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Employment practices liability claims stemming from the #MeToo movement continue to increase and have not yet reached their peak, experts say.
There has been a nearly 14% increase in sexual harassment claims filed with the U.S. Equal Employment Opportunity Commission in fiscal year 2018 — despite an overall decrease in complaints filed — after several years of declining rates.
The cost of settling the claims may have also increased, and claims that began with major household names are now percolating down to smaller, midsize companies, observers say.
“We certainly haven’t seen the crest yet” of “#MeToo-related claims, said Kelly Thoerig, Richmond, Virginia-based U.S. employment practices liability product leader for Marsh LLC. “I’m not sure whether this is the new normal in terms of elevated frequency and severity or whether it will die down at some point.”
“For me, the fact that we are nearly 18 months past the Harvey Weinstein allegations being made public, and these claims are still having significant traction, suggests it’s certainly not a blip” or short-term issue, Ms. Thoerig said.
The former movie executive has been charged with sexual assault.
“I don’t think it’s reached its peak because we still have enforcement bodies” such as the EEOC making it the agency’s top priority, said Beth Goldberg, New York-based chief underwriting officer for financial lines for Starr Insurance Cos.
Mark Azzolino, Hartford, Connecticut-based head of management and professional liability at Hartford Financial Services Group Inc., also said the claims have not reached their peak.
“The good news is, with the focus that the #MeToo movement has placed on corporate policies and procedures and training,” which has either been required by new laws or initiated by companies on their own, “the risk and control environment is getting better,” he said.
Natalie Douglass, senior managing director of the management liability practice for Arthur J. Gallagher & Co. in St. Louis, said #MeToo claims are now “trickling down into the middle-market segment” in addition to the well-known names that were initially cited.
However, Mr. Azzolino said the trend is not specific “to any one industry class or size of risk.” These exposures range from small family-owned businesses to large organizations, he said.
Ms. Thoerig said, “We have also seen a noticeable uptick in precharge or prelitigation demand letters seeking quick, and often expensive, settlements.”
In addition, “One thing that’s striking to me is the way in which these claims are being presented has changed, in my view,” Ms. Thoerig said.
“We obviously still have a significant number of employees choosing to go to the EEOC or state equivalent agencies, but there’s a very large swath of claimants that are bypassing these administrative processes and going straight to the employer with an attorney demand letter” and threatening to go the EEOC or file litigation, she said.
The settlement amounts have also increased, experts say.
“At this point, the cost of resolving sexual harassment claims post-#MeToo has increased, in no small part due to the #MeToo movement and public attention,” Ms. Thoerig said.
The EEOC, for instance, reported in April that in fiscal year 2018 it recovered $56.6 million in monetary benefits for sexual harassment victims, up from $47.5 million in fiscal year 2017.
However, there may be some downward pressure on claims. “There’s some new legislation in a number of states that targets the use of confidentiality agreements,” said Ms. Douglass. This means plaintiffs attorneys can no longer demand higher payments in return for keeping settlements confidential, say observers.
Meanwhile, the environment created by #MeToo claims has influenced the filing of related claims. “We’re seeing new kinds of claims spawning from “#Me Too,” such as pay equity, and more sexual discrimination claims stemming from the “glass ceiling,” Ms. Douglass said.
“Most of the plaintiff firms are not just checking one box. They’re checking several” boxes when they file litigation, said Ms. Goldberg, so if they are alleging sexual harassment, they may also charge retaliation or discrimination on top of that.
“You’re seeing multiple allegations coming across in these claims, with retaliation being up there,” she said.
The issue has also affected other lines besides employment practices liability, including management liability, according to observers.
To date, the #MeToo claims have not generated significant policyholder litigation, observers say. Claims litigation stemming from the #Me Too movement “is always a possibility, particularly when the stakes are high,” said Ms. Thoerig.
But the good news is “the claims themselves, the underlying exposure and the wrongful acts, those have been part and parcel of EPLI coverage since the dawn of stand-alone EPLI policies.”
“There’s obviously a lot more attention on the EPLI issue, and they are definitely costing more to resolve, but there’s not a perceived gap in EPLI coverage failing to respond to the current sexual harassment claims we’re seeing,” Ms. Thoerig said.
The claims process for employment practices liability stemming from the #MeToo movement has gone relatively smoothly, say experts.