After the Riots: Mitigating Liability Risks

 A supervisor at a midsize business is watching the evening news when she sees a disturbing video of people smashing windows and looting stores in the city where her company is based. What she sees next shocks her: one of the looters is not wearing a face mask, despite the coronavirus, and she realizes as he passes the camera that he’s one of her longtime employees. This scenario is fictitious but could become real for many employers, following massive protests against racial injustice and police brutality that, in numerous cities, were accompanied by rioting and violence. Employers, already struggling to reopen from the nationwide lockdown during the pandemic, face an even more painful recovery after weeks of riots across America. If employers discover some employees engaged in violence and looting, they may wonder if they can discipline those employees and worry about inviting liability if they do. What’s more, the marketplace for employment practices liability insurance is continuing to tighten.

Employment practices liability insurance remains a valuable form of coverage for employers. With more discrimination claims likely from the pandemic and protests, retailers and insureds should explore ways to mitigate EPL exposures and maximize available coverage to defend against claims. Whether an insured is seeking stand-alone EPL insurance for the first time or has bought the coverage for years, a wholesale specialist is an important partner in finding the best options available.


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 Featuring:

• Kunal Shaw
  Of Counsel
  Wilson Elser Moskowitz
  
  
• Brian Martin
  Broker, ExecPro
  CRC's Dallas

Episode Timeline

1:53
When is it OK to terminate an employee who has participated in a riot or protest?

2:44 
What kind of liability scenarios could an employer find themselves in when terminating an employee who has rioted or protested?

3:48
What effect is the current climate having on employer liability?

4:57
When will we start to see EPL claims from the riots and protests starting rolling in?

5:37
What are some steps that employers can take to mitigate risk in these situations?

8:09
How does EPL insurance factor into these scenarios?

8:59
What is the current state of the EPL marketplace given all of the recent events?

12:05
How can insurance agents best navigate this environment?

14:27
What value does a CRC broker bring to the equation?

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Transcript

[00:00:00] Dan Wentz: This is the placing you first podcast. I'm Dan Wenson. This podcast features news and insights from CRCs fast knowledge base of 2000 plus associates who write nexus of $8 billion in premium annually. And we're giving you insider access to what's happening in our company and the types of insurance.

 since may 

Dan Wentz: 26, hundreds of thousands of people participated in protests in 750 towns. Cities across the United States, the event that triggered the protest was the May 25th killing of George Floyd during a police arrest in Minneapolis. Following that events, Atlanta, Chicago, Los Angeles, Minneapolis, New York.

And in other major cities, riots broke out mayors and imposed curfews. And more than two dozen States activated the national guard in the first week of protest, more than 4,100 people were arrested. And you've got to imagine if you're a business owner, you might [00:01:00] encounter a scenario like this. You're watching the evening news.

You see the looting, the writing, you see one of the protesters not wearing their mask, even though it's a during Corona virus. And you notice that that is your long time employee at your business, what do you do? What kind of liability will you face? If you terminate this person or you proceed with some sort of disciplinary action for what you've seen them doing on, on the television?

we have a great panel here to discuss this with us today. We're talking liability risks after the private protests and riots, and we're joined by Kunal Shaw of council Wilson Elser and Brian Martin, a broker here at CRC group in the Dallas office. Welcome to the podcast, guys. Let's start with Kunal.

It help us navigate the gray area here. When is it okay to terminate an employee that has participated in riot or protests? 

Kunal Shaw: !Sure. I think there's a difference here. The major difference is. Protected speech actions [00:02:00] version versus action. Zach can violate the law, just as participating in a protest.

you know, either side of the coin, it's not necessarily automatic termination, because that's really just expressing opinions sometimes based on race related issues. but on the other hand, if you're talking about looting, which we've seen, which you're seeing the videos of committing crimes, things that adopt promote discrimination, racial, trans, you know, things like that, all of that starts to reflect poorly on an employer.

And that is stuff that is definitely worthy of giving an investigation and eventual termination. so that's basically the main distinction if you were to distill it to a court. 

Dan Wentz: Okay. So I've gotta be a little bit worried as a business owner. There's obviously some liability there. so if I, if I go ahead and terminate an employee, what kind of liability scenarios could I find myself in?

Kunal Shaw: Sure. Well, you know, [00:03:00] let's say you turn it and employ it for the right reasons. And he was found looting. there's still a possibility that that employee sues. Right. and they may Sue saying, Hey, you know, I was out a. You know, I was at a recent black lives matter, protest, and I was just expressing my solidarity for, you know, the, the movement.

am I being terminated because you know, either of my race or that I support this race and this issue that's going on. so it can be perceived that way, from a potential claimant and on its face, clearly on a, on a charge of discrimination or a complaint in a lawsuit. Without knowing the backstory can seem like somebody who's being terminated for their beliefs in supporting racial race related issues.

So there is liability for sure. 

Dan Wentz: And it seems like right now, tensions are definitely in an all time high. What effect is this having on employer liability it large. 

Kunal Shaw: Well in [00:04:00] general, attention are higher right now. There are a lot of jobs being lost. There are a lot of claims, people being, people considering claims a lot of first time, unemployment claims are leading people to be upset and scared.

And, that sometimes, you know, can manifest into. Potential racial issues that were maybe under their surface, given the time now, it it's certainly can be, you know, exacerbated into going into a claim, you know? there's certainly. Going to be a considerable well amount of claims that will be filed.

There's a backlog right now with the EERC. because one in generally OCS is understaffed, but this is a, a particular time where a lot of EOC staffers have either been furloughed or are working on, responding to charges. So, the flood gleek, the flood Gates are going to open. And I think this is somewhat of a, a perfect storm.

Yeah, 

Dan Wentz: I was going to say, when do you think we're going to start to see all these claims [00:05:00] start coming in? 

Kunal Shaw: you know, I I've started to see certain claims now come in related to covert layoffs. Right? So claims, saying, well, I was laid off. You blamed it on COVID, but it was really my age or my race. I think, you know, you think about that.

Those are terminations from March and they're coming in now. So it's about a three month, three to four month lag. I think you're going to certainly see, if there is litigate, if there are litigation and if there's an uptick of charges based on terminations for participating in these protests, I think you'll see that at the end of the summer or the beginning of fall.

Dan Wentz: Okay. And what do you think an employer can do? Obviously, we have a lot of agents that listen to this podcast and view this video cast. What, what can they be advising their clients and what can business owners and people who are worried about this? What are some steps that they can take to mitigate the risk here?

Kunal Shaw: Sure. I think. This kind of goes with anytime, but it's compassion. It's an [00:06:00] investigation. It's having the dialogue, not being trigger happy. I think sometimes a conversation regarding what really happened, thorough investigation, you know, it's you see on that CV, right. You know, and there's several instances where somebody.

Is just being racist on TV, right? I mean, it's the Karan movement, right? They may, there's so many videos of people saying things that are racist in the middle of the store. Things like that are pretty much cold, hard proof that you've got an employee that may not believe it may not be in line with your company's beliefs.

That's probably enough evidence to terminate. But when you're talking about someone who may have missed work, because they're on a riot or a protest, let's call it, you know, And maybe they did get arrested or maybe they did something that may on its face be, not in the best interest of the company.

You really should still peel back and have the conversation, give them the opportunity. You explain what happened. And that's because one, you [00:07:00] might realize that they didn't do anything that warrants termination or two, you got documentation contemporaneous with the incident. That when you do get a charge five months down the road, three, four, five months down the road, you can say, well, you've changed your story now because when you talk to me and we have the conversation, you admitted that, you know, you alluded the JC Penney's down the street.

You know, I think what employers need to do, like always investigate and document. And in this, in this sort of, global pandemic and, and these tense issues. Just be a little bit more compassionate. Have those conversations. 

Dan Wentz: Yeah. Compassion always wins. Right. It's free and it's free. Yeah. It doesn't cost you anything to be understanding and compassionate that's for sure.

Great. So let's talk about protection. We've got Brian here with us today, Brian, from CRC group, Brian Martin. He, if I'm a business owner and I want to get some protection for this, I'm looking at EPL insurance, right? Employment practices [00:08:00] liability. 

Brian Martin: Yeah, thanks for having me. Yeah, that's absolutely it. Yeah.

This, a lot of these claims will fall under the EPO policy for sure. Yes. 

Dan Wentz: Okay. And what is that cover? Like what, what does it cover? What kind of options exists if I'm looking for that? 

Brian Martin: Yeah. Yeah. so generally an EPL policy, most, most of the companies out there they're right. These things they're going to be named peril policies.

And what that means is simply in the, in the policy itself, you'll find a list of anywhere from 10 to 11 different named perils, specifically, itemized out in the form of what they're specifically covering, You know, the, the top headliners, everybody always talks about the, make the news that everybody.

Is aware of are going to be, you know, discrimination, retaliation, sexual harassment, workplace harassment, unlawful termination, things like that. and those are what, those, you kind of five, they kind of drive the claims and drive the coverage itself. But there's probably, like I said, I don't know, 10 to 12.

Different perils in the form itself that can pick up the coverage. So 

Dan Wentz: great. [00:09:00] So obviously we've got a lot going on in this space. what have we been seeing in the EPL marketplace and what are we going to see moving forward, as you know, especially considering COVID and the recent protesting with black lives matter and all this stuff that's going on right now.

Brian Martin: Yeah, good question. there's probably five or six things I'll touch on at a high level real quick, just some what we've been seeing and what's likely to happen moving forward. you know, one is, hardening the market was hardening prior to the pandemic. When what that means to simply, you know, prices and terms of conditions are getting tougher to get, premiums are going up.

that was, we were starting to see signs of that part of the pandemic part of March. And since March, it's really escalated. That kind of what that, that hockey stick kind of graph. If you, if you won't look at that, that way, You know, it increased claims, due to the, due to the pandemic. That's for sure.

Happening as was mentioned earlier, really we're seeing a lot of that just with the, the, the layoffs, the, the layoffs, the rehires, the furloughs, the closings, things [00:10:00] like that. We're seeing a lot of that going on right now. capacity that's restrictions. Limits. What, what that means is limits available out in the market.

normally what you could get, six months ago, so they weren't offered a million dollars in limit, you know, they would, they were generally offer maybe a two and a three mil as well. Those are really, really rare to get right down to harder to come by the higher limits, over a million dollars. in fact, a lot of companies are pulling back on limits and offering less limits as much as path that I've seen.

So some companies won't even offer a million. No can offer less than that. so that's, that's a challenge we're having to deal with, tire terms and conditions. No with an uncertainty continuing to increase here. you know, a lot of the insurers are offering higher deductibles, higher self insured retentions, regardless of class of business.

six months ago, you know, I, I had a risk specifically, a construction risk that six months ago they offered a $5,000 retail retention and. They didn't buy. It came back, you know, in, in last month and never attention went from 5,000 to 15. Right. So [00:11:00] that's kind of what we're seeing. A lot of those increases on the retention side, exclusionary language, seeing a lot, almost every company out there seems like has some type of exclusionary language around COVID-19, claims or layoffs downsizing claim.

So things that weren't there six months ago or are really. Readily available now, you know, request more financial information. that's really a financial information or financial distress I would say is really a key indicator to a lot of underwriters and companies of, claim, potential claims. So we're seeing a lot of companies ask for financial data.

before they quote, six months ago, it wasn't happening. It's happening now, on a more regular basis, those types of things. and listen, ultimately at the end of the day, we've seen a lot of companies just reduced availability for coverage. A lot of markets are not things they caught a six months ago.

Now they just kind of pulled back altogether and offering policies and quotes. So that's, that's another challenge. It doesn't mean we can't do it. Certainly can't still do it. Yeah. just more conversations we're having to have with the [00:12:00] companies, on our side. So those are probably the five or six things.

I think we're seeing the most out there right now. 

Dan Wentz: What would you tell agents who are trying to get their insurance coverage for this right now? What do they need to be doing to, to navigate this environment? Especially since you've mentioned it's, it's pretty, you know, it's tougher now than it has been.

Brian Martin: Yeah. so, you know, to help kind of navigate talk if they're talking to insurance, man, I would, I would talk about, you know, first and foremost, like those mentioned earlier, thoughtful, thoughtful conversations with your employees throughout the year. Not just the end of year, performance evaluation review, but thoughtful conversations throughout the year.

Right. Really engage those employees throughout the year with. with conversations and then, and then, documentation mentioned earlier, and that's, that's kinda been the two keys that I've, I've talked to claims attorneys for 17 years on this with companies. Anyway. and the, the keys, I said that most of these claims is it's not that you made a bad decision.

It's just that you didn't have anything to back up your decision with. Right. But the, at the end of the day, the worst thing that could happen is to have a bad employee. You terminate them, and then you have nothing [00:13:00] behind you to back it up with documentation or conversation wise. Right. So. Document document document have thoughtful conversations.

those are two of the key drivers. the empathetic, I think that's a key to these days, like you said, or compassion, kindness, Joseph empathy, things of that. there's a lot of risk management tools out there for agents. To look at it and go by almost every company that I'm aware, three PO coverage has some type of risk management online tool.

they can access those. You can Google them, you get them free with the purchase of an EPL policy. So if you don't have an HR department, because you're a smaller insured, let's say, and you just don't want to, you don't, you can't afford it. These online HR tools conserve is your HR department. You can buy handbooks there.

You can customize them. There's articles, there's research done. There's a. No tests and quizzes, you can give employees to show that you reviewed material, things of that nature. I really waste to help navigate and help mitigate some exposure. And at the end of the day, you know, you, can't, none of these, none of these [00:14:00] things will help as it's not a silver bullet, right?

You can't keep these things claims about coming in, but lessens your exposure. And then obviously it's what you buy insurance for. Right? And you buy insurance for these reasons. That's why you feel policies are out there. And so I would also say, listen, you know, contact your CRC broker, in that regard, right?

Get some help, go to, go to CRC group.com and a lot of information there. Reach out to your seriously local brokers. You don't have one reach out to me. I'll be more than happy to help you navigate some of this stuff for you. 

Dan Wentz: Yeah. So can you talk a little bit about that? I mean, you've, you've convinced us, we need EPL insurance.

why, why should I use it a CRC broker? What value do they bring? You know, our practice groups, that kind of stuff. yeah. What do you guys bring to the table? 

Brian Martin: Yeah. Great question. Mag word, your question. so I would say with, with us, you know, experience, I know specifically the team I work on, you know, we've over a hundred years plus experience, I guess in this market placement, our leads been doing for 30 years.

I've been doing it for 17 years. multiple people on our team, 10 plus years. So experience is a [00:15:00] big deal, in this world. It's a nichey area from an insurance product standpoint. So you may not, there's a lot of different moving parts with options you can get. so having somebody to review those policies for, you know, what's going on in the market and we have great relationships with most, all of our markets, where we can pick up a phone call and get somebody, a decision maker on the phone, if we need to, to get something amended or to remove something or to, you know, talk about terms and conditions, if we think they're too strict.

and, and we have a lot of practice leaders. You mentioned that, we've got. I forget how many you have naturally that's on my head, but I know we have it brief, you know, we have a specific, you feel practice group that can do these things for us. Right? They have the leverage because of the amount of premium and policies we ride with companies in the market.

we have leveraged with some of these companies where we can pick up a phone, like I said, and make call to key decision makers to help us out on these things. not just that, but I think the, the setup of CRC is, is pretty dynamic. And the fact that yes, we, on the surface, it looks like a big company.

But our footprint is really [00:16:00] local. We have offices all over the country, in towns all over the country. There's no place that we really can't reach or get to. and that comes in key. I think when you're talking to agents and you're talking to ensure to, if you look, I'll give you an example, if you look at Texas by chance, right?

A lot of markets underwrite, EPL coverage for Texas based on zip code. And so depending on what zip code or County you live in, because it's so big, they may write coverage, an essay they may not down in South Texas, as you get closer to the border. that's traditionally been a tougher, venue for EPL.

A lot companies pull out, we, they don't want like attorneys or people coming in from out of state and out of the area. We have those people locally on the ground that can talk to those people. We understand the environments go on. I think that's a big deal and a difference maker for us. so those are a few things that we can.

Dan Wentz: That's great. I'm the marketing guy and I'm over here, like taking notes. We've made a lot of great points there, Ryan. I appreciate it. And Kunal, thank you so much for both. Thank you both for being on the podcast today and chronology, you have a lot to offer as [00:17:00] well too. Can you maybe talk a little bit about what you know, what you do and how you can help our agents and our insurers, those kinds of people.

Kunal Shaw: Sure. Yeah. so I'm currently an employment attorney. I represent, insured's employers, employer sized only, discrimination cases. That's where I pretty much started my career. what I've been doing over the last few years, that I think might be helpful to agents and insureds, is something I like to call, I guess preventative measures, you know, claims prevention.

Is is something that I saw. I started to do pre pandemic earlier in this year, for pandemic unrelated, unrelated to the pandemic. But I think things like, Hey, training, right training where you train your employees on, on obvious issues or issues that you may have realized in the past year you had, you know, earlier this year, I had one particular client that was having just a fit with ADA and FMLA and people would just were not trained properly on how to identify potential claims [00:18:00] and how to document things like that.

I think now you, you know, even, even for something like this with, with, protests, Yeah, this is a good time too. If you can't give him person trainings because it's virtually impossible, right? it's a good time to update those handbooks. You know, something as simple as, as small as, Hey, you know, there's a new policy to the hand handbook regarding, whether or not, you know, where, you know, we, we reserve the right, the right to discipline or terminate you.

If we find you on social media. You know, doing something that is, you know, not in line with the company and their beliefs, something as simple as, as easy as that goes a long way into documentation, Rob can say, Hey, you know, they were well aware that this was a policy that we had and they went out and they took the risk of, you know, being terminated.

So, so I think, you know, claims prevention is something. It's free. I mean, not traditionally, right, but it's not a claim. It's you spent a little bit money up front. You make sure your ducks are in a row and your documentation is, [00:19:00] is prepared to handle these types of things. you know, our firm in general, when COVID really started ramping up and most firms that are similar to mine, add a lot of tools out there for their clients, a lot of resources to use, state by state understanding, Hey, how do we.

How do we implement these new laws and things like that. but just the, just the education, I think, as an attorney right now, it, you know, it's, the focus should not be, putting out fires. It really should be getting out ahead, teaching your clients and your insurance, how to identify claims and prevent 

Dan Wentz: them.

Great. So if people want more information about you, they can find you@wilsonelser.com. Right? I've got that. Right. And also you're on LinkedIn, pretty easy to connect nowadays with people and Brian, of course, you're on the CRC group website, look for Brian Martin or search out his team there in Dallas. And of course we've got our nationwide network of producers that you can search pretty [00:20:00] easily@crcgroup.com and plus a lot more information, a lot of podcasts videos.

More stuff like this. If you're seeing it for the first time, guys, I really appreciate your time today. I think this has been a tremendous conversation. Very, very helpful for everything for everybody. Thank you so much for joining us. We appreciate it. 

Brian Martin: Thanks.