Non-profit organizations have always been at risk for claims alleging wrongful termination, discrimination, harassment and retaliation, but the typical amount and size of employee lawsuits is higher than ever due to COVID-19 and other recent trends, including:
- The "Me Too" and "Time's Up" movements
- Changing laws that eliminate confidentiality
- Social inflation
"Me Too" and other similar movements such as, "Time's Up," have given individuals greater courage and confidence to challenge unacceptable behavior within organizations, which is increasing the number of discrimination and harassment claims. Historically, organizations have been able to avoid public scrutiny and protect defendants through confidentiality provisions that enabled them to conceal sexual harassment and discrimination claims from public knowledge, and in turn, protect their reputation. These growing movements alleged that confidentiality provisions in settlement agreements unfairly restrict victims of sexual harassment and other forms of discrimination from speaking out, and this has inspired certain states, including New Jersey, to pass laws to prohibit such provisions. While there are some doubts around whether new legislation will effectively reduce workplace harassment, plaintiffs certainly now have a new perspective of how much their claims are worth and are encouraged by their prospects of more lucrative requital in court.
Social inflation, a term now widely used in the insurance industry, generally refers to recent growth over the last several years in liability risk and costs due to several trends and developments, including:
- Societal views towards increased litigation
- The emergence and growth of third-party litigation funding, which enables plaintiffs - who, historically, have been discouraged in pursuing cases to trial due to large expenses - to resist settling cases before trial
- Plaintiff friendly legal decisions
- Larger jury awards
- Wavering tort reform
These trends are having a strong impact on employment litigation, increasing employment practices liability (EPL) insurance claims and creating a hardening EPL insurance marketplace. So what can nonprofits do to help adequately protect themselves against these developments that are likely to continue on an upward trajectory?
- Choose the right insurer
It's imperative that adequate EPL coverage is placed with an experienced insurer that has strong expertise in employment liability
- Stay on top of employment practices liability risks
Regularly review and update their employee handbook, paying close attention to their employment practices and sexual harassment policies. Having these policies updated and communicated can be vital in their defense of a potential claim.
For more information on COVID-19's impact on the EPL market, read our article, COVID-19's Impact on Employment Claims and Litigation.
