COVID-19 EPLI Update

Elan Kandel represents insurance companies with respect to all aspects of claims involving directors and officers liability, employment practices liability, fiduciary liability, professional liability and commercial general liability policies.

Michelle Gordon is Claims Manager of the Management Liability team at Markel Service, Incorporated. Michelle is responsible for overseeing a team of claims examiners located across the US. Her team handles employment practices liability, directors and officers liability, and errors and omissions claims for private and public institutions. Prior to joining Markel Service, Incorporated, Michelle practiced law as an insurance defense attorney in New York, focusing on professional and general liability. She received her bachelor’s degree from Binghamton University and her law degree from Hofstra University School of Law. She is currently President-Elect of the New York City Association of Insurance Women.

Jamie A. LaPlante is experienced in all aspects of management-side employment and labor law at the state and federal levels. She defends employers in a variety of litigation matters under Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), the Family Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA), and other state and federal laws and regulations, as well as breach of contract, whistleblower claims, workers’ compensation retaliation, and public policy violations.

Early in the COVID-19 pandemic, insurers predicted a flood of EPLI (employment practices liability insurance) claims related to the pandemic. So far, employers have held back the flood waters. Little by little, however, the claims have come trickling in, and we expect that trend to continue throughout 2021.

What are the potential sources of EPLI claims?

Employees cannot simply make a claim that they contracted COVID-19 and therefore, should recover from their employers. That does not mean that employers are immune from claims related to COVID-19.

Several different situations in the new COVID-19 workplace can result in potential liability:

  1. When employers lay off employees and recall some or none of those employees, the employers face risks of individual and systemic discrimination claims.
  2. When employers transition employees back to work in the workplace from remote work, it may give rise to employment claims related to requests to accommodate disabilities and religious practices and harassment.
  3. Employees may retaliate against employees returning from quarantine related to COVID-19 exposure or diagnosis.
  4. When return-to-work results in allegedly unsafe work conditions, employers can face citations from the Occupational Safety and Health Administration (OSHA) and employee retaliation claims following an OSHA investigation. Employers also face claims for negligence; public nuisance; negligent hiring, retention, and supervision; wrongful discharge; and whistleblowing related to unsafe workplaces.
  5. The COVID-19 relief bills provided two new causes of action for failure to provide required paid sick and family leave and for retaliation after the use of paid sick or family leave.
  6. Vaccination requirements and incentives can give rise to disability and religious discrimination claims, as well as wage-and-hour violations and privacy claims.
  7. Defamation and invasion of privacy claims can result from improper disclosure and handling of employee private health information.
  8. Employees who raise issues concerning PPP loan fraud or misuse of funds may have whistleblowing claims.

2020 revealed several litigation trends.

Looking at 2020 court filings, trends emerged. California and New Jersey lead the way with significantly more COVID-19-related employment cases than any other states. Florida, New York, Texas, Ohio, and Michigan round out the top states for employment claims related to COVID-19. In addition, two-thirds of the cases are filed in state court.

On March 25, 2020, an employee representative filed the first EPLI lawsuit against Walmart. The estate of a deceased Walmart employee sued, alleging that managers knew that several employees and customers had COVID-19 and failed to protect the decedent-employee. The estate claimed that the store failed to: adopt social distancing and quarantine guidelines; adequately clean and sterilize the facility; provide appropriate personal protective equipment (PPE); develop a response plan for infections; and provide warnings to employees who may have been exposed to COVID‑19.

In Texas, the family of a deceased meatpacking employee sued for negligence. The family alleged that the employer required an employee to report to work, despite disclosing symptoms of COVID-19, or be terminated. Employees claimed that the meatpacking company took no precautions against the spread of COVID-19, placing workers at risk of illness or death.

COVID-19 caused temporary and permanent layoffs that could give rise to EPLI lawsuits.

Many states implemented emergency health orders that required businesses to temporarily cease in-person operations. Those business where work-at-home was not possible immediately implemented layoffs—e.g., restaurant, retail, and beauty industries. Many of those employers that continued operations realized a decline in revenue that necessitated layoffs and/or pay cuts. EPLI lawsuits are likely if those layoff and/or pay cut decisions adversely affected certain protected groups (i.e., race, color, ethnicity, national origin, religion, age, disability, sex, sexual orientation, and gender identity).

Many workplaces failed to plan and adapt to the COVID-19 world.

A recent study by The Counterpart[i] found that most businesses that could implement work-at-home had not reopened their offices. In fact, many employers anticipated continuing remote work for many employees indefinitely. Yet half of employers surveyed had yet to adapt their workplace policies to COVID-19 or remote work. Those that did updated their policies updated them in order to permit: voluntary remote work, reimbursement of home office expenses, revised travel requirements, and staggered shifts. Nearly 75% of survey respondents cited safety as the reason for new policies and procedures. Surprisingly, 88% of survey respondents did not seek professional or legal counsel in implementing changes in response to the COVID-19 pandemic.

What are the risks when employers do decide to transition back to in-person work?

Many employers may be delaying the return to in-person work to avoid dealing with return-to-work issues. Inevitably, some employees will refuse to return to work in the office and cite safety concerns. The law permits employers to force an employee to return to work in person unless the employee needs remote work as a reasonable accommodation for a disability under the Americans with Disabilities Act (ADA).

Handling these accommodation requests incorrectly could give rise to disability discrimination claims under state and federal law. Even if an employee has a disability that subjects him/her to a greater risk of COVID-19 complications, remote work is not an automatic accommodation. An employee could be alternatively accommodated through a private, safe workspace, additional PPE, or alternative less crowded shift. Conversely, an employer cannot require a disabled employee to accept a work-at-home accommodation if he/she wants to work in the office, even if the accommodation is intended to protect the employee.

Further, employers may face employment claims if they harass or retaliate employees, or allow coworkers to do so, upon the employees’ return to work after quarantine. This underscores the need for employers to be discrete about who is told of an employee’s COVID-19 diagnosis or exposure. Only those employees within human resources who “need to know” should be informed.

How does an employer safely transition back to in-person work?

With all these concerns, how can an employer safely transition back to in-person work without risking employment claims? Before returning to in-person work, an employer should consider the following safety issues and appropriately mitigate COVID-19 risks:

  • Appropriate social distancing;
  • Redesigned meeting spaces;
  • Cleaning and sanitizing common and shared areas;
  • PPE – e., sanitizers, masks, gloves, etc.;
  • Daily symptom checking;
  • Encouraged use of paid sick leave when ill;
  • Testing; and
  • Contact tracing and quarantine requirements.

While EPLI policies often exclude OSHA citations, retaliation claims from employees who made OSHA complaints or participated in an OSHA investigation usually are not excluded. In addition, employees who in good faith and reasonably refuse to work due to safety concerns, can allege retaliation and wrongful discharge claims that may be covered by EPLI policies. Further, employers who require employees to work in an allegedly unsafe work environment could face claims for: negligence; public nuisance; negligent hiring, retention, and supervision; wrongful discharge; and whistleblowing.

Employers must comply with new COVID-19 employment laws.

The COVID-19 relief bills provided employees with new causes of action for employment claims related to the pandemic. The Families First Coronavirus Response Act (FFCRA) provided COVID-19 sick and family leave to employees who work for employers with less than 500 employees. The small employers covered by the FFCRA may lack robust human resources departments to assist them with compliance.

These employers could face claims under the FFCRA if they failed to provide the required (a) two weeks of paid sick or quarantine leave or (b) twelve weeks of paid family leave related to a daycare or school closure. In addition, through an amendment to the Family and Medical Leave Act (FMLA) and Fair Labor Standards Act (FLSA), the FFCRA provides employees with a right of action to sue in court for retaliation following the use or request for FFCRA leave. This is notable, as retaliation claims, unlike FMLA interference and FLSA wage-and-hour claims, often are covered by EPLI policies.

Employers must appropriately and confidentially handle an employee’s COVID-19 diagnosis or quarantine information.

Once an employer knows that an employee or his/her household member has COVID-19, the employer must handle that information confidentially. Only those employees within human resources that typically handle medical information (e.g., FMLA, workers’ compensation, and accommodation requests) should be informed. The employee’s supervisor only should be notified that the employee is off work. Employees who are exposed only should be notified that they were exposed to someone diagnosed with, or suspected to have, COVID-19. Identifying the employee is improper and unnecessary.

This process is full of potential landmines for an employer to step into, resulting in an employment claim for defamation, invasion of privacy, disability discrimination, and/or breach of Health Insurance Portability and Accountability Act (HIPAA) rules.

What about requiring or encouraging employees to get the COVID-19 vaccine?

The additional costs of PPE, social distancing, cleaning, sick leave, and other mitigation measures led many employers to encourage their employees to obtain one of the COVID-19 vaccines once they are available. The Equal Employment Opportunity Commission (EEOC)’s current guidance on the responsibilities of employers and rights of employees states that, if an employee cannot get vaccinated for COVID-19 because of a disability or a “sincerely held religious belief, practice, or observance,” and there is no reasonable accommodation possible, it would be lawful for the employer to exclude the employee from the workplace. This does not mean that the employer may automatically terminate the worker; rather, the employer must consider whether the employee is a direct threat to the rest of the workplace and/or whether remote work is a potential accommodation. A private work area, alternative schedule, or continued mask use could permit in-person work of an unvaccinated employee if most of the workforce is vaccinated. In addition, if the employer requires vaccination, the time spent obtaining the vaccine likely is compensable time under wage-hour laws.

Vaccine mandates are not the only concern. Many employers opted to encourage vaccination through incentives and workplace vaccine clinics. Some employers offered additional vacation days and cash in amounts ranging from $50 to $200. The most recent EEOC guidance on wellness incentives is that anything more than a de minimus incentive (e.g., a water bottle) in exchange for a wellness program is illegal under the ADA. The EEOC declined, thus far, to provide guidance on COVID-19 vaccine incentives, despite urging from the business community. Providing these incentives, despite the lack of guidance, remains a gray area of the law.

In addition, if an employer hosts a vaccine clinic at the workplace, poor handling of employee responses to vaccine screening questions could result in ADA violations, by converting the interaction into an improper workplace “medical examination.”

Some claims related to COVID-19 may be excluded by EPLI policy exclusions.

EPLI coverage exclusions may exclude some employment claims from EPLI policies. Many policies exclude FMLA claims, wage-and-hour claims, OSHA citations, bodily injury damages, WARN Act violations, and claims arising from criminal acts. These exclusions may exclude some—but certainly not all—employment claims related to COVID-19. It is important to review your EPLI policy and understand that there are exclusions that may apply for these type of claims.

The future remains unclear.

Thus far in 2021, it looks like employment claims related or stemming from COVID-19 are on the rise. In the first quarter of 2021, employees filed 671 new lawsuits against employers. By way of comparison, in 2020, there were 284 filings in second quarter, 458 in third quarter, and 539 in fourth quarter. The vast majority continue to be filed in state court. In addition, nearly one-half of all claims are based on disability, leave, and accommodation issues, with retaliation and whistleblower claims closely following in proportion. Regardless, employers—and EPLI insurers—should pay close attention to the potential employment claims that could result from the COVID‑19 pandemic and focus their efforts on prevention and compliance.

[i] “The Reinvention of the Workplace Study,” Counterpart™

COVID EPLI Update Podcast: Vaccine and Return to Work Implications for EPLI Insurers and Policyholders

Now that vaccines are slowly beginning to roll out, and at least some landlords in major metropolitan areas are predicting a more ramped-up return to work in June or July, COVID related EPLI claims are a rising concern for employers. Elan Kandel of Bailey Cavalieri LLC, Tanner Hackett of Yourcounterpart, Michelle Gordon of Markel, Jaime LaPlante of Bailey Cavalieri LLC, and Tom Sheridan of Mitsui discuss sources of potential EPLI claims, trends with EPLI claims, return to work issues, vaccine related issues and accommodations, and more in this podcast.

Listen to the podcast episode below, or on the PLUS Connect App:

Elan Kandel represents insurance companies with respect to all aspects of claims involving directors and officers liability, employment practices liability, fiduciary liability, professional liability and commercial general liability policies.

Michelle Gordon is Claims Manager of the Management Liability team at Markel Service, Incorporated. Michelle is responsible for overseeing a team of claims examiners located across the US. Her team handles employment practices liability, directors and officers liability, and errors and omissions claims for private and public institutions. Prior to joining Markel Service, Incorporated, Michelle practiced law as an insurance defense attorney in New York, focusing on professional and general liability. She received her bachelor’s degree from Binghamton University and her law degree from Hofstra University School of Law. She is currently President-Elect of the New York City Association of Insurance Women.

Jamie A. LaPlante is experienced in all aspects of management-side employment and labor law at the state and federal levels. She defends employers in a variety of litigation matters under Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), the Family Medical Leave Act (FMLA), the Fair Labor Standards Act (FLSA), and other state and federal laws and regulations, as well as breach of contract, whistleblower claims, workers’ compensation retaliation, and public policy violations.

Tom Sheridan is the Specialty Lines Claims Manager at Mitsui Sumitomo Insurance Group (“MSIG”) where he supervises the handling of Management Liability (D&O, EPLI and Fiduciary), Cyber, certain complex GL and Excess claims as well as oversight of MGA and TPA-handled claims.  Prior to joining MSIG, Tom was a litigator at the law firm of Riker Danzig in Morristown, New Jersey. 

Tanner Hackett is the co-founder of multiple businesses including, Lazada Malaysia, which was purchased by Alibaba, and Button, which is recognized as one of the best place to work by Inc. Magazine, Fortune, Entrepreneur Magazine, and Crain’s

EPL Perspectives on Coronavirus

As part of our continuing series of PL Perspectives on Coronavirus, we’re focusing in on EPL business lines. We have three EPL experts discussing the possible effects of COVID-19 from underwriting, risk management, and legal perspectives. Thank you to the speakers for their time and expertise!

Listen here to the EPL Perspectives on Coronavirus discussion:

Herman.SarahSarah Goldstein, Managing Partner & Partner in Employment Litigation practice at O’Hagan Meyer

Sarah represents organizations of all sizes in employment-related matters and advises companies on proactive compliance with employment and wage and hour laws. Sarah is an experienced trial lawyer in both the Federal and California Superior Courts, with a focus on harassment, whistle-blower, wrongful termination, retaliation, discrimination, PAGA and wage and hour matters.

Her litigation practice includes defending employment actions under the Fair Employment and Housing Act including gender, pregnancy, race, ancestry, color, religion, age, national origin, sexual orientation, disability, wrongful termination claims, whistleblower claims, wage and hour claims, and retaliation matters. Sarah also represents employers in administrative actions before the U.S. Equal Employment Opportunity Commission, U.S. Department of Labor and the Department of Fair Employment and Housing.

In 1998, Sarah received the Wiley W. Manuel Award for Pro Bono Legal Services. An active member of the Professional Liability Underwriting Society (PLUS), Sarah currently serves on the Board of Trustees and is the current board liaison to the Diversity and Inclusion Committee.  She chaired the Women’s Leadership Network event in Los Angeles in September 2012 and from 2009 to 2011, she served as Southern California Chapter Chairperson.

sgnilek-matt-webMatthew Sgnilek, Partner in the Employment practice at O’Hagan Meyer

Matthew represents employers in a variety of employment cases and administrative actions, including claims for civil rights violations, harassment, discrimination, retaliation, wrongful termination,  American Disabilities Act (ADA) violations, unfair business practices, misappropriation of trade secrets, as well as Private Attorney General’s Act (PAGA), individual and class action wage & hour  disputes. Matt represents employers in both state and federal courts, in arbitration, and before state and federal agencies, such as the Equal Employment Opportunity Commission, the California Department of Fair Employment and Housing, the California Unemployment Insurance Appeals Board, Workers’ Compensation Appeals Board and the Division of Labor Standards Enforcement. Matt conducts employee classification audits, payroll audits, HR best practices audits, and workplace investigations.  Matt also provides preventive counseling to his clients and works with them to ensure compliant HR policies and documents are in place..  Matt is a frequent speaker providing seminars and workshops on employment issues, including Sexual Harassment and Discrimination Training to executives, supervisors, managers and human resources professionals.

Kelly ThoerigKelly Thoerig, Managing Director, Employment Practices Liability Coverage Leader at Marsh

Kelly is Marsh’s U.S. Employment Practices Liability and Wage and Hour Coverage Leader and is primarily responsible for manuscripting EPL and W&H policies, leading policy and insurer new product reviews, and drafting endorsements. In addition, Kelly is a claims advocate for Marsh’s FINPRO practice, specializing in complex coverage and claims issues concerning EPL, W&H, D&O, professional liability, crime, and cyber insurance, where she calls upon her prior law firm experience representing insurance carriers in coverage disputes. Kelly frequently presents at industry seminars nationwide on various insurance coverage topics.