The coronavirus is presenting employers of all sizes with a complex range of employment law issues. Insurance defense law firms with coronavirus employment defense response capabilities may find that helping employers to answer difficult HR questions can be both a valuable legal service and an effective business development tool. Here are just a few of the many coronavirus issues that employers are addressing:
- Classification of “essential” workers
- Cybersecurity precautions in a remote work environment
- Emergency paid sick leave policy
- Employee quarantine or isolation
- Families First Coronavirus Response Act, signed into law March 18
- FMLA leave expansion
- Mandatory reporting of exposure to public health authorities
- Travel restrictions
- Understanding the difference between a furlough, lay-off, and reduction in force
- Wage and hour disputes
- Workers’ compensation claims
An employment-related engagement, for example, can give the law firm access to key executive officers beyond the HR department, including the president, the chief financial officer, and risk managers. Other types of claims that the defense law firm may be able to assist the corporate client with include business interruption claims, commercial automobile liability, slip and fall premises cases, director and officer (D&O) matters, and possibly products liability.
Many insurance defense law firms have a preference to work for “self-insured” accounts because they tend to pay at a higher rate and can be more loyal to a law firm over the longer term.
From a business development perspective, the tragic consequences of COVID-19 can enable law firms with a coronavirus employment defense capability to mitigate damage for the client while professionally seeking to expand the firm’s market-driven legal strategies.
Marketing Coronavirus Employment Defense Capabilities
Law firms can provide a valuable service by communicating with clients often and substantively on issues that are relevant to coronavirus protection.
Self-Insured Retentions (SIR) Under an Employment Practices (EPLI) Policy
SIR is an acronym for “self-insured retention,” which is defined by IRMI as “a dollar amount specified in a liability insurance policy that must be paid by the insured before the insurance policy will respond to a loss.”
In the case of an SIR associated with an employment practices liability insurance (EPLI) policy, an insured corporation would would pay the defense and/or indemnity costs of a claim up to the SIR limit. If a corporate policyholder has a $100,000 SIR limit, for example, the insured will handle the claim in-house using counsel of their choice. Once the SIR is met, the insurer would make any additional payments as provided under the policy.
For those employment defense law firms that are able to work with corporate accounts that are covered by an employment practices liability insurance, the law firm should try to be named as counsel of choice in the client’s EPLI policy. This is frequently accomplished through some type of endorsement to the policy and may require the insured to pay an additional fee. The benefit to the insured (the employer) is that they are then defended by the law firm that knows them well and understands their long-term strategies.
If a choice of counsel provision is not in place, the employer can also ask the insurer to appoint their employment defense law firm for a specific claim. This is often known as an “accommodation” and may be facilitated by the insurance agent or broker. Approval of an accommodation is at the discretion of the insurer and may be granted inconsistently. If an accommodation is approved, it is not the same as being on the EPLI panel.
Trends in Employment Practices Liability Insurance (EPLI)
According to AmTrust, 23 percent of companies with fewer than 100 employees purchase an EPLI policy. This compares to 34 percent of businesses with 500 to 700 employees, and 40 percent of businesses with more than 1,000 employees that protect themselves with an EPLI policy.
Coronavirus Compliance with OSHA Guidelines
In regard to workplace safety, employment defense law firms can help employers evaluate and comply with guidelines issued by the U.S. Department of Labor, Occupational Safety and Health Administration (OSHA) on steps employers can take to reduce workplace exposure to SARS-CoV-2, the virus that causes COVID-19. Click on the link to access OSHA Guidance on Preparing Workplaces for COVID-19.
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This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.