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Property Casualty

Proactive Steps for Avoiding COVID-19-Related Employment Termination Litigation

Monica M. Minkel, Holmes Murphy Vice President Executive Risk Enterprise, and Chris Murphy, Holmes Murphy Vice President Enterprise Loss Control
Monica M. Minkel, Holmes Murphy Vice President Executive Risk Enterprise, and Chris Murphy, Holmes Murphy Vice President Enterprise Loss Control

The COVID-19 pandemic has touched many areas of the employer-employee relationship and will no doubt continue to do so into the future.

As part of this, we have seen an increase in Equal Employment Opportunity Commission (EEOC) complaints and litigation alleging wrongful termination or retaliation based on exercising protected rights under the Family Medical Leave Act (FMLA), Families First Coronavirus Response Act (FFCRA), or other employment laws. These emerging cases tie back to COVID-19 restrictions, limitations, quarantine requirements, and more.

An Example of a Wrongful Termination Lawsuit

Here’s a common scenario we’ve seen play out.

An employee requests time away from work to deal with a COVID-19-related illness to himself/herself or another family member. (Perhaps, more than once.) When the employer makes a decision to terminate the employee after such a leave, the employee may file suit against the employer citing wrongful termination and retaliation for exercising protected leave.

These cases can be tricky because there may be many factors that lead to the dismissal of an employee, and employers can be trapped into defending their legitimate and justified business decisions.

How Can an Employer React to a Wrongful Termination Lawsuit?

Fortunately, there are a few things employers can do to protect themselves from lawsuits.

1. Know the COVID-19-related Laws

Ensure your Human Resources, Legal, and other employment-related teams are aware of the scope and intent of COVID-19-related laws, such as the FFCRA, FMLA, and other state-specific acts. Also, make sure your internal policies and procedures reflect the changing requirements.

2. Enlist Legal Advice

Obtain a qualified, legal opinion prior to making any adverse employment decision in the current environment. It is always wise to clearly and completely document employee performance and relevant communication prior to taking employment actions.

3. Use the Services of Your Employment Practices Liability (EPL) Insurance Carrier for Assistance

Many EPL insurance carriers offer loss prevention services, like a hotline, that insured businesses can call prior to terminating an employee to get free legal advice from qualified counsel. In some cases, doing so can result in a reduction in retention/deductible on the EPL policy if they follow the recommendation made and a claim is later filed. Take advantage of these no-cost services and reduce the risk of future litigation.

4. If an EEOC Charge or Lawsuit Is Filed, Provide Information Immediately to Your Insurance Broker

EPL policies require reporting immediately as soon as you are aware of a written demand. Your EPL coverage is designed to respond with defense (and even settlement and indemnity expenses) in wrongful termination and retaliation allegations. The policy only works when the claim is properly reported. Understand the terms and conditions of your policy before you need it. The sooner you report the claim, the sooner the investigation can begin.

Managing employees as we emerge from COVID-19 can no doubt be a touchy situation. You’ll want to be sure you have the right resources in your corner. If you would like further discussion on this topic or need more information about EPL insurance coverage, please contact any member of our team. We have experts who are very well versed in this area and would be happy to help.

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