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NEW YORK-The increase over the past several years in employment practices liability-related lawsuits shows little sign of waning, according to an employment practices attorney.
As widespread layoffs continue and high-profile employment practices suits gain national attention, more suits are perpetuated and new causes of action emerge, said Julianna Ryan, a partner at Wilson, Elser, Moskowitz, Edelman & Dicker in New York.
Employers should watch out for warning signs that they might be vulnerable to EPL suits and act now to avoid disputes rather than face the large awards and legal bills that often result from the suits, she advised.
One of the main reasons that employment practices litigation has increased in recent years is the growing number of employees being laid off, she said.
"When people are out of a job, they start to think about why they are out of job, and that's when they start to think about suing," she said last month at a D&O Liability Insurance Issues Symposium in New York sponsored by the Professional Liability Underwriting Society.
Current and former employees become more conversant with employment practices issues when they see high-profile disputes, such as the sexual harassment allegations against Supreme Court Justice Clarence Thomas during his nomination hearings in 1991, Ms. Ryan said.
And, when they examine their own situation, employees find they often have arguable cases, Ms. Ryan said.
"Every person is in at least three or four protected classes. Everyone has a race, a color, a national origin or a gender," Ms. Ryan said.
When employees turn to the law, they find many statutes on the books and case law precedents that they can use to pursue their cases, she said.
As the number of cases grows, so do employees' options under the law, Ms. Ryan said.
Recently, some courts have broadened the definition of a "hostile work environment."
For example, a California state appeals court last year expanded the definition by allowing an applicant for a job, as well as employees, to sue.
In the still pending case, an aspiring actor sued New York-based Capital Cities Inc. over the actions of a casting director at a Los Angeles division for Capital Cities unit, the American Broadcasting Companies Inc.
The actor alleged in his lawsuit, that the casting director agreed to help him get a contract and manage his affairs at ABC. After a series of meetings and auditions, the casting director invited the actor to his home, drugged him and, with four other men, raped the actor, court papers say.
In addition to assault charges, the actor is suing Capital Cities for sexual harassment.
Other trends in employment practices litigation include an aversion by some courts to affirmative action programs in which employees receive jobs for reasons other than ability. In reverse-discrimination suits, courts are setting aside agreements that give certain people preference in employment, Ms. Ryan said.
"Affirmative action is not politically correct anymore," Ms. Ryan said.
Another set of claims growing in number is "glass ceiling" claims, she said. Under these suits, statistical evidence is cited to demonstrate that a group of people, such as women or minorities, are not promoted beyond a certain level in an organization.
D&O suits arising from employment issues also are growing in number, she said.
These suits, typically brought by shareholders after companies lose employment practices cases, allege that the awards damage the company and its share price and that the directors and officers are responsible, Ms. Ryan said.
Plaintiffs say, " 'Why should this be my problem and be reflected in the share price when it's a reflection of management?'*" she said.
Along with the expansion of the variety of allegations, defense costs also are growing as employers view EPL disputes more seriously and fight suits to resolution rather than settling them and perhaps inviting more suits, Ms. Ryan said.
Companies and directors and officers can take several steps to prevent employment practices disputes, she said.
For example, they should establish and implement set policies, procedures and controls; oversee internal complaints through to their resolution; remain sensitive to the rights of the accused; and establish committees for special tasks, such as layoffs, Ms. Ryan said.
When suits succeed and courts award damages, corporations must review whether they can recover from their insurers, she said.
Some states prohibit insurance for willful misconduct, but some courts are changing their interpretations of these statutes, Ms. Ryan said.
Coverage differs among the various types of insurance policies. For example, under general liability policies, bodily injury normally must be proved for an employment practices claim to be paid, she said.
However, courts disagree on whether mental anguish is a bodily injury, Ms. Ryan said.
D&O liability policies without EPL endorsements are unlikely to provide extensive coverage. But, D&O policies with endorsements can offer some coverage, and specific EPL policies give even wider coverage, she said.