Discrimination Insurance Gives Companies Little Incentive to Change

Companies can insure themselves against many things, including discrimination lawsuits. Shauhin Talesh, professor at the School of Law at the University of California – Irvine, has spent two years studying the insurance industry and their anti-discrimination policies. He concludes that the way insurance providers help companies avert risk focuses on avoiding lawsuits rather than changing corporate culture to eliminate discrimination altogether.

Liability Insurance for Employment Discrimination

Employment practice liability insurance (EPLI) is a product that arose after the strengthening of employment discrimination laws. As state and federal law made employment discrimination based on race, color, creed, religion, sex and national origin unlawful, more workers were able to bring lawsuits against their employers. Insurance companies responded by offering EPLI to businesses. EPLI covers the costs of litigation over breaches of employment law such as wrongful termination, sexual harassment, and discrimination. Over 70 insurers offer EPLI as well as risk management and loss prevention services, and it is estimated that over half of Fortune 500 companies are covered by the insurance.

According to Professor Talesh, insurance policymakers, the agents, brokers and risk management consultants view anti-discrimination laws as risk. To counter that risk, they offer clients services including checks of anti-discrimination practices, compliance audits, templates for employee contracts and handbooks, and legal hotlines for employers with questions.

Some states ban policies that pay out when a company loses in court. Insurers have found a way around this by including policy clauses that ensure a state jurisdiction that favors coverage for punitive and exemplary damages.

Another tactic is to sell the policy abroad to employers with offices in the United States. Because the sale takes place in an offshore location like Bermuda or London, the policy is not subject to state rules. These so-called wrap-around policies are pricey, but big companies can afford to pay for them. It is big business for the insurers. In the U.S., the policies are worth roughly $1.6 billion every year. Worldwide about $500 million worth of EPLI is sold.

Red Bank Employment Discrimination Lawyers at McOmber McOmber & Luber, P.C. Advocate for Victims of Workplace Harassment and Discrimination

If you have experienced discrimination or sexual harassment at your job, talk to an experienced Red Bank employment discrimination lawyer from McOmber McOmber & Luber, P.C. who can answer your questions and provide you with skilled legal counsel.

Call our Red Bank office at 732-842-6500, our Marlton office at 856-985-9800, our Newark office at 973-878-9040, or contact us at 888-396-0736 or online for a free consultation.