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Employers who expect to get a break from employment practices liability issues with the new Trump administration are likely to be disappointed, many experts warn.
That is because any decline in regulator-originated litigation is expected to be made up for by plaintiff attorneys eager to pursue litigation in the sector. Furthermore, to at least a certain extent, national regulation is likely to be pushed down to the state level, these experts say.
“I am expecting the federal government to be much less activist than it was under President Obama, and overall, I think, for most of our clients, that’s going to be a positive development,” said Robin E. Shea, a partner at Constangy, Brooks, Smith & Prophete L.L.P. in WinstonSalem, North Carolina.
“But from an employment practices liability standpoint, if there’s less compliance activity for the federal government” it could result in more individual lawsuits filed against employers by plaintiff attorneys, Ms. Shea said.
There may also be more regulatory activity at the state level if there is a rollback at the federal level, say many observers.
“We’re already seeing that states are taking matters into their own hands,” said Adeola Adele, New York-based executive vice president and employment practices liability insurance product leader at Willis Towers Watson P.L.C.
Last year, for instance, California amended its equal pay legislation to apply on the basis of race and ethnicity in addition to gender, she said.
“I think you’ll continue to see steps like that by the states to fill any gaps where it is expected the federal government won’t support broader rights for employees,” she said.
In addition, Richard B. Cohen, a partner with FisherBroyles L.L.P. in New York, pointed to news reports of former U.S. Attorney General Eric Holder being put on a retainer by the California Legislature’s Democratic leaders “to ostensibly fight the administration on whatever issues come up that it deems worth fighting.” “I have never seen states gearing up to do this,” he said.
Because of the patchwork quilt of state laws, “you might get sued for conduct in one state where you’d never get sued for conduct in another state,” with California and New York having “very plaintiff-friendly environments,” said Gerald L. Maatman Jr., a partner with Seyfarth Shaw L.L.P. in Chicago.
Meanwhile, it will be at least two to four years before Trump judicial appointments influence the sector, he said.
“One of the biggest things we face right now is uncertainty,” more so “than in any administration transition in recent history,” said Gregg M. Lemley, a shareholder with Ogletree Deakins Nash Smoak & Stewart P.C. in St. Louis. It is difficult to predict exactly what the Trump administration’s agenda will be, he said.
“We’re in this situation where employers spent the last eight years playing keep up” with Obama administration policies, whether it was U.S. Department of Labor guidelines and regulations, or the National Labor Relations Board’s extensive guidance with respect to social media and other employment policies, he said. “And now the question is what’s going to stick and what’s not, and what do we do about it in the short term and long term?” Mr. Lemley said.
In the meantime, the U.S. Equal Employment Opportunity Commission will continue to be active. In January, for instance, the agency’s activity included filing suits concerning same-sex harassment, discriminating against an employee with an intellectual disability and Hispanic-preference hiring.
“I don’t think in the short term the new administration is going to slow down the EEOC’s focus, in part because many of those initiatives are already in progress, and in part because the Trump administration is going to have a lot of other priorities on their plate,” said Patrick H. Hicks, a shareholder with Littler Mendelson P.C. in Las Vegas.
“There are so many issues that this Congress and this administration have to address ... that I think the current trend will probably continue for the short term and even the midterm,” Mr. Hicks said.
Meanwhile, some of the same issues that employers have been facing will continue, including claims related to the Americans with Disabilities Act, the Age Discrimination in Employment Act, gender equality, the Family Medical Leave Act, wage-and-hour laws and religious discrimination claims, particularly with respect to Muslims.
And retaliation claims filed under various laws, which have been the most frequent charge filed with the EEOC for fiscal years 2010-2015, are likely to remain in the forefront.
Employers would be “well-advised” to think about how they could prevent and correct retaliation claims, said Jonathan A. Segal, a partner with Duane Morris L.L.P. in Philadelphia.
Another issue likely to come to the forefront is whether Title VII of the Civil Rights Act of 1964 covers sexual orientation discrimination.
Both the 2nd U.S. Circuit Court of Appeals in New York and the 7th Circuit in Chicago are expected to rule in cases now before them that it does, which “just opens the door for more claims under Title VII, obviously,” said Eric B. Meyer, a partner at Dilworth Paxson L.L.P. in Philadelphia.
Another major issue facing employers is the concept of joint employer liability. Franchisors are “now being dragged” into employment discrimination lawsuits filed against their franchisees, said Mr. Maatman.
That is a “very, very important issue because it impacts the liability and exposure of major companies,” he said.
Directors and officers liability insurance policyholders are continuing to enjoy lower rates, increased capacity and broadening terms and conditions in their programs.