A new lawsuit filed July 5 accuses Raytheon Technologies Corporation of retaliation and discrimination against an unvaccinated employee who was told he can no longer work from home. In the lawsuit, a principal electrical engineer alleges he was discriminated against by the defense technology company when it withdrew his permission to work from home and later suspended him for not following its COVID-19 testing protocols, which he said he could not comply with because of unnamed medical conditions, Law360 recently reported.
“He is essentially asking for an accommodation to work from home; he has an elderly parent, a religious belief, and possibly a medical condition that is preventing him from doing the testing,” said Heather Schaaf, Associate Vice President, Professional Lines, Atain Insurance Companies, Chicago, Illinois. “I think what it comes down to for this company will be their track record. Have they been following the local guidelines and making accommodations for their employees without discrimination? A court is going to look at what else they have done.”
I have been saying since the start of the pandemic that these types of lawsuits will arise, and I think we are still going to see more before this goes away.
The lawsuit is a “classic” example of an employment practices matter that could be covered by a company’s Employment Practices Liability (EPL) Insurance, said Ryan Ascenzo, Senior Broker, Professional Liability, Burns & Wilcox Brokerage, New York, New York. An increase in similar cases can be expected as companies continue to grapple with remote work arrangements, mask and vaccine requirements and other uncertainties related to operating during a pandemic.
“I think it is a real question of what employers and employees are supposed to do. What is the right course of action?” Ascenzo said. “These issues are not in the headlines as much as they used to be, but I think it is definitely still a concern for employers and employees. I have been saying since the start of the pandemic that these types of lawsuits will arise, and I think we are still going to see more before this goes away.”
Companies could be sued over missed opportunities, failure to promote
According to a McKinsey survey released in June, 58% of Americans had the opportunity to work from home at least one day per week and 35% could work from home daily. Remote work has also been on the rise in Canada, where 30% of the workforce worked remotely in March of 2021 compared to just 4% in 2016, Statista reported.
I think what it comes down to for this company will be their track record. Have they been following the local guidelines and making accommodations for all of their employees without discrimination?
With new Covid variants still being identified and many employees asking to continue remote work, navigating work-from-home policies is an ongoing risk for employers, Ascenzo said. In September of 2021, the EEOC filed its first lawsuit alleging violations of the Americans with Disabilities Act (ADA) related to COVID-19 after an employee was reportedly denied a request to work from home due to her disability, even though the company allowed others in her position to work remotely.
“Allegations of wrongful discrimination and ADA accommodations have been very common as far as returning to the office,” Schaaf said.
There has also been a surge of lawsuits from remote workers suing their employers over work-from-home expenses that were not reimbursed, CPA Practice Advisor reported in April. In other cases, employees who work from home due to being unvaccinated have claimed they missed out on certain opportunities, like team meetings, because they are away from the office. “Other employees end up getting promotions, raises or bonuses and then those remote workers that are unvaccinated file a lawsuit saying they have been retaliated against because they are unvaccinated,” Ascenzo said. “I have seen lawsuits from that angle.”
Allegations of wrongful discrimination and ADA accommodations have been very common as far as returning to the office.
Lawsuits alleging a failure to promote an employee could require an additional line of coverage under a company’s EPL Insurance, Schaaf pointed out. “If the employee was up for a promotion, or a raise or bonus, some EPL Insurance policies have a clause that specifically includes failure to promote,” she said. “It is usually an enhancement and it is something for a company to consider when reviewing which EPL Insurance policy might be better for them.”
Lawsuit expenses on the rise due to inflation
Workplace requirements on mask-wearing or vaccination status are among other sources of recent employment practices litigation. On June 30, three former Disney employees filed a lawsuit against the company alleging religious discrimination after they were fired for not wearing a mask at work and not getting the COVID-19 vaccine, The Hill reported on July 9.
EPL Insurance can help respond to these lawsuits, as well as claims over wage-and-hour disputes, discrimination, retaliation, wrongful termination, harassment, bullying, and other issues. Covered expenses generally include defense costs and settlements, both of which are currently on the rise due to inflation, Ascenzo said.
“The cost that law firms are charging is on the rise. The cost of everything is rising, so the defense bills are rising,” he said. “Then you have to look at the issue of social inflation. In a lot of the cases that do go to a trial, the jury is very sympathetic with the plaintiffs and are awarding major damages.”
The cost of everything is rising, so the defense bills are rising. Then you have to look at the issue of social inflation.
Legal defense needs to start “right away” after an allegation against an employer is made, which is a significant benefit of EPL Insurance, Schaaf said. “The carrier can start the defense process for the employer immediately, and ultimately that is going to help a suit have a lower cost overall,” she said, noting that defense costs for these lawsuits can easily reach $100,000, even if the company is not at fault.
The potential for high-value settlements may also necessitate Excess Liability Insurance. “With the rising cost of defense and awards and damages, it might be worthwhile to look at a company’s EPL Insurance limits and look for additional limits,” Ascenzo said. “However, a significant cost is what the company incurs to defend itself against this type of allegation.”
Clear, consistent policies can help reduce risks
Establishing clear and consistent policies around the issue of remote work should be a top priority for employers, Schaaf said. “Companies need to follow their state and local guidelines as far as the health and safety of their employees,” she said, noting that human resources professionals can help with this process. “In a lawsuit, a court is going to look and see whether the company was trying to make the best work environment for their employee and that they are applying any rules in the same manner to every individual. They should demonstrate their diligence to follow the current guidelines and be very equal in how they apply that.”
Ascenzo agreed, encouraging employers to utilize available resources for guidance on mitigating their risks. “A lot of policyholders have access to EPL law firms or hotlines where they can ask questions,” he said. “They should also update their employee handbook or manual to create work-from-home policies and procedures. The employees will have to acknowledge they have read it, including each time there is an update, so employees are aware of the framework they have to abide by. That way, everyone is clear and on the same page.”
If a company faces multiple allegations from employees about unfair employment practices, its Directors & Officers Insurance is more likely to come into play. This type of insurance can cover a company’s directors and officers when they are individually named in a lawsuit and respond to claims over the operations or management of a business.
“If a company has unequally applied their work-from-home policy or blatantly discriminated on several occasions against the workforce, that is more of a corporate culture problem and that is where you get that crossover into D&O Insurance,” Schaaf said. “Your D&O Insurance is really insuring those management decisions but on a higher level.”
Privacy should be another priority for companies, especially if they gather or use employees’ biometric data, Ascenzo said. “We are starting to get into a gray area of biometric information,” he said. “Could that be used to discriminate or have some sort of impact on an employee’s work?”
How companies use an employee’s private information, such as a medical diagnosis disclosed when requesting an accommodation, could lead to privacy violations that require specific coverage on their EPL Insurance, Schaaf added. “Not every EPL Insurance policy has provisions that relates to privacy coverage,” she said.
When reviewing potential EPL Insurance policies, employers should pay careful attention to the language on what constitutes a “wrongful employment event,” Schaaf said.
“There can be some subtle differences in the policy language and certain carriers might be broader,” she said. “Make sure that the definition of a wrongful employment lists out all the possibilities. That is where we see differentiation among carriers.”