Specialty Podcast: Current Employment Practice Liability Trends & Challenges in the Western Region

Intro (00:00):
You're listening to the Alliant Specialty Podcast dedicated to insurance and risk management solutions and trends shaping the market today.

Travis Barnett (00:08):
Welcome back to the Alliant Specialty Podcast. Today, I'm your host, Travis Barnett from the Alliant Management & Professional Solutions Group. I'm a First Vice President and Western Region Leader, focusing on the natures of employment practice liability insurance and risks. In addition to myself, we have Peter Woo who is a principal at Jackson Lewis out in California, specifically down in Southern California, who specializes in management-side employment claims in California. Today, we're going to be focusing not just on employment practice liability insurance in general, but very specifically within the Western United States and within California because it is a different beast a lot of the time, outside of what we experience nationally. So Peter, welcome.

Peter Woo (00:53):
Thank you very much for having me.

Travis Barnett (00:55):
No problem. Well, I think it's a good place to start here, Peter, if you can provide some comments on the most notable employment litigation trends from 2022 and even what you're seeing transpiring here in 2023.

Peter Woo (01:10):
Yeah, sure. So first and foremost, what we're seeing right now is an uptick in sexual harassment cases due to cases being subject to the arbitration under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act that was enacted in March of 2022. And that act essentially said sexual harassment claims may be heard in court in front of a jury and not be forced into arbitration even if the employee signed an arbitration agreement. Because of that, what we've seen is an increase in sexual harassment cases. In 2021, there were about 10,000 or so claims. In 2022, that increased 10% from that number, and so we're going to see that number increase even more so, especially given that the effects of COVID are starting to dissipate, people are coming back into the office more. So, that's one area that we're seeing a bit more in terms of trends. The other area as well is wage and hour litigation and that continues to remain a key focal point here in California. In terms of trends, particularly with regards to PAGA actions, and that's the Private Attorney General's Act of California, last year in July 2022, the U.S. Supreme Court came down with a decision that has a significant impact on PAGA litigation as it relates to arbitration agreements. In that case, it's called the Moriana v. Viking River Cruises case. That case held that arbitration agreements can be enforced against PAGA claims such that individual PAGA claims must go into arbitration, whereas the multi-plaintiff claims have to be dismissed if there is an arbitration agreement.

Now, there's some issues with regards to that second piece in terms of whether the multi-plaintiff claims can be dismissed. The California Supreme Court is dealing with that right now, and so that California Supreme Court is going to have a huge impact on whether PAGA claims are going to continue to be as pervasive as they have been in California. And the other area that I would be focusing on in terms of trends is the Dobbs v. Jackson Women's Health Organization decision that came down last year as well. Most people know that the Dobbs decision overturned Roe v. Wade with respect to the right to abortion, and we see that interplaying significantly with regards to sexual discrimination or gender discrimination claims and also disability related claims as well. We have seen an increase across the country of those type of claims since Dobbs has come down because employers are not, or considering not, providing accommodations or providing the resources necessary to allow women to make informed decisions with regards to abortion. And we're seeing a lot of those claims, particularly in I would say red states for lack of a better term, and those include states like Texas, Virginia, Tennessee, Kansas, etc. And Jackson Lewis is keeping track of that litigation right now. So, that's pretty much what's going on from 2022.

Travis Barnett (04:34):
Wonderful, thank you. So Peter, it appears that COVID employment litigation has begun to dissipate. At what areas, if any, do you see remaining at the center of COVID employment related litigation in 2023?

Peter Woo (04:48):
Yeah, it's a really good question and I think that there's several areas where we're going to probably see continued trends and upticks in litigation. I think one of those areas includes remote and hybrid work issues that continued to remain. The issues there include reimbursement of office expenses or home expenses related to the office and that includes anything from the internet or electricity. What we've seen even is a portion of rent or a portion of the mortgage, we're seeing those type of claims, although there not too many, those are some of the claims that we are seeing. We have seen that there has been a trend of employers acquiring employees to go back to work, and so because of that we're seeing more of these type of remote work issues that exist. The other area that we're also seeing is reasonable accommodations for medical and religious purposes. Reasonable accommodations must be provided for anyone with a valid medical or religious reason. And of course, what is a reasonable accommodation? That's usually what is at issue in a lot of cases and we've seen an uptick in terms of those claims throughout the West Coast and in California as well. Other issues involving COVID involve long COVID claims and so, if that involves any sort of medical issues that continue to be a symptom of the employee for long after the person had COVID, that continues to be an issue. Also, taking care of other family members who may have long COVID in California, taking care of another person is a protected activity under the California Fair Family Rights Act. And so, quite a bit going on.

Travis Barnett (06:54):
Yeah, so when you think that COVID might hopefully be leaving us, but we're still having the litigation and trying to get used to what things are looking like going forward. Well, on that note, we are very close to being through the first half of 2023. What other employment related litigation trends do you anticipate for the remainder of this year and do you foresee continued litigation focusing on, like biometric data including BIPA or as a subject of claims?

Peter Woo (07:24):
We will continue to see BIPA litigation, not necessarily in California because in California they have not yet passed any BIPA litigation, although it is currently for the legislature right now. But because of the first-class action that went to trial with regards to BIPA in Illinois where the court awarded hundreds of millions of dollars in damages, it is a major concern for you and for your insureds. And so, we are monitoring that, we're seeing some claims, not necessarily BIPA related, but claims involving privacy issues relating to the California privacy statutes. Other areas that we're seeing in terms of 2023 litigation include potentially contractual declaratory relief actions involving broad confidentiality agreements in severance and settlement agreements. In February at the National Labor Relations Board, we had an opinion where NLRB essentially said that employers who are subject to the NLRB, they are now prohibited from putting in those broad confidentiality agreements in both severance and settlement agreements. And that applies both prospectively and retroactively as well. And so, there's a concern there, how exactly is that law going to be construed by the plaintiff's bar if there are additional claims that are asserted by the employee down the road. Although, it should theoretically remove all potential claims going backwards, I should say, to the extent that there are any claims on an ongoing forward basis, including a breach of contract of that settlement agreement, this particular new statute could come into play. Also, something in 2023, with the economy the way that it is, interest rates going up, the potential looming for a recession. And then we've seen this already with some companies and that could trigger WARN Act litigation. And the WARN Act, both under California and federal law, states that if there is a mass layoff, that certain notices be provided prior to that layoff to the employees and in California to a relevant governmental agency. And so failure to do that could lead to WARN Act class action cases being made or individual litigation arising. That's what we're seeing in 2023. And of course, you're running the mill disability, sexual harassment, gender, race discrimination claims, those continue to pervade and are increasing. Especially as I mentioned before, given the fact that people are returning back to work, we're seeing a lot more of these type of claims arising now.

Travis Barnett (10:07):
And wage and hour still an issue in California. Correct, Peter?

Peter Woo (10:11):
It's not going away anytime soon. Yeah, and as I mentioned before, PAGA is still the thorn on every employer's side. The PAGA cases, a lot of the PAGA cases, at least the ones that we're handling, are state because of the case that's before the California Supreme Court. And again, that case before the Supreme Court, the issue there is whether or not an employee whose individual claims are in arbitration, under Viking River, whether that person has standing to sue still for all the other employees, all the other class or representative employees, potential employees that exist in you. But regardless of PAGA, there's still going to be individual wage and hour cases. There's still going to be class action litigation in terms of meal break violations, respite violations, and so on and so forth. Reimbursement, that's another potential claim as well. So, California is quite unforgiving to employers when it comes to wage and hours. So, that will always be an area that employers should be concerned about.

Travis Barnett (11:21):
So, with how you're monitoring several things we've been discussing here, Peter, how are you advising your clients in some of these items? Obviously, there's probably a lot more we can do, a whole other podcast for it. Would be great to hear some of the things that you are advising your clients on.

Peter Woo (11:39):
Yeah, so for the wage and hour issues, first thing is to make sure that your policies are compliant under relevant California and federal law, whichever law applies in California, it's going to be California law cause California laws are more strict than federal law. So, make sure that your handbooks say the correct things in terms of that the person gets a 30-minute lunch break before the end of the fifth hour of work. That they are entitled to a rest break every four hours of work or major fraction thereof. Having those buzz language terms in your employee handbook are helpful. So, we do that here at Jackson Lewis. So, that's one piece of it. The other piece is also in practice making sure clients are doing what they're supposed to be doing irrespective of what they put in their policies. Cause a lot of times wage and hour claims, they hinge on not only what they have in terms of their policies, but what they actually do in practice as well. So, are you really providing the 30-minute meal break within the end of the fifth hour of work? Are you really providing the rest break? Are you doing any rounding in terms of allowing people to come in early, leave late, leave early, do you round their time for these non-exempt employees? Those are just a few things to consider in terms of wage and hour.

Travis Barnett (13:05):
Well, I appreciate that and that's good free meaningful advice right there, and reminders on things that people can do on the blocking and tackling side to try and avoid some of these issues. And one more question for you, Peter, have you noticed any meaningful new trends from the EOC in 2023?

Peter Woo (13:26):
Yeah, absolutely. And they've disclosed that they're going to hire more people, 450 more attorneys to be exact, to help to investigate claims and to file lawsuits. Now mind you, the EOC will be focused more on larger corporations and those corporations where there is a continued pattern of alleged misconduct or alleged discrimination. They are focused on that type of systematic discrimination across the board. And particularly with regards to, I think this year they're going to be really focusing on sexual harassment based on sexual orientation. This focus came from a case in Georgia called the Bostock v. Clayton County case, where there was allegations of sexual orientation, gender identity discrimination on a governmental level, which really made the EOC want to focus on this area for 2023. Along with the impact of COVID-19 on civil rights as I mentioned above, including claims about disability discrimination, long COVID, remote issues, etc.

Travis Barnett (14:50):
Well, thank you for that, Peter, and I'll say this, I'm sure that as we've been listening to you and discussing this, I'm sure that the listeners of this are saying, "What does this have to do with?" or "What's this going to do in impacting my insurance, my employment practices liability insurance?" And so, over the past several years we've experienced some harder markets in the management liability space. But we have seen some softening in some of the lines of coverage this year, especially employee practice has been fairly stable and hasn't necessarily shifted as much as other lines of coverage in favor of the insureds. And so, the premiums that we did experience between 2020 through 2022 have helped stabilize things from an employment practices liability standpoint. And we've really found that it really depends on the risk profile of the insured to see how things are going to go with their renewals. And specifically in California, we are still seeing insurers being quite conservative in nature, especially with a lot of the reductions in forests layoffs that have been announced over the past six months or so. And so, we are seeing that those who have strong or favorable risk profiles where there aren't any reductions in forces, where there's strong controls when they're good loss histories. We are seeing that some insurers are going more aggressively after that business. And so, we appreciate you Peter and the Jackson Lewis team for participating here.

Peter Woo (16:28):
I appreciate the opportunity here. But certainly if you or any of your insureds have any questions we certainly are able to help out with regards to anything and we're here to listen. So thank you again Travis and for Alliant the opportunity to be here today.

Travis Barnett (16:45):
Well, we appreciate it and thank you all for joining us on the Alliant Specialty Podcast. If you want more information, you can contact us at www.alliant.com and we'd be happy to help you out with any of your employment practice liability needs. Have a great day.