Employment Practices

1. Employment Practices Exposures – Solutions – Insurance Bernd G. Heinze, Esq. AAMGA Executive Director UFO Annual Meeting Whistler, British Columbia September 5, 2008 1

2. Federal Laws Civil Rights Act 1964 (a/k/a Title VII) EPA 1963 ADEA 1967 ADA 1990 USERRA Common Law Claims Defamation-Libel-Slander Contractual Interference Invasion of Privacy Negligent Hiring-Supervision-Retention Emotional Distress/P&S Economic Advantage Loss of Consortium Inability to Power Walk {State Specific Law Applies} A.-F. Evolution of Non-Discrimination Laws 2

3. Fair Labor Standards Act (FLSA) • Minimum wage • Overtime • Child labor standards • Federal statutes => state laws 3

4. ISO EPLI Insuring Agreement Sums insured legally obligated to pay resulting from an “injury.” Claims made trigger of claim received and recorded with notification in writing to company as soon as practical. Requires prompt notice of incident which might result in a claim if insured has knowledge. [Not a notice of claim] 4

5. What Is “Injury” Per Contract? • Demotion, failure to promote, negative evaluation, reassignment or discipline of current “employee” or wrongful refusal to employ. • Wrongful termination – Law/public policy or violation of contract, other than contract stipulating financial considerations if such action on consideration is the result of a breach of contract. • Wrongful denial of training, career opportunity or breach of contract. [Continued] 5

6. “Injury” Defined Continued • Negligent hiring/supervision resulting in any of the other offenses listed in definition. • Retaliatory action. • Coercing “employee” to commit unlawful act or omission. • Work-related harassment. • Employment-related libel, slander, invasion of privacy, defamation or humiliation. • Other work-related verbal physical, mental or emotional abuse arising out of “discrimination.” 6

7. Law Congress Federal Courts State Courts Guidelines Executive Branch EEOC Labor Department II. A. The Regulatory Maze 7

8. B.1. General Remedies 1.Title VII and Americans With Disabilities a. Injunctive order for promotion, promotion quotas and hiring b. Backpay c. Attorney’s Fees d. Compensatory/Punitive damages between $50,000 and $300,000 for intentional discrimination 8

9. WHERE DID THE LITIGATION EXPLOSION COME FROM? • CHANGING WORKFORCE – UNION TO EMPLOYMENT AT WILL • THE JURY TRIAL • IT’S ALL ABOUT THE BENJAMIN’S • HIGH PROFILE CASES • EMPLOYEE AWARENESS OF RIGHTS & CLASS ACTION LAWSUITS

10. PROTECTED CLASSES UNDER TITLE VII HARASSMENT FROM: • Race • Color • Religion • Sex • National Origin • Age Chewing Gum Debacle

11. B.2. Equal Pay Act Equal Pay for Equal Work Act of 1963 a. Back Pay b. Liquidated Damages Equal to Back Pay c. No Compensatory or Punitive Damages 11

12. C. Benchmark Developments 1.a. Burden of Proof – Plaintiff must go beyond proving an employer’s stated legal reason for its actions were a pretext for discrimination and must prove that bias was the motivating factor. St. Mary’s Honor Center v. Hicks, (1993) 12

13. Pretext Bias Cases • Employee must establish a “prima facie” case of discrimination • The burden then shifts to the employer to proffer a legitimate , non-discriminatory reason for the adverse employment decision • If employer meets the burden, the employee must prove illegal pretext 13

14. C.1.b.. Mixed-Motive Bias Cases • U.S. Supreme Court in 2003 established a two step process: (Desert Palace, Inc. v. Costa) • Employee must prove impermissible motive played motivating role in adverse employment decision • Employer must then counter that action would have been taken in spite of the employee’s protected status. 14

15. C.2. Defense: Employee Misconduct McKennon v. Nashville Banner Pub. Co. U.S. Supreme Court (1995) • Prior wrongdoing by employee does not necessarily shield an employer that has violated law. • Court ruled that such conduct does not have to be disregarded and if proved the employee may receive limited damages. (Back pay) 15

16. C.3. Reverse Discrimination Murray v. Thistledown Racing Club-1985 Harding v. Gray-1993 • Requires direct evidence or intentional discrimination • Carry burden that employer is the unusual employer that discriminates against the majority 16

17. C.4. Individual Liability Under Title VII Johnson v. University Surgical – 1994 a. Title VII defines “employee” to include “any agent” of employment b. Individual liability of a “supervisor” is based on issue of authority over an employee c. Split Federal Decisions 17

18. What Constitutes A Supervisor? Mack v. Otis Elevator Co.–April, 2003 2nd U.S. Circuit Court of Appeals ruling: • Special dominance over others at a work site is controlling factor 7th U.S. Circuit Court of Appeals ruling: • Concisely defined as anyone with authority to “hire, fire, demote, promote or discipline an employee” 18

19. III.Five Basic Unlawful Discrimination Theories • Disparate Treatment • Disparate Impact • Stereotype Class Assumptions • Failure To Accommodate Religion Or Disability • Retaliation 19

20. Winning & Losing 48% of Plaintiffs Win Average Defense Cost - $107,000 Win or Loss! 20

21. Winning & Losing “Folks, this is your Captain speaking. Please don’t worry, the pumps are working perfectly, return to your staterooms and await further instructions.”

22. Disparate Treatment • Direct or Indirect Evidence • Four Point Test • Member of Protected Class • Qualified Employee/Applicant • Adverse Effect on Employee or Applicant • Other Qualified, Non Protected Not Adversely Affected by Action 22

23. Disparate Impact • Applies Even in the Absence of Intent • Federal Courts’ Three Point Test: • Practice that discriminates on basis of race, color, religion, sex, origin • Plaintiff must show adverse effect falls more heavily on protected class • Plaintiff must show practice caused a disparity (Real harm) 23

24. Ground Rules 1. Employees 40+ 2. Employee 20 + 3. Disparate Treatment: Requires proof of intent ADEA Covers Disparate Impact & Treatment 4. Disparate Impact not recognized in ADEA 5. Willful Violation Doubles Damages / What is Knowing or Reckless Disregard? Case Law Rulings Employer must prove a training program about age discrimination exists to avoid willful violation (2001) Mixed motive may apply (2000) IV. Scope of Regulation-ADEA 24

25. Disparate Impact Claims……..Smith v. Jackson, MS. 2005 WL 711605 (2005) • The U.S. Supreme Court noted that, “to state a disparate impact claim, an employee must isolate and identify the specific employment practice responsible for the age-based disparate impact.” • Recognizes the “reasonable factors other than age” provision when action is attributable to a non-age factor that was reasonable from a business perspective. 25

26. B. Sex Discrimination – Title VII • Pregnancy Related Issues • Paramour’s Advantage • Inadequate Mentoring or Training • Sexual Harassment Opposite Gender – Original Intent Same Gender – Expanded Reality Split by Districts 26

27. SEXUAL HARASSMENT • What is it? • Unwelcome sexual advances • Requests for sexual favors • Verbal or physical conduct of a sexual nature • Incidental and unintentional exposure of sexual or explicit materials, e-mails, photographs, etc.

28. SEXUAL HARASSMENT • Inappropriate Behavior Looks Like: • Sexually harassing behavior • Leer • Grope • Off color joke, banter • Taunt, tease, flirting • Dare • Reckless conduct • Targeting • Would you do this to your Mother?

29. SEXUAL HARASSMENT • Under what circumstances? • When submission to such conduct is made either explicitly a term or condition of an individual’s continued employment (quid pro quo) • Submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual • Such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creates an intimidating, hostile or offensive work environment

30. More Lawsuits on the Horizon

31. FEDERAL LAW Employees Applicants for employment Those not promoted or given a raise Those who are laid off, subjected to consolidation or reduction in force Reference checks/Recommendations WHO CAN BRING A COMPLAINT?

32. FEDERAL LAW EMPLOYERS with 15 or more employees LABOR ORGANIZATIONS EMPLOYMENT AGENCIES VENDORS SUPERVISORS & MANAGERS STATE LAW EMPLOYERS (no minimum number of employees) LABOR ORGINZATIONS EMPLOYMENT AGENCIES INDIVIDUALS WHO AID AND ABET WHO CAN BE SUED FOR DISCRIMINATION?

33. BANKS INSURANCE AGENCIES AEROSPACE INDUSTRY MUNICIPAL ENTITIES SCHOOLS MOST LIKELY DEFENDANTS

34. HIRING TESTING TRAINING ON THE JOB ACTIVITIES SUPERVISION, EVALUATIONS, PROMOTIONS DISMISSAL OR TERMINATION FROM WHAT ACTIVITIES?

35. DISMISSAL OR TERMINATION HIRING ON THE JOB ACTIVITY WHEN ARE YOU MOST LIKELY TO HAVE A PROBLEM?

36. MOST PLEADINGS ARE ALREADY TEMPLATES AND ARE AVAILABLE ON-LINE PUBLICITY REPRESENTING THE SMALL CLAIMANT AGAINST THE BIG CORPORATION TITLE VII ALLOWS AN AWARD OF ATTORNEY FEES IF SUCCESSFUL WHY DO PLAITNIFF ATTORNEYS LIKE THESE CASES?

37. THREE SIMPLE LETTERS: S E X WHY BRING A COMPLAINT?

38. FEDERAL LAW MUST EXHAUST ADMINISTRATIVE REMEDIES COMPLAINT MUST BE FILED WITH THE EEOC WITHIN 180/300 DAYS MUST OBTAIN RIGHT TO SUE LETTER ACTION FILED IN FEDERAL COURT COMPLAINT CAN INCLUDE STATE LAW CLAIMS OR OTHER RIGHTS TO RECOVERY DEFAMATION; LOSS OF CONSORTIUM; BREACH OF CONTRACT; WHERE IS THE COMPLAINT BROUGHT?

39. PROVING SEXUAL DISCRIMINATION UNDER STATE AND FEDERAL LAW • TYPES OF DISCRIMINATION • Hostile Environment • Explicit or implicit physical contact or conduct as a term or condition of employment • Comments, slurs or innuendos

40. HOW DOES THE PLAINTIFF PROVE IT? • Must establish sexual harassment and its “prima facie” case by a preponderance of the credible evidence • Claim (negligence/breach of contract/common law & derivative) • Damages (compensatory/punitive/equitable/attorney fees) • Employer must then show a legitimate non-discriminatory basis for the conduct or treatment • Plaintiff then has the chance to prove by a preponderance of the evidence that legitimate reasons offered by the employer or actor were a “pretext” to cover a discriminatory motive

41. TITLE VII Discrimination was pervasive and regular; Discrimination detrimentally affected employee; Employee suffered intentional discrimination because of his or her sex; Discrimination would detrimentally affect reasonable person of same sex in that position; and Existence of respondeat superior liability PRIMA FACIE CASE OFHOSTILE WORKPLACE HARASSMENT

42. CONSTRUCTIVE DISCHARGE • “Constructive Discharge" occurs when the employer has imposed upon an employee working conditions so intolerable that a reasonable person subject to them would resign.

43. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS Plaintiff must establish the following elements: 1) defendants acted intentionally or recklessly; 2) the conduct was “extreme and outrageous”; 3) defendants’ actions were the proximate cause of the plaintiff’s emotional distress; and 4) plaintiff suffered “severe emotional distress.” Court must determine, as a matter of law, that employer’s conduct was so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, as to be regarded as atrocious, and utterly intolerable in a civilized community

44. Defending the Complaint • The best defense is a good offense…as long as it not “offensive” • What are the claimant’s motives? • Confidentiality • Immediate investigation • Avoidance = Death • Documentation • Forensic Investigation • Facts, venue, parties, attorneys, impact on insured

45. Defending the Complaint • Pursue appropriate discovery • Everything is discoverable • Use of experts • Human factors • Forensic economists • Psychologists • Independent medical physicians • Industry specialists

46. Defending the Complaint • Quid Pro Quo Case: • Prove no illegal conduct occurred by establishing: • No sexual favors were sought • No sexual advances were made • Plaintiff was not subjected to an adverse employment act • If plaintiff was subjected to an adverse employment action: • Must establish a legitimate non-discriminatory reason for the action • Establish the sexual advances were not objected to or welcomed by the plaintiff

47. Defending the Complaint • Hostile Environment Sexual Harassment: • Prove the abusive conduct did not occur • Prove the events were isolated (rather than repetitive or continuing) and trivial (rather than pervasive or egregious) • Establish that the conduct or actions were not beyond society’s acceptable norms of behavior • Establish the plaintiff willingly participated in the conduct or activity • Prove the employer had no knowledge of the action

48. Defending the Complaint • Advance the employer’s training program and investigation • Employee Handbook • Professionalism • Care and treatment for the victim, psychological help • Reassigning, transfer, suspension, demotion, probation or firing the actor, if claim is substantiated

49. Why do Jurors Love to Hear & Decide EPL Cases? • Ever meet 12 people who all love their boss? • The theory of “indirectly transferred divine retribution” • Jurors feel a kinship with the “victim” of discrimination, and therefore: • Arbitrarily shift burden to employer • Evaluate evidence on own life’s experience • Are suspicious of employers categorizing employee’s problem as one of “attitude” or “initiative”

50. HOW DO YOU LIMIT EXPOSURE TO EMPLOYMENT CLAIMS? • Compliance with the law • Unequivocal policy statement • Effective employee handbook • Use internal procedures • C.Y.A. – Document everything • Common sense • Training program – educate employees and managers • Identify a specific individual to receive complaints