The COVID-19 pandemic has opened up new exposures for employers. Faced with ever-mounting health, social and economic challenges, employers are having to adapt their business practices to comply with new pandemic-related laws, and to meet the heightened expectations of care for their employees.
The United States government signed a number of coronavirus stimulus bills into law in 2020, including the Families First Coronavirus Response Act (FFCRA), which broadens employee rights and benefits to include expanded reasons for leave, increased entitlements, reduced length of tenure for leave eligibility, and enhanced unemployment insurance coverage.
Under the FFCRA, private employers with less than 500 employees are required to provide Emergency Paid Sick Leave (EPSL) and Emergency Family and Medical Leave (EFMLA) to their employees under certain circumstances relating to COVID-19. Employers who fail to acknowledge, understand and comply with the new laws could easily find themselves embroiled in a costly employment practices liability (EPL) claim.
The new laws introduced in response to the COVID-19 pandemic create heightened EPL exposure for employers around compliance, explained Jade Rabacal (pictured), Senior Underwriting Manager for Employment Practices Liability (EPL), Tokio Marine HCC – Cyber and Professional Lines Group.
“For example, before COVID-19, most employers’ EFMLA violations were tied to denying employees leave to take care of a sick family member,” said Rabacal. “The FFCRA has now expanded the scope of EFMLA to include childcare, so if a child’s daycare center is closed as a result of COVID-19, the parent could be entitled to EFMLA leave. We were concerned claims would arise as a result of EFMLA violations and accusations of discrimination among our insureds, many of whom are single location franchise owners and restaurant owners - we don’t think insureds would willfully try to deny employees leave; it’s simply that they might not know or understand the new laws in place.”
While scrambling to comply with the array of new pandemic-related legal requirements, employers have also had to navigate the most challenging economic climate since the Great Recession. With periodic mandatory stay-at-home orders, closure of non-essential businesses, and new health and safety measures around social distancing, many businesses had to layoff and furlough employees as a result.
“In times of economic downturn, there is always going to be an uptick in claims, particularly allegations of discrimination,” Rabacal told Insurance Business. “Layoffs often result in people alleging that they were singled out and discriminated against because of factors like their age or their health.”
Layoffs related to COVID-19 weren’t necessarily planned or (in many cases) intended to be permanent. In order to survive, many companies announced short-term layoffs, with the promise of bringing employees back to work when their prospects had improved. However, insureds faced heightened exposure on two fronts: through staff layoffs and how they managed staff returning to work.
This is where “robust risk management” is key, according to Chris Murphy (pictured directly above), Senior Vice President of Underwriting for EPL, Tokio Marine HCC – Cyber and Professional Lines Group. He commented: “Since the start of the pandemic, our insureds have really taken advantage of the risk management and HR services that come free with our EPL policy. Our HR services team received 4X the amount of calls in 2020 than it did in 2019, and most of those calls involved COVID-related questions.”
Tokio Marine HCC – Cyber and Professional Lines Group insureds who have laid off staff temporarily because of the pandemic are able to get assistance and guidance from HR and legal experts on how to bring their employees back into the workforce in a safe and legally compliant way. If they take a phased approach and bring some employees back before others, they could face EPL lawsuits around discrimination in their staffing strategy. These are problems that insureds should acknowledge and work through with the help of experts.
“Our HR services have always been robust,” said Lauren Wilke (pictured, directly above), Underwriting Manager for EPL, Tokio Marine HCC – Cyber and Professional Lines Group. “The COVID-19 pandemic has highlighted to our insureds just how important these services are, how diverse they are, and how proactive they have been as the situation around the pandemic has evolved. From the onset, we worked quickly to get our insureds easy access to vital information through webinars, online support, and by offering unlimited calls to our HR services.
“Proactive risk management always proves to be successful for the insured in the long run. Employers never want to face EPL claims; they’re often personal attacks on their business practices. As an insurer, to be able to provide unlimited risk management and HR support to the insureds is really important to put them in the best position to limit EPL claims and maintain a happy workforce.”