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Editors Column: The Importance of EPLI

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According to insurance industry estimates, fewer than 50% of companies carry EPLI. While most large companies carry it, the smaller the employer, the lower the percentage of coverage. This mirrors feedback I get from CEO’s I speak to nationwide. Although the cost of coverage varies, a $1 million policy with a $10,000 deductible usually costs from $50 to $250/year per employee. When you think about obtaining EPLI, weigh the cost of this protection against the likelihood and impact of a claim, settlement, verdict, etc.

Check out the cost figures on claims, derived from the EEOC, Jury Verdict Research and other sources:

  • 88,778 cases were filed with the EEOC in 2014
  • Average employee verdict exceeds $200,000 
  • 14% of all verdicts exceed $1 million
  • Average settlement is $75,000
  • Legal fees average over 100,000
  • Wasted time, an emotional roller coaster, impact on the company’s brand among all stakeholders — priceless.

That’s the potential exposure. What’s the potential of getting hit with it? According to CNA, an employer is more likely to face an EPLI claim than a Property or General Liability claim. Almost 75% of litigation against corporations involves employment disputes. More than 40% of Employment Practices claims are filed against companies with 15-100 employees.
Doing some rough math, there are about 6 million companies in the U.S. Although many of these firms are too small to bother suing, some 2.5 million businesses have 15 or more employees. 

Experience tells me that tripling the number of EEOC claims give a fairly realistic number of total claims made with employers. Dividing 2.5 million companies by 300,000 claims comes to roughly a one in eight chance of experiencing a claim during a year — which means the firm can expect to face at least one employment-related claim over an eight-year period (this probability depends on the size of the company, location, compliance practices, culture, etc.).

By purchasing EPLI, you not only cap your risk at $5,000 to $25,000 a year, but you allow yourself the freedom to let go of poor performers without the threat of litigation. Let’s say a 50-person company pays $7,200 a year (an average of $120 per employee) for EPLI coverage. Building in a cost increase, over an eight-year period, estimate the total cost of $70,000. The company probably will face a claim during those eight years, which will cost an average of $75,000 just to settle, plus another $25,000 in legal fees, for $100,000 (see the average premium cost and settlement figures above). You’d still come out $30,000 ahead —plus eliminating much of the stress and hassle. If the case goes to verdict, those numbers can easily triple. Remember there is no way you can amortize this expense! Of course, you might easily face more than one claim during the policy term.

Last, not only do you get a cost of defense, you obtain an insurer’s expertise in claim management.

The bottom line: Not getting EPLI is a gamble that could significantly impact or even wipe out your cash flow. Talk to your broker about this coverage today.


Tell 'Em About It: Educating the Workforce about the ADA & Accommodations

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The 25th anniversary of the signing of the ADA offers an opportune time to encourage businesses to educate the workforce about the ADA and disability employment issues. Informing employees, beyond simply posting an equal opportunity poster, can benefit businesses by creating a more knowledgeable and inclusive workforce, reducing the likelihood of discrimination through awareness, and improving productivity by recognizing value in providing reasonable accommodations. There are many ways to educate the workforce about the ADA and reasonable accommodation. Consider these strategies:

Train HR Professionals, Supervisors, and Managers. JAN cannot stress this enough. Train management staff on the ADA and accommodations – early and often. These key employees will have a significant impact on job performance success rates if properly informed, trained, and equipped with the information and tools necessary to comply with the ADA and engage in the interactive process. Here are some training tips that will benefit any management team: 

  • Inform staff about the basic principles of the ADA and reasonable accommodation. They must know the employer’s obligations under the ADA, general accommodation requirements, and how to avoid discrimination. 
  • Train staff how to recognize and respond to an accommodation request. This is where a formal reasonable accommodation procedure will help management engage and implement accommodations in a way that is fair and consistent. When an employee indicates that a medical condition is causing a work-related problem, a supervisor or manager should treat it as an accommodation request until a definite determination is made. 
  • Limit the sharing of medical information. Employee medical information should be shared with only those who are considered to be on a need-to-know basis. In many cases, medical information is provided to HR, however, supervisors and managers often do not need to know an employee’s specific medical impairment to implement accommodations. Details about the accommodation may be all that is needed. Knowing fewer details about an employee’s medical impairment will be beneficial when other employees ask questions about accommodations – the manager won’t be in a position to unnecessarily reveal information s/he is not aware of. 
  • Don’t perpetuate or tolerate harassment. Expect management staff to communicate respectfully and interact positively with employees who have accommodations, as should be expected with all employees. Management should refrain from making negative or derogatory remarks in response to an accommodation request or questions from co-workers about accommodations. 

Implement a Reasonable Accommodation Policy … and Tell Everyone About It! There is no requirement under the ADA for employers to follow specific policies and procedures when trying to accommodate an applicant or employee with a disability. However, having a formal reasonable accommodation policy and procedures – and sharing them with everyone – is recommended. A formal process creates a standard of practice for HR professionals, managers, and supervisors to follow, which increases the likelihood that accommodation requests will be handled properly and consistently. When formal policies and procedures are shared with all employees, this helps all workers know about the ADA, how to request accommodations, what to expect after doing so, and also helps them understand (if they personally do not need accommodation) that other employees might be requesting and receiving accommodations. EEOC’s own accommodation procedures can be used as a model for employers who would like to draft their own. See, Procedures for Providing Reasonable Accommodation for Individuals with Disabilities. 

Make a Statement! … About Reasonable Accommodation. Another way to educate the workforce about the ADA and accommodations is to be sure the organization has a formal reasonable accommodation statement that is widely disseminated. A reasonable accommodation statement can be included as part of an equal opportunity (EO) statement that makes it clear that the organization has no intention to discriminate on the basis of disability or other legally prohibited bases. Employers should consider including an EO/RA statement in job postings, employee handbooks, on websites and intranet sites, in on-line applications, and other sources of workplace policies distributed to applicants and employees. For sample reasonable accommodation and EO statements, see JAN’s Consultants’ Corner article, Making a Statement – About Reasonable Accommodation and Equal Opportunity. 

Incorporate ADA & Accommodation Practices Into the Onboarding Process. The purpose of an onboarding process is to smoothly integrate new employees into their positions and company culture. The onboarding process should include information about the ADA and reasonable accommodation. If a new hire with a disability needs an accommodation, how will s/he know how to request it? Make sure new hires know that they can and should ask for an accommodation if they know or think they may need one. Many individuals who know they need an accommodation to do the job successfully will choose to make an accommodation request. Others may fear the job offer will be rescinded if they do so, and some may not be sure if they need an accommodation or may not know how to request what they need. To overcome these issues, the individual making the job offer or preparing the employee to start working can share information about the company's desire to facilitate a smooth transition and integration for the new employee and explain various employment policies and procedures, including the organization’s reasonable accommodation policy. For more information, see JAN’s E-News article, Incorporate Reasonable Accommodation Practices into your Onboarding Process.

From the Job Accommodation Network http://askjan.org/enews/2015/Enews-V13-I3.htm#5


EEOC’s “Reverse” National Origin Discrimination Suit Survives Motion to Dismiss

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This week, a federal district court ruled that the U.S. Equal Employment Opportunity Commission (EEOC) made sufficient factual allegations of intentional discrimination against a local farming company to survive a motion to dismiss. What makes this case unusual is that the EEOC alleges discrimination against U.S.-born workers, a departure from a typical “national origin” discrimination case alleging discrimination against foreign-born workers.

According to the allegations in EEOC v. J&R Baker Farms LLC, a Georgia farm violated Title VII of the Civil Rights Act of 1964, and engaged in unlawful discrimination by subjecting its American workers—both white and African American—to different terms and conditions of employment. For example, Baker Farms allegedly divided its work crews by national origin and race, with foreign, often Hispanic, workers placed in one group and American workers in another. American workers were also held to higher production standards than their foreign coworkers. On one occasion, several American workers were fired for not meeting a vegetable picking quota that had not been announced until after they were terminated; foreign workers had no quota at all. Finally, the EEOC presented statistics that American workers were fired at a much higher rate than their foreign coworkers.

Baker Farms filed a motion to dismiss the suit, claiming that the EEOC failed to present sufficient factual allegations. Baker Farms argued the EEOC failed to identify any individuals who instituted these practices and failed to provide specific dates for the actions alleged. Therefore, the EEOC failed to satisfy federal pleading standards. The district court disagreed.

The court first noted that on a motion to dismiss, the EEOC need not prove its allegations, but instead must only make plausible allegations which, if true, would prove a violation. The EEOC clearly identified a class of employees—U.S. -born workers—whom the defendants subjected to different, more rigorous terms and conditions of employment. Therefore, the allegations were sufficient to demonstrate intentional “disparate treatment.” Additionally, the court noted that the EEOC provided statistics regarding disproportionate termination of American workers. In the fall of 2010, the EEOC alleged that Baker Farms fired 116 of its 121 American employees, while increasing its foreign-born workforce from 88 to 117. The court held that, if proven, Baker Farms could be liable for disparate treatment in violation of Title VII’s prohibition on discrimination based on national origin.

The EEOC claims that Baker Farms is just one example of “reverse” national origin discrimination. According to the director of the EEOC Atlanta District Office, “This is not the first time the EEOC has seen this kind of discrimination against American workers due to negative stereotypes of their work ethic and likelihood to complain about injustice.” The EEOC has promised increased vigilance regarding similar misconduct. Employers and businesses should be just as vigilant and remember: Title VII protects all workers of every race, color, creed and national origin


Curing an Insufficient FMLA Notices- Employers Beware

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The case of Deborah HANSLER v. LEHIGH VALLEY HOSPITAL NETWORK shows how employers can get in trouble with FMLA regulations-even where an employee provides and insufficient medical notice. 

Deborah  Hansler was hired by Lehigh Valley Health Network (“Lehigh Valley”) in 2011 to work as a technical partner. In early March 2013, Hansler experienced shortness of breath, nausea, and vomiting. The cause of these symptoms was unknown. On March 13, Hansler's physician completed a medical certification form “requesting intermittent leave at a frequency of 2 times weekly starting on March 1, 2013 and lasting for a probable duration of one month- or until about April 1, 2013.” Hansler submitted the certification to Lehigh Valley as part of a formal request for leave under the Medical Leave Act. Because of her condition, Hansler could not work on March 13, 14, 23, 24, and 25.

Without seeking further information about the medical certification from either Hansler or her physician, Lehigh Valley terminated Hansler at the end of her shift on March 28. The basis for Hansler's termination was absenteeism, including the five days she took off in March. Hansler reminded Lehigh Valley she had requested time off under the Medical Leave Act, but Lehigh Valley informed her, for the first time, her request had been denied. Following the last of her absences, Hansler learned of a letter dated March 26 explaining her request for “leave of absence (FMLA) for the period of 3/1/13–3/11/13” was denied because her “condition presently does not qualify as a serious health condition under the criteria set forth by the [Medical Leave Act].” In early April 2013, after her dismissal, Hansler received a diagnosis of diabetes and high blood pressure. She alleges these previously undiagnosed and untreated conditions are what caused her March absences.

Hansler sued Lehigh Valley under the Medical Leave Act for interfering with her substantive rights to medical leave and for terminating her in retaliation for seeking leave. In her complaint, Hansler alleges she has chronic serious health conditions and argues that Lehigh Valley improperly denied her request for leave without providing her an opportunity to cure her medical certification. The District Court granted Lehigh Valley's motion to dismiss for failure to state a claim. It concluded Hansler's request for leave was defective because her medical certification indicated her condition would last only one month, but the Medical Leave Act requires that a chronic serious health condition persist for an “extended period of time.” The District Court held that because the certification showed Hansler was not entitled to leave, Lehigh Valley was not required to afford Hansler a cure period and could terminate Hansler for her subsequent absences. That Hansler was later diagnosed with diabetes and high blood pressure was of no consequence. According to the underlying Court, “[a]lthough the timing of events for plaintiff was, without question unfortunate, the fact remains that her diagnosis with diabetes and high blood pressure did not occur until after her leave request was denied and she was fired by defendant.” 

After summarizing the above facts, the appellate Court began then summarized the law around FMLA notices. It reminded us that a “serious health condition” involves inpatient care in a hospital or “continuing treatment by a health care provider.” 

Most important is the Department of Labor's regulations governing how employers respond to perceived deficiencies in medical certifications. An employer “shall advise an employee whenever the employer finds a certification incomplete or insufficient, and shall state in writing what additional information is necessary to make the certification complete and sufficient.” 29 C.F.R. § 825.305(c). …If the employer determines a certification is either incomplete or insufficient, it may deny the requested leave on the basis of an inadequate certification. But it may only do so if it has “provide[d] the employee with seven calendar days, unless not practicable under the particular circumstances despite the employee's diligent good faith efforts, to cure any such deficiency.” 

On top of that the Court stated the fact Hansler was diagnosed with her illnesses after she was fired does not affect determining whether her medical certification was insufficient.

“Not only is our conclusion dictated by precedent and the statutory and regulatory text, but we believe the cure period makes abundant sense in this context. Faced with nascent symptoms from a yet-to-be diagnosed condition, an employee's physician may need some additional time to provide the required elements of a sufficient certification, including more specific information regarding relevant medical facts and the probable duration of the condition, the planned medical treatment, and the intermittent leave. 29 U.S.C. § 2613(b). As this case illustrates, for an employee with an emerging condition, the difference between a medical certification that supports leave and one that is deficient might be a matter of days.”

The dissent:

The dissent understood the “trap” position of the employer. Here’s is an excerpt from it.

“The majority fashions a new rule to fit a sad case. In early April of 2013, Deborah Hansler was diagnosed with diabetes and high blood pressure. Had these conditions been diagnosed just days earlier when Hansler applied for FMLA leave, she would have been entitled to medical leave under the Family and Medical Leave Act —ensuring her time to treat her illness and a position upon her return. Instead, Hansler was denied leave and terminated from her job at Lehigh Valley. While I too sympathize with Hansler's situation, I cannot subscribe to the majority's strained reinterpretation of the FMLA.

“When an employer receives a request for FMLA leave, the decision on whether to grant that leave depends on the factual situation presented to the employer at the time that the leave is requested. The “crucial moment for determining if a particular condition qualifies” for FMLA leave “is the time that leave is requested or taken.” Here, Hansler requested “intermittent leave at a frequency of 2 times per week” for one month based on her suffering from shortness of breath, nausea, and vomiting during the previous two weeks. Hansler's medical certification accurately reflected her condition at the time of her request. This condition did not, however, qualify her for FMLA leave. This is not a case of a deficient certification that omitted necessary information. It is simply a case of a certification that describes a condition that is not one for which FMLA leave can be awarded.

“The reader may respond, “Well, let's not penalize the poor lady for applying too early for leave—for applying before her physician had diagnosed diabetes. Let's let her clear up any short fall in the information she gave her employer by permitting her to correct her deficiencies pursuant to 29 C.F.R. § 825.305(c).” The problem with this solution is that the employer in good faith, with the completed form and the information on it, has denied FMLA leave because the employee was not qualified for it. There was no indication on the certification of the health care provider that one or more of the applicable entries had not been completed and there was no information that was vague, ambiguous, or non-responsive. The certificate was not rejected by the employer as incomplete or insufficient. FMLA leave was denied because the completed certificate did not present grounds to grant FMLA leave. In this situation, there is no statutory right to cure by presenting further information within seven days. The employer here should not be penalized for denying leave when the complete and unambiguous request for leave did not present grounds for leave.

“….Ultimately, the issue is who bears the burden when an employee has an undiagnosed condition. The majority tasks employers with this novel burden, deeming it irrelevant “whether Lehigh Valley could have known Hansler was suffering from a chronic condition at the time she requested leave.” This construction is not tethered to the statute's text, which places the burden on employees to demonstrate that they qualify for leave and permits employers to require that a leave request be supported by a medical certification. The majority's conclusion that employers may not then reasonably rely on that information makes little sense. I would hold that where, as here, an employer has no basis for concluding that an employee has a current, serious health condition under the FMLA, it may deny the leave request. Such a denial is not interference.

Going forward under the Majority's rule, you will now be able to maintain an interference claim against your employer regardless of your condition when you request leave if you claim that your diagnosis changed or was not finalized until after you submitted the request. This is true for even the most frivolous leave requests. Indeed, following the Majority, as long as the “certification does not contain a statement from [your] physician saying that [you] would not miss any work,” the employer who denies a leave request is at risk of an interference claim. For lawyers seeking attorneys' fees under the FMLA, this message will sound loud and clear.

Response to the dissent:

“Our decision that the certification Hansler's doctor submitted is “insufficient” under 29 C.F.R. § 825.305(c) does not mean, as the dissent contends, that “you will now be able to maintain an interference claim against your employer regardless of your condition when you request leave if you claim that your diagnosis changed or was not finalized until after you submitted the request.” Nor does it mean that the “employer who denies a leave request is at risk of an interference claim.” It does mean that when a certification submitted by an employee is “vague, ambiguous, or nonresponsive,” the employer must, under 29 C.F.R. § 825.305(c), provide the employee an opportunity to cure the deficiency within seven days.”

The practice pointer is this: no matter the quality of the FMLA Notice Requesting Leave- if the intended response denies the leave tell the employee why and give them a reasonable period to address any insufficiency. It is also interesting no mention of the ADA accommodation was ever brought up, even though she arguably had a covered disability as well.