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Ongoing uncertainty over COVID-19 vaccine mandates may trigger an increase in discrimination and retaliation claims against employers next year, according to employment practices liability insurance experts.
What the effect will be on employment practices liability coverage, though, remains to be seen.
Amid a patchwork of federal, state, local and employer vaccination policies, accommodation requests from employees have ticked up and further employment practices liability insurance claims are a concern. Legal disputes over the validity of federal mandates are expected to make their way to the U.S. Supreme Court.
On Dec. 17, the 6th U.S. Circuit Court of Appeals in Cincinnati reinstated the Biden administration’s vaccine mandate for private U.S. businesses with 100 or more employees. The mandate, which covers about 84 million workers, had been on hold after a series of court challenges.
It’s a “fluid situation” and the effect on employment practices liability coverage and pricing hasn’t come full circle yet, said Bryan Lorenz, Los Angeles-based national account director for the management liability practice at Risk Strategies Co.
Employers are doing what they can to keep employees safe, “but mandating vaccines takes it into another category,” Mr. Lorenz said.
“I don’t think plaintiffs bars are going to win a lot of cases if employees say, ‘I was fired from my job because I wouldn’t get the vaccine.’ If a discrimination component makes its way into the claim, then I can see the plaintiffs bar jump on this and take on some of these cases,” he said.
The biggest concern is the uncertainty with respect to vaccine mandates, said Kimberly Forrester, partner at Clyde & Co. LLP in San Francisco. “The enforceability of them remains in limbo,” and vaccine policies vary regionally and by industry, she said.
“We do expect to see an increase in claims as different employers roll out their policies, and whatever they are, they adversely affect some employees,” Ms. Forrester said.
Disability and religious discrimination claims, particularly by employees seeking an exemption from vaccination policies, are expected to increase, as well as discrimination claims in general, she said.
“As employees return to the workplace, some could claim they lost out on promotion or some sort of opportunity due to vaccination status,” Ms. Forrester said.
Employment practices liability insurers are monitoring the issue, said Joni Mason, senior vice president, national executive and professional risk solutions claims practice leader, at USI Insurance Services LLC in New York.
“Our clients have seen a large increase in requests for accommodations to their vaccine mandate, so, in turn, insurers are seeing some of those claims come rolling in,” she said.
However, many of the requests are in the form of letters from employees or attorney demand letters. “It’s not necessarily litigation,” Ms. Mason said.
Over the past six months, there’s been a steady increase in COVID-19-related lawsuits generally, not just those specific to vaccine mandates, said Marie-France Gelot, New York-based senior vice president, insurance and claims counsel, at Lockton Cos. Inc.
“We expect, and insurers expect, the number of claims to increase over the course of the next year,” Ms. Gelot said.
Employers facing the prospect of litigation will ask, “Do I have insurance for this?” said Micah Skidmore, partner at Haynes and Boone LLP in Dallas.
Employment practices liability coverage is specific to various wrongful acts listed in a policy, including discrimination, wrongful discharge, wrongful failure or refusal to employ, and wrongful discipline, Mr. Skidmore said.
“Those are some examples of what you might see implicated if you have a claim,” he said.
Eden Stark, vice president of financial lines at QBE North America in New York, said the insurer has seen an uptick in employment practices liability claims arising from COVID-19 overall but “is not seeing a significant impact on severity, which drives loss.”
Also, policy wordings have not changed significantly, she said. “To specifically exclude COVID claims would be too broad. We haven’t seen any specific responses directed at COVID,” she said.
Jeff Hirsch, head of claims at FounderShield LLC, a unit of BRP Group Inc., in New York, said a few insurers have added mandatory endorsements restricting coverage for COVID-19-related claims.
Such moves are common in industries susceptible to COVID-19 claims, such as companies manufacturing or distributing personal protective equipment or companies providing services and labor in the health care sector, he said.
“EPL premium rates have been on an upward curve and that curve has become between 5% to 10% higher in response to the pandemic. … It’s safe to say there is a rate increase factor around vaccine mandates,” Mr. Hirsch said.
Employment claims overall were increasing prior to the pandemic, said Michael D’Ambrise, senior vice president at Beecher Carlson Insurance Services LLC, a unit of Brown & Brown Inc., in New York.
COVID-19-related claims “including and especially (related to) vaccines,” are also increasing, he said. “Those things could be an influence in terms of increasing rate,” he said.