates have declined since the start of the pandemic, the rate is still elevated as compared to pre-COVID-19. As the pandemic intensified so too did the impact on the economy. Traditionally, when there are shifts in unemployment and societal changes that impact the workplace, we see an increase in employment practices liability (EPL) claims. In the context of COVID-19 there have been well over 700 employment and wage and hour related claims.

Complaints by Category (Plaintiff Type)

Table of complaints by plaintiff type (single or class action); total of 56 class action and 899 single plaintiff complaints

Category/state Class Action Single Plaintiff Total Complaints
Contract 2 36 38
Disability, Leave and Accommodation 9 368 377
Discrimination / Harassment 1 122 123
Other 0 10 10
Retaliation / Whistleblower 1 219 220
Traditional Labor 1 17 18
Wage and Hour 24 42 66
Total 56 899 955

As organizations grapple with the impact of COVID-19, they also had to balance a hardening EPL market where underwriters are focused on the workforce impact, financials, and inclusion, diversity and equity initiatives. Aside from COVID-19, the 2020 trends that are driving market conditions are increased employee friendly state legislation, with California still being the most problematic jurisdiction and a further push for employers to focus on inclusion, diversity and equity in the wake of the Black Lives Matter movement, calling for zero tolerance of racial discrimination and racial inequities in the workplace. Similar to the #MeToo movement, these movements collectively, and individually, continue to drive the rise in EPL claims and increased employment law legislation.

A global pandemic certainly did not stop the U.S. Supreme Court, which ruled on some significant employment-related cases:

  • Bostock v. Clayton County ­held that sexual orientation discrimination and gender identity discrimination fall within the ambit of Title VII protection.
  • Comcast Corp. v. NAAOM – Court upheld a stringent causation test so that workers can only sustain viable claims if they can prove they would not have been mistreated “but for” their race – this is a higher bar than the “motivating factor” standard under Title VII and means weaker claims should be weeded out through early court challenges.
  • Babb v. Wilkie – Court made it easier for federal employees and applicants to prove age discrimination by ruling that courts should not apply that heightened “but for” causation standard in ADEA cases – this is for employees and applicants of the federal government. Private employers can still rely on the “but for” standard when depending ADEA cases.
  • Our Lady of Guadalupe School v. Morrissey-Berru – Court held that the “ministerial exception” (which allows religious employers to use an employee’s status as a “minister” to invoke the First Amendment’s protections against government interference in the selection of employees) should be evaluated using of variety of factors, including whether an employee carries out important religious functions.
  • Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvaniaensures broad exemptions from the contraceptive mandate remain in place for both for-profit and nonprofit employers with sincerely held religious beliefs or moral objections to offering contraception coverage in their group health plans.

With 2020 almost in our rearview mirror, let’s look ahead to 2021. Unfortunately, the world will still find itself in the midst of the COVID-19 pandemic. To that end, we expect to continue to see a rise in employment and wage and hour related claims, particularly as more offices and businesses reopen and a potential vaccine becomes available.

In addition to COVID-19, we expect continued focus on inclusion, diversity and equity efforts in the workplace. Some states, like California, have proposed legislation to ensure diversity on the Board of Directors of public companies. Similar legislation may follow in other states. In addition, states may continue to pass legislation that is broader than federal law to prevent unlawful discrimination, such as, CA’s Senate Bill 973, which will require private employers with 100 or more employees to report pay data to the Department of Fair Housing and Employment by March 31, 2021 for specified job categories by gender, race, and ethnicity.

Over the past several years there has been an increase in privacy protections, such as, the Illinois Biometric Information Privacy Act (BIPA). While BIPA has been in place for many years, there has been a recent surge of class action claims against organizations with employees in the state of Illinois. This has been in large part due to the increased use of technology that collects biometric information. As more technology develops that has the potential of invading privacy, we may continue to see a rise in such claims.

In the employment context, these new forms of technology certainly create the potential for employee privacy violations, particularly in the wake of COVID-19. As businesses and offices reopen, many employers are collecting more information about employees (such as part of symptom checking, contact tracing, temperature checking, COVID-19 testing, etc.) which may lead to more employee privacy claims and ADA claims.

Finally, one of the more hotly contested issues has been the classification of certain workers as independent contractors or employees. California has been at the forefront of this issue with the Dynamex decision, then AB 5 and Proposition 22. Efforts to adopt or expand the tests set forth in Dynamex by way of state legislation are currently pending in several other states. Classification of workers can lead to increased wage and hour exposure in the form of misclassification claims, failure to pay overtime, etc.

As we close out a turbulent 2020 and look ahead to 2021, employers should expect to see some continued turbulence with a focus on the above issues. During these challenging times, it is always important to continuously review your internal policies along with your insurance policies to ensure continued compliance with the changing legal and social landscape.


This Willis Towers Watson publication is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. If you would like additional information, please contact us. Some of the information in this publication may be compiled by third party sources, whilst we consider these to be reliable, we do not guarantee and are not responsible for the accuracy of such. The views expressed herein are not necessarily those of Willis Towers Watson. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates, for example: Willis Towers Watson Northeast, Inc. in the United States, Willis Canada Inc., in Canada.


Employment Practices Liability Thought and Product Leader,
FINEX North America

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