Nothing is as simple as it used to be. Court decisions and new laws are rendering privately held companies increasingly vulnerable to an unprecedented number of suits. The most progressive and the most conservative organizations are finding themselves exposed to substantial liability.
In today's perilous legal environment, you have special liability needs that in most respects are NOT COVERED by your general liability insurance. The proliferation of Federal and State laws governing employment combined with evolving case law makes claims by employees more common and more costly. Even routine management decisions can lead to Personal Liability for your company's directors and officers.
A wide range of actions can be brought by any number of parties, not just employees, including shareholders, customers, creditors, competitors, and government agencies.
THE FINANCIAL WELL-BEING OF YOUR COMPANY AND ITS DIRECTORS AND OFFICERS IS AT RISK.
The employment arena has become more complicated and litigious than ever. The number of employment-related lawsuits has increased and award levels are setting records. It is estimated that more than 150,000 wrongful employment practices complaints occur each year with that number expected to double. The average damage award employers have been forced to pay is $650,000.
Claims from race discrimination, sexual harassment; age, race and disability discrimination, hostile work environment, whistle blower and retaliation, wrongful demotion and age discrimination, are all examples of claims that have occurred.
EXAMPLES OF EMPLOYMENT PRACTICES LIABILITY CLAIMS
Here are a few examples:
Sexual harassment: A female plant supervisor left her job because of intolerable sexual harassment from male subordinates at a company's plant. The female supervisor alleged she was forced from her job because of sexual harassment. She made claims of quid quo pro sexual harassment, hostile work environment harassment and constructive discharge. A jury found that the female supervisor had been constructively discharged and awarded her $2 million in damages.
Wrongful Demotion: Two engineers were demoted and had their salary cut by 25 percent. They sued their company alleging the company failed to follow its personnel policy when it demoted them and cut their salaries without good cause. A jury awarded one engineer $700,000 and the other engineer $625,000 in economic damages. In addition, the jury also awarded each $75,000 in noneconomic damages for their emotional distress.
Directors and Officers Liability
Not all actions against your directors and officers are brought by employees. Virtually any decision made by directors and officers today can result in lawsuit by customers, creditors, government agencies, contractors, competitors, and other third parties-not to mention shareholders. Such suits not only affect your directors and officers personally, they may also threaten the financial health of your company.
Here are some examples of the typical directors and officers claim:
· Officers who allowed rodent infestation at a company's food warehouse were sued in a claim by government regulators.
· Directors and officers who approved salary increases for other officers when the company was in poor financial condition were sued in a claim by other officers and outside shareholders.
· An officer who, unbeknownst to directors, refused to deliver goods to one customer pursuant to a contract and instead sold goods to another customer and was sued by the first customer.
If you don't believe an employer and/or issues affecting your directors and officers and pursuant lawsuits can put you out of business, then you can summarily throw away this broadcast.
However, as a prudent business practice and a company that wants to insure their liability to cover these most troubling exposures, there are a multitude of opportunities available at reasonable fixed cost options.
At the The Gaudreau Group, we have been providing unique and creative alternatives for risk transfer for our clients for over 90 years. If your company has purchased Employment Practices Liability and Directors & Officers Liability, you have already taken the most important, first step. If your company has not yet purchased these most critical coverages, then we would recommend immediate consideration in investigating what the marketplace has to offer.
If you would like a nonbinding, no obligation premium indication, please contact us. At a minimum, we are offering this service to give you an idea of how reasonable the cost is for this critical coverage item. All it takes is a simple one page indiaciton sheet that we can generate in less than one week.
We encourage you to call us with any questions at 800-750-3534.
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