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Experts say employers are likely to face more efforts to bring class action lawsuits in light of last month's order by the 9th U.S. Circuit Court of Appeals certifying as a class more than 1.5 million women who worked at Wal-Mart Stores Inc. since 1998. The suit accuses the Bentonville, Ark.-based retailer of pay and promotion discrimination.
But observers disagree whether the class action threat is likely to translate into more employer interest in buying employment practices liability insurance.
"I think you'll see an increase in demand" as well as an increase in claims, following the Wal-Mart case, said Robert Cap, Deerfield, Ill.-based associate product manager for employment practices liability for Shand Morahan & Co. Inc.
"Any time you see a splashy case with splashy headlines, it's certainly going to reinforce the notion that this type of behavior is out there, and in turn, that always causes an increase in interest in the product and does ultimately create an increase in demand for it," Mr. Cap said.
"I think it has highlighted the need for significant limits in EPLI and therefore has increased interest" in large amounts of capacity, said Jim Gray, executive vp at Bermuda-based Max Re Capital Ltd., an EPL insurer.
While EPL insurance has gained in acceptance, its takeup rate still trails that of directors and officers coverage for public companies, Mr. Gray said.
Catherine Padalino, Warren, N.J.-based EPL product manager for Chubb Specialty Insurance, a unit of Chubb Corp., said she is not sure the Wal-Mart publicity will necessarily create more demand for EPL insurance.
"There are still a large number of smaller customers whose initial reaction to large suits such as that is" that it will not happen to them, Ms. Padalino said.
Richard S. Betterley, president of Sterling, Mass.-based Betterley Risk Consultants Inc., agreed. "The untapped market is still the small (employer) and I don't know of a single small employer who thinks that if it happens to Wal-Mart, it could happen to them," he said. "Would it cause other large insureds to think about higher limits? Maybe."
However, "Wal-Mart is such an outlier in terms of employment size and public scrutiny that they're not necessarily" an indication of what may happen to other employers, Mr. Betterley said. "I don't know that this is all that much of a guiding light for the rest of us."
On a separate, but related front, all employers with federal government contracts of $50,000 or more and 50 or more employees, and all other employers with 100 or more employees, are required to submit by Sept. 30 a revised version of the Employer Information Report to the EEOC as well as well as the Department of Labor's Office of Federal Contract Compliance.
It is the first time in more than 40 years that the EEOC has changed the EEO-1 form, which requires employers to provide a count of their employees by job category, ethnicity, race and gender.
The new form asks for more detailed information about employees' ethnicity, and divides the previous category of officials and managers into two levels.
The EEOC uses the data to analyze employment patterns, such as the representation of female and minority workers within companies, industries or regions, according to the agency.
In addition, the Office of Federal Contract Compliance uses a statistical analysis of EEO-1 data "to select for compliance evaluations facilities where the likelihood of systematic discrimination is the greatest," according to the EEOC.
The EEOC is not requiring employers to resurvey current employees for the Sept. 30 report.
Mr. Gray said this information is readily available to the large companies with whom Max Re deals, and "getting that information in the form the EEOC wants will allow the companies to do a more in-depth analysis of their own current situations, so I think it's perfectly fine."
The new form will allow underwriters "to determine pretty quickly" whether a company has "some glass-ceiling issues" that need improvement, Ms. Padalino said.
Separately, the EEOC announced last year that it would increase its efforts to investigate and litigate systemic discrimination based on recommendations in the March 2006 Systemic Task Force Report.
In addition, the EEOC last week launched a new initiative, Eradicating Racism and Colorism from Employment, which it described as "an outreach, education and enforcement campaign to advance the statutory right to a workplace free of race and discrimination." The EEOC said it will combine E-RACE's objectives with those of existing commission initiatives, including its systemic initiative.
Observers said that although the revised EEO-1 form, which has been in the planning stages since 2003, is not directly related to the systemic discrimination report or E-RACE, information derived from the forms is expected to be used by the EEOC in these initiatives.