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Article | FINEX Observer

State of employment practices liability and what to expect ahead

Financial, Executive and Professional Risks (FINEX)
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By Joann D. Nilsson | April 8, 2022

In this article, we examine the current state of the employment practices liability insurance market and early developments in 2022.

Employment practices liability (EPL) insurance continued to experience a hard market in 2021. This was driven primarily by the continuation of the COVID-19 global pandemic, which created many challenges within the workplace. As we look back on 2021, the main drivers of employment claims were return-to-work directives and vaccine and mask mandates. In addition, with the new administration in office we started to see some more employee friendly legislation.

As the world starts to emerge from the global pandemic, companies continue to review their return-to-on-site policies to fit their specific workforce. Part of the challenge for employers in creating their return-to-work policies has been whether they would have to mandate vaccination. The U.S. Supreme Court spoke on the issue and remanded President Biden’s OSHA ETS (which would have applied to nearly 84 million employees), back to the Sixth Circuit, effectively preventing the mandate from ever being implemented.

The Supreme Court blocks enforcement of OSHA’s vaccine mandate

One of the most heavily watched matters in the end of 2021 was the Department of Labor's Occupational Safety and Health Administration's (OSHA) COVID-19 Vaccination and Testing Emergency Temporary Standard (ETS).1 The ETS mandates COVID-19 vaccination, or at least weekly testing, for workers at companies in the United States with 100 or more employees by January 4, 2022, subject to legally required accommodations. The legal accommodations, based on either religion or a disability had been/and will continue to be what employers will have to navigate, through the guidance of legal counsel.2 However, on January 13, 2022 the U.S. Supreme Court granted a temporary stay, reversing the Sixth Circuit’s decision.3 The decision stays the ETS, pending review of the merits by the U.S. Court of Appeals for the Sixth Circuit. On January 26, 2022, OSHA withdrew the vaccination and testing ETS.

Separately, the mandate for the Centers for Medicare & Medicaid Services was allowed to take effect. This mandate requires vaccines for health care workers at hospitals and other medical facilities that participate in certain Federal programs.

Employers would still be best served to consult with legal counsel to determine the appropriate policies and procedures that will work best for their business and employees, while adhering to any local and state applicable legislation as well as Title VII and the Americans with Disabilities Act (ADA).4 Additionally, the EEOC has continued to provide updated guidance on this issue.

Remote working and the subsequent influx of employees returning to the office

As 2021 moves into our rearview mirror, we started 2022 with most of the country still in lockdown, with remote workspaces (once a novelty) gradually becoming many employees’ fulltime workspaces as virtual meetings became the preferred mode of communication. While there are many benefits to remote working, there are risks. As such, employers should ensure they are following best practices when allowing workers to work remotely. Some employers, on the other hand, have begun to craft their return-to-office plans.

While COVID-19 and mandates were top of mind for many, there were some government policies, further described below, that may have future implications on the business decisions that employers undertake, irrespective of whether employees work remotely or on-site.

Joint employer final rule

On July 29, 2021 the Department of Labor rescinded an earlier version of the joint employer final rule implemented during the previous administration. The “new” rule, which became effective September 28, 2021, is a return to the much broader rule in effect prior to March 2020. The joint employer final rule addressed the standard for determining whether an employee may be deemed to be jointly employed by two or more employers. The effects of such a rule are that a joint employer can be held jointly and severally liable for Fair Labor Standard Act (FLSA) wage and hour obligations to the employee. “[E]mployers must be aware of potentially more stringent or otherwise different standards that may apply to parallel wage and hour claims under state law”5 especially in light of the National Labor Relations Board recent announcement that it will revisit its joint employer standard in the very near future.6

Non-compete agreements

In the Summer of 2021, President Biden issued a wide-ranging Executive Order that, among many other competition-focused objectives, encourages the Federal Trade Commission (FTC) to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”7 It is important to note that the Executive Order does not alter the law of restrictive covenants, it merely “encouraged” the FTC to act.8 Historically non-competes have been regulated by the States not the federal government.9 Three states – California, North Dakota, and Oklahoma – and the District of Columbia largely ban non-compete agreements. Almost a dozen states prohibit or significantly limit the use of non-competition agreements with low-wage workers. Illinois, Oregon, Nevada, and Virginia joined this group.10

Looking onward in 2022: Upcoming employment decisions

As discussed at the outset, we saw a major decision already issued by the U.S. Supreme Court this year. However, as the Supreme Court’s new term commenced on October 4, 2021, there are a couple other employment cases which could impact the employment law landscape.

Viking River Cruises Inc v. Moriana

In this case, the Supreme Court will decide whether workers in California who sign arbitrations agreements can circumvent arbitration by filing lawsuits for wage violations on behalf of the state under California’s unique Private Attorneys General Act (“PAGA”).11 Thousands of PAGA cases have been filed in recent years with some yielding multimillion dollar judgments and settlements. A Supreme Court ruling in favor of the company would keep many of these lawsuits out of court altogether. (See update on wage and hour risks in California for further information on California’s unique wage and hour risks).

Cummings v. Premier Rehab Keller PLLC

The Supreme Court will decide whether Congress meant to create a private right of action to sue for compensatory damages for emotional distress under existing federal civil rights laws.12

In this case, Cummings (who has been deaf since birth and is legally blind) sued Premier for disability discrimination under the Americans with Disabilities Act of 1990, and other statutes and alleged that Premier failed to provide as ASL interpreter. Cummings sought injunctive relief and damages. The Supreme Court will answer whether the compensatory damages available under Title VII and the statutes that incorporate its remedies, include compensation for emotional distress.13

As we are now well into the first quarter of 2022 with a Supreme Court Decision already in the books, employers can anticipate a continuing changing landscape as it pertains to where employees will physically call their place of employment and the resulting employment claims. We expect the EPL market to continue to be challenging in 2022 with California continuing to be the most problematic jurisdiction and New Jersey, New York, and Florida not far behind. COVID-19 related litigation will likely continue to keep trending upward, with the hardest hit industries being healthcare and retail. We anticipate this will be even more apparent as workplaces continue to reopen. As the workplace continues to constantly evolve, with the Courts responding in kind, it is important to have an open dialogue with your brokers, claims advocates and legal counsel to keep abreast of changing laws and how your insurance policies will respond to the same.

Footnotes

1 https://www.hklaw.com/en/insights/publications/2021/11/osha-issues-anticipated-emergency-temporary-standard-regarding-covid19

2 https://www.icemiller.com/ice-on-fire-insights/publications/handling-medical-and-religious-exemptions-to-the-c/

3 https://www.daypitney.com/insights/publications/2022/01/14-supreme-court-has-spoken-osha-ets-stayed

4 https://www.fisherphillips.com/news-insights/supreme-court-strikes-down-oshas-vaccine-ets.html

5 https://www.jacksonlewis.com/publication/labor-department-formally-withdraws-trump-era-joint-employer-final-rule

6 https://www.jacksonlewis.com/publication/how-manufacturers-can-prepare-likely-expansion-labor-board-s-joint-employer-rule

7 https://www.jacksonlewis.com/publication/takeaways-president-biden-s-executive-order-non-competes

8 Id

9 https://www.hklaw.com/en/insights/publications/2021/07/how-will-presidents-new-executive-order-on-noncompete-agreements

10 Id

11 https://www.reuters.com/legal/government/high-court-will-review-arbitration-exemption-under-novel-calif-law-2021-12-15/

12 https://www.sullcrom.com/blogs-supreme-court-considers-emotional-distress--title-vi-cummings-v-premier-rehab

13 https://ballotpedia.org/Cummings_v._Premier_Rehab_Keller,_P.L.L.C.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

Author

Associate Director — Claims Advocate, FINEX North America

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