November 30, 2018 Feature

Employment Practices Liability Insurance Coverage and Claims Trends

By Trudy Hardin and Hillary J. Raimondi

Employment practices liability insurance (EPLI) covers lawsuits (aka claims) against employers that arise out of employment actions or decisions. Hiring, firing, and disciplinary activities are the main claim drivers, but corporate transactional activities such as mergers and acquisitions also can generate lawsuits. This article discusses EPLI-related claims: procedure, data on charges, financial impact on insurers, and additional considerations.

Procedure: From Allegations to Claims

Most allegations against employers that go on to become claims begin at the administrative stage. Employees must file a charge with the Equal Employment Opportunity Commission (EEOC) alleging violation of a relevant employment law, such as Title VII of the Civil Rights Act of 1964,1 the Americans with Disabilities Act of 1990,2 the Age Discrimination in Employment Act of 1967,3 or the Lilly Ledbetter Fair Pay Act of 2009,4 to name a few. The EEOC, which is responsible for the enforcement of these laws, investigates the charge and finds either cause or no cause for the allegation. When the EEOC finds cause, employees are given a right to sue letter, which leads to the lawsuit against the employer.

EEOC Data on Charges

As part of its law enforcement activities, the EEOC tracks the number of charges filed by allegation. The EEOC maintains these data to determine trends in compliance with the laws. In the insurance industry, we have found that the number and type of EPLI claims closely follow the number and type of EEOC charges. Thus, to forecast the type of EPLI claims coming down the pike, we need only review the EEOC charge statistics.

Number of charges. In 2011, the EEOC logged a record number 99,947 charges. The number of charges filed each year thereafter decreased until 2015 and 2016, when the number of charges increased again. In 2017, the number of charges filed decreased from 2016 by almost 8 percent to 84,254.5 While we not know the exact reason for the decrease, the typical pattern is that the number of charges filed falls during times of economic prosperity and low unemployment.

Types of charges. Of the 84,254 charges filed in 2017, retaliation charges (all statutes) led the pack with 41,097. Of the retaliation charges filed, 32,023 charges were for retaliation in conjunction with Title VII violations. Even though the total number of Title VII retaliation charges in 2017 was lower than in 2016, those charges represented a higher percentage of the overall charges filed in 2017 compared to 2016.6

The category with the second highest number of charges filed was race discrimination at 28,528.7

Not surprisingly for those who follow the news, the category with the next highest number of charges was sex discrimination with 25,605. Sex discrimination charges as a percent of the total number of charges increased (by 1 percent) from 2016 to 2017, as did several other categories of charges—most notably, retaliation (all statutes) (2.9 percent), Title VII retaliation (1.8 percent), and disability (1.2 percent). In contrast, for some categories of charges, there was a decrease in the percent of the total number of charges from 2016 to 2017; race charges decreased the most—1.4 percent—as a percentage of the total.8

The number of Equal Pay Act charges decreased 7 percent from 1,075 in 2016 to 996 in 2017. However, as a percent of the overall number of charges, Equal Pay Act charges have maintained consistency within a range of 0.9 percent to 1.5 percent since 1997.9

The number of charges alleging harassment decreased by 4 percent to 26,978 in 2017. Of that number, 12,428 charges represented sexual harassment.10

The chart above shows the number of charges by category from 1992 to 2017.11

Monetary recoveries. Even though the number of charges filed decreased in 2017 compared to 2016, the monetary recoveries by the EEOC increased by 2.2 percent from the 2016 total of $347.9 million to $355.6 million in 2017.12

Disability discrimination under the Americans with Disabilities Act was the category of charges with the highest monetary recovery in 2017 at $135.2 million, edging out Title VII sex discrimination at $135.1 million.13

Recoveries for all claims of harassment totaled $125.5 million. Of that amount, the monetary recovery for sexual harassment only was $46.3 million, a 13 percent increase over the monetary recovery for that same category in 2016.14

Monetary recoveries in 2017 under the Equal Pay Act and the Age Discrimination in Employment Act were $9.3 million and $90.1 million, respectively, the same amount of recoveries as in 2016 for both categories.15

The monetary recovery for race discrimination in 2017 was $75.9 million, a 4 percent decrease from 2016.16

The chart above shows the amount of monetary recoveries by category from 1992 to 2017.17

EEOC Charges: Financial Impact on EPL Insurers

Harassment and discrimination allegations, claims, and settlements can have a significant financial impact on a company and its insurers.

Sexual harassment and gender discrimination suits have moved to the forefront of the news recently. Allegations of both have been brought against entire industries as well as individual CEOs. The revelations of the pervasiveness of sexual harassment and racial and gender discrimination throughout some organizations have rocked those organizations to the core. These allegations have resulted in not only lawsuits against individual perpetrators but also derivative suits stemming from a series of workplace harassment claims.

As long as sexual harassment claims continue to make the news, employers will want to resolve them expeditiously, likely resulting in higher payments. Claim payments in the double-digit million-dollar range are going to produce more stringent underwriting requirements as well as tighter claim-handling procedures.

Increasing number of claims, increasing costs. The 2016 uptick in the number of EEOC charges came at a time when insurers were just recovering from the financial costs associated with the record number of charges in 2011. That record number of charges brought a surge in single-plaintiff claims, which caught insurers by surprise because, prior to that, their main concern had been class action lawsuits. Suddenly, insurers were facing the double threat of class action lawsuits and high-dollar single-plaintiff claims, a threat that continues to this day.

Although the total number of charges decreased from 2016 to 2017, the impact of the 2016 increase still is being felt. Any increase in the number of EEOC charges means an increase in the number of claims in the pipeline for employment practices liability (EPL) insurers—and that means that EPL insurers’ financial outlay for defense costs and/or settlements and verdicts will increase over the next two to three years. Even if an allegation is proven to be unfounded, the claim still must be defended. Further, if the allegation includes retaliation, it is extremely likely that the employee will win on the retaliation claim even if the employee loses on the companion claim.

In addition, despite the decrease in total charges in 2017, the fact that the amount of the EEOC monetary recoveries increased in 2017 means that insurers still may experience increased financial pressure with EPL claims for a few more years.

Claim against a business. One claim resulted in a $168 million sexual harassment verdict against Mercy General Hospital in California in 2012. In that case, Chopourian v. Catholic Healthcare West,18 a female physician’s assistant alleged that she was subjected to constant sexual banter, crude remarks regarding her body, and sexual propositions. She also maintained that hospital management did not respond to her 18 written complaints filed during her two-year employment there. She was subsequently terminated and filed suit alleging defamation, wrongful termination, and sexual harassment. At trial, her reviews were proven to contain false statements, which resulted in her inability to find a job for more than a year after leaving Mercy General. She ultimately obtained a position at another facility, Mercy San Juan, for eight months—until she produced evidence for the discovery phase of her suit against her previous employer. At that time, Mercy San Juan, as part of the Mercy General system, denied her privileges. After that, the plaintiff did not receive another job offer despite her education at prestigious universities and excellent clinical experience. The verdict consisted of $3.7 million is economic damages, $39 million in noneconomic damages, and $125 million in punitive damages.19

Company-led investigation. The tech industry is an industry that has been identified as a hotbed of sexual harassment and racial discrimination.20 Uber is one of the most extreme examples to date of what can happen to a company as a result of sexual harassment allegations. In this case, the allegations of company misconduct began via social media, which led to an internal investigation and action.

A female former Uber employee, an engineer, posted a comment on her blog alleging that the human resources department systematically ignored the claims of sexual harassment that she reported over the course of the year that she worked for the company. The post went viral.21

Uber hired an outside law firm to investigate and, as a result, found 215 cases of sexual harassment. Twenty employees were fired for inappropriate behavior, and the CEO resigned. Uber subsequently hired former U.S. Attorney General Eric Holder to conduct a separate audit of the company. The company has replaced the CEO and added two female senior executives in leadership and strategy positions to help detoxify the workplace.22

Prior to these allegations, Uber was considered the most valuable private tech company. After the allegations, the company’s value plummeted and customers fled.23

Derivative suit. In another case, City of Monroe Employees’ Retirement System v. Rupert Murdoch & Twenty-First Century Fox, Inc.,24 sexual harassment allegations resulted in the largest derivative settlement ever. A pension fund investor in Twenty-First Century Fox (Fox News) filed suit against Fox News after reports of previously undisclosed large settlements for sexual harassment and discrimination became public. The lawsuit alleged breach of fiduciary duty and unjust enrichment against certain individuals due to separation payouts. It further alleged that management had facilitated a culture of systemic sexual harassment, racial discrimination, and retaliation that had existed for decades; failed to address issues in the workplace; and “failed to implement controls sufficient to prevent the creation and maintenance of this hostile work environment.”25 Ultimately, Fox News agreed to pay $90 million to settle allegations that the company’s management permitted a culture of racial and sexual harassment, which resulted in financial and reputational harm to the company. In addition to the monetary settlement, the proposed corrective action included the creation of a Workplace and Professionalism Council and the implementation of governance and compliance enhancements. A Delaware Chancery Court judge approved the settlement in early 2018.26

Claims Trends in EPLI: Additional Considerations

Political climate. As noted in a recent article in the Insurance Journal, the Trump administration presents a new backdrop for EPLI claims: a climate where less federal regulation and enforcement may be expected but where issues of political correctness and less tolerance for certain conduct at the societal and corporate levels still may drive an increase in litigation.27 Thus, it seems reasonable to expect that the largest number of claims will continue to be in areas involving retaliation, gender discrimination (including sexual harassment), and national origin/race. The climate seems to be ripe not only for these types of claims but also for claims involving illegal background checks and privacy and data collection, among others.

Furthermore, in a climate where we may see the federal government stepping back, litigation at the state and local levels may become more prevalent. Certain jurisdictions with broader regulation and more lenient standards for claimants/plaintiffs may shift the focus of EPL claims, especially because there is increased regulation on the local level regarding such areas as disability, family leave, and wage and hour law.

Illegal background checks. The use of background checks is commonplace in the employment context. In fact, all 50 states and the District of Columbia require criminal background checks for certain occupations, such as nurses, elder caregivers, day-care providers, schoolteachers, police and corrections officers, and various others. In addition, municipalities increasingly are requiring background checks. However, increased regulation regarding the use and scope of such checks has resulted in an upward trend in related claims. Employers need to be cognizant of liability under Title VII; local ban-the-box regulations, which are increasing in number annually; and federal statutes such as the Fair Credit Reporting Act (FCRA).

Compliance with state and local laws does not shield employers from violating Title VII: Employers still must show that any exclusion is job related and consistent with business necessity. In fact, the EEOC has said that a bar to employment based on the mere fact that an individual has a conviction record is unlawful under Title VII because it adversely affects minority applicants.28 Although the EEOC took its central position on this issue over 40 years ago, there has been a recent increase in the use of criminal checks, likely due to ease of access to information, electronically stored data, and the Internet/social media, as well as the current political climate.

Ban-the-box legislation is another area of potential liability for employers. According to data from the National Employment Law Project, over 150 counties and cities and 32 states have enacted some form of ban-the-box legislation,29 and such legislation continues to be promulgated. The term ban the box was coined for fair-chance policies that remove from forms the box seeking information regarding criminal history. A fair-chance policy typically does not prohibit employers from running a background check, nor does it prevent employers from considering an applicant’s criminal history when making a decision. It just delays such consideration until after a conditional offer of employment, but any exclusion due to the results of a background check must be based on narrowly tailored considerations related to business necessity. In fact, elimination of the use of background checks is actually inadvisable because of possible liability for negligent hiring and retention and because such background checks may be required by law. Thus, improper use of background checks likely will continue to result in litigation for the foreseeable future.

Employers also must be cognizant of the fact that background checks are governed not only by Title VII and ban-the-box legislation but also by the FCRA.30 Thus, they must follow certain procedures to avoid strict liability under the Act. The FCRA establishes procedures for employers to obtain and use consumer credit reports and investigative/criminal background reports for prospective or current employees. It requires voluntary consent and detailed notices to all applicants/employees who are the subject of criminal or credit background screenings through third-party consumer reporting agencies. Although statutory damages are limited, a violation of the statute allows the recovery of attorney fees and punitive damages.31 These lawsuits also can be class actions, which have significant exposure for insurers in terms of defense costs.

Interestingly, as unemployment rates decrease, according to a New York Times article, certain employers are finding that they must consider for jobs individuals who in the past would have had a difficult time finding work.32 In particular, there are areas in the country where certain employers are paying inmates to do certain jobs. Because the unemployment rate has not been this low since the late 1990s and early 2000s, the job market now is supporting individuals with criminal histories, as well as those with disabilities and less experience.33 Thus, it is possible that the lower unemployment rate combined with the liability potential for improper use of background checks will have the effect of decreasing the use of such checks in instances where it is unlikely that criminal histories can implicate business necessity.

Language regulations and national origin discrimination. Another area in which many claims are made is national origin discrimination. Numerous issues arise in the context of national origin discrimination, in particular those concerning usage of foreign language and treatment of bilingual employees. As issues regarding immigration and nationalism increasingly garner significant attention, rules regarding English fluency and speaking English in the workplace undoubtedly will be central in many EPLI claims.

English fluency may be required only when effective performance of a job depends on it. Assessment is on a case-by-case basis, and applying uniform fluency requirements for dissimilar positions may result in a violation of Title VII.34

English-only rules are another liability concern for employers. Such rules implicate national origin because language can be tied closely to cultural and ethnic identity. An English-only rule violates Title VII if it is adopted for discriminatory reasons, including, but not limited to, discrimination against employees with a specific national origin. The EEOC says that the primary language of an individual is often an essential national origin characteristic. Thus, the following guidelines apply:

  • An English-only requirement at all times is a burdensome term and condition of employment; thus, it will be presumed to violate Title VII and be closely scrutinized.
  • If an employer requires English at a certain time, the employer must show a business necessity.
  • Employers must effectively notify employees about when English is required.35

Examining these issues in the context of bilingual employees requires looking at when employees are permitted to speak their native language and whether they were hired to speak a foreign language in certain circumstances. English-only rules are not discriminatory as applied to bilingual employees where there is a legitimate business justification for implementing such rules.36 For example, it has been held that it is legitimate to require English to create a comfortable atmosphere for a largely English-speaking client base.37

Another language issue relates to accents. Employment decisions and/or harassment based on accents may violate Title VII because accents may be indicative of national origin. Courts determine whether an accent “interferes materially with job performance,” in which case an adverse employment decision is legitimately based.38 In order to prove that an accent affects job performance, an employer must prove that (1) effective spoken communication in English is required to perform job duties and (2) the individual’s accent materially interferes with his ability to communicate in spoken English.39

A final note: National origin discrimination often overlaps with race, color, or religious discrimination because a national origin group may be associated or perceived to be associated with a particular race or religion.


The issues addressed herein are only illustrative of the types of claims that continue to be prevalent in the EPLI universe. It is still too early to predict with any certainty how the current political climate will impact claims, especially in light of the statutes of limitations governing such claims. Furthermore, because it takes time for allegations to make their way through the required administrative procedures, litigation results may not be seen for some time. One thing that can be said with certainty, though, is that although the numbers and types of claims have varied over the years, EPL-related lawsuits are not going away; thus, EPLI coverage is necessary for all employers.


1. 42 U.S.C. § 2000e (1970).

2. Id. ch. 126, § 12101.

3. 29 U.S.C. § 626(e) (1970).

4. 42 U.S.C. § 2000a.

5. Enforcement and Litigation Statistics,, (last visited Sept. 1, 2018).

6. Id.

7. Id.

8. Id.

9. Id.

10. Id.

11. Id.

12. Id.

13. Id.

14. Id.

15. Id.

16. Id.

17. Id.

18. No. CIV S-09-2972 KJM KJN, 2012 WL 1551728 (E.D. Cal. Apr. 30, 2012).

19. Id.

20. See Elephant in the Valley, (last visited Sept. 11, 2018).

21. See Johana Bhuiyan, Uber: With Just Her Words, Susan Fowler Brought Uber to Its Knees, Recode (Dec. 6, 2017),

22. Id.

23. See Anita Balakrishnan, Scandals May Have Knocked $10 Billion Off Uber’s Value, a Report Says, (Apr. 25, 2017),—the-information.html.

24. C.A. No. 2017-0833, 2017 Jury Verdict LEXIS 13550 (Del. Ch. 2017).

25. Id.

26. Id.

27. Andrea Wells, What to Expect in EPLI Under President Trump, Ins. J., Jan. 9, 2017.

28. See U.S. Equal Emp’t Opportunity Comm’n, EEOC Enforcement Guidance, Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, No. 915-002, Apr. 25, 2012,

29. See Beth Avery, Ban The Box: U.S. Cities, Counties, and States Adopt Fair Hiring Policies, Nat’l Emp’t Law Project, Aug. 15, 2018,

30. 15 U.S.C. § 1681 et seq. (1970); see also U.S. Equal Emp’t Opportunity Comm’n, Background Checks: What Employers Need to Know (A joint publication of the Equal Employment Opportunity Commission and the Federal Trade Commission), (last visited Sept. 18, 2018).

31. Id. § 1681n.

32. Ben Casselman, As Labor Pool Shrinks, Prison Time Is Less of a Hiring Hurdle, N.Y. Times (Jan. 13, 2018),

33. Id.

34. See 29 C.F.R. § 1606.6(b)(1) (fluency-in-English requirements, such as denying employment opportunities because of an individual’s foreign accent, or inability to communicate well in English may be indicative of national origin discrimination); see also U.S. Equal Emp’t Opportunity Comm’n, EEOC Guidance on National Origin Discrimination, Section V(B), No. 915-005, Nov. 18, 2016,

35. 29 C.F.R. § 1606.7(a); see also U.S. Equal Emp’t Opportunity Comm’n, EEOC Guidance on National Origin Discrimination, Section V(C), No. 915-005, Nov. 18, 2016,

36. Roman v. Cornell Univ., 53 F. Supp. 2d 223, 237 (N.D.N.Y. 1999).

37. Jordan v. United Cerebral Palsy of N.Y.C., No. 12-CV-5715, 2016 WL 9022502 (E.D.N.Y. Mar. 31, 2016).

38. See U.S. Equal Emp’t Opportunity Comm’n, EEOC Guidance on National Origin Discrimination, Section V(A), No. 915-005, Nov. 18, 2016,, citing Fragante v. Honolulu, 888 F.2d 591, 596-97 (9th Cir. 1989).

39. Id. See also Carino v. Univ. of Okla. Bd. of Regents, 750 F.2d 815, 819 (10th Cir. 1984) (plaintiff with “noticeable” Filipino accent was improperly denied position as a dental laboratory supervisor where his accent did not interfere with his ability to perform supervisory tasks); Berke v. Ohio Dep’t of Pub. Welfare, 628 F.2d 980, 981 (6th Cir. 1980) (employee with “pronounced” Polish accent whose command of English was “well above that of the average adult American” was improperly denied two positions because of her accent).


By Trudy Hardin and Hillary J. Raimondi

Trudy Hardin is a senior vice president and claims counsel with Financial Services Group, a division of Aon Risk Services Inc. of the West, in Denver, Colorado. She can be reached at Hillary J. Raimondi is a partner with Traub Lieberman Straus & Shrewsberry LLP in Hawthorne, New York. She can be reached at