What is a Nuclear Verdict? Employment Practices Loss Example

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Edited August 9th, 2024 by Kyle Langan

Are employers held accountable for their wrongful acts? Upon litigation, businesses have frequently encountered juries that are sympathetic to plaintiffs, making them more susceptible to nuclear verdicts ($10 million or more) [1].

QUESTION: What could have prevented or reduced the severity of this nuclear verdict example?

Example: Microsoft’s unfair employment practices

Location: California

Wrongful acts: Lower monetary bonuses and unfavorable performance reviews resulted in cases of pregnancy, a disability, or other family and medical reasons spanning 2017-2020 [2]

Settlement: $14,425,000 [3]

The settlement also required Microsoft to implement a series of proactive measures to help minimize similar incidents going forward [4]

Covered acts on an EPL policy: Discrimination; Retaliation [5]

ANSWER: Compliance risk mitigation. To ensure compliance, workplace policies should be regularly assessed to maintain compliance with fair employment laws and any other applicable federal, state, and local regulations.

i.e. Compliance with: The Family Leave and Medical Act (FMLA), California Family Rights Act (CFRA) Title VII of the Civil Rights Act of 1964 (Title VII) and the Fair Employment Housing Act (FEHA), The Americans with Disabilities Act (ADA)

Mitigation goals:

  • Purchase Employment Practices Liability Insurance
  • Establishing an employee handbook that includes appropriate policies
  • Encouraging employees to report all instances of discrimination and retaliation
  • Taking all reports of discrimination and retaliation seriously by following documented investigation and response protocols
  • Educating managers and supervisors on what constitutes retaliation and making it clear that such behavior is prohibited
  • Documenting all complaints, evaluations and situations that result in an employee’s termination

Sample policy language: Philadelphia

DEFINITIONS
A. Employment Practice Act means any actual or alleged:
1. wrongful dismissal, discharge, or termination of employment;
2. breach of a written or oral employment contract or implied employment contract;
3. employment related misrepresentation;
4. wrongful failure to promote;
5. violation of employment discrimination laws (including harassment);
6. wrongful deprivation of a career opportunity;
7. employment related wrongful discipline;
8. negligent employee evaluation;
9. employment related invasion of privacy;
10. employment related defamation (including libel and slander);
11. sexual or workplace harassment of any kind;
12. constructive discharge of employment;
13. employment related Retaliation;
14. employment related humiliation;
15. wrongful demotion;
16. negligent reassignment;
17. violation of any federal, state, or local civil rights laws;

Solely with respect to any Claim brought by or on behalf of any Third Party, Employment Practice Act means any actual or alleged wrongful failure to employ, discrimination, sexual harassment or violation of such Third Party’s civil rights in relation to such wrongful failure to employ, discrimination or sexual harassment, whether direct, indirect, or unintentional, committed by an Individual Insured in his/her capacity as an Individual Insured or by the Private Company.

References

[1] — [5]

Civil Rights Department, State of California (n.d.). Civil Rights Department reaches $14.4 million settlement with Microsoft over alleged parental and disability leave discrimination. CRD. https://calcivilrights.ca.gov/2024/07/03/civil-rights-department-reaches-14-4-million-settlement-with-microsoft-over-alleged-parental-and-disability-leave-discrimination/

 

Professional Liability Insurance

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Protect yourself and your business from claims not covered by commercial general liability coverage. If you provide expert advice or services you should consider professional liability insurance. Professionals who are architects, home inspectors, lawyers, physicians, real estate brokers and accountants can benefit from this type of coverage. Read this coverage insight to learn more about what professional liability insurance covers and how it can help your company go above what general liability coverage does.

At Conrey Insurance we want to ensure that you have all the knowledge and help you need so your business is sufficiently covered. To speak with a member of the Conrey Team about professional liability insurance, call (877) 450-1872 or contact us and experience The Conrey Difference for yourself.

A Comprehensive Guide to Hours of Work and Required Break Periods in California

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This Employment Law Summary provides an overview of hours of work and required break periods in California.

At Conrey Insurance Brokers and Risk Managers, we want to ensure you are informed on the topics that are important to you. That’s The Conrey Difference. Give us a call at 877-450-1872 or visit our website.

How to protect your Company When Disciplining or Terminating an Employee

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Disciplining or terminating an employee brings about unwanted stress, but it can also open your business to a list of liability exposures. It is easy to believe that once an employee has received a corrective warning or has been terminated there will no longer be a problem. This is not always the case. There are many types of claims that an employee can file against you or your company if they feel they have been wrongly disciplined or terminated. But, there are ways to help prevent a claim if you are aware of the risks.

It is essential to clearly define your company expectations and individual roles for employees in a handbook which employees should sign. Conduct periodic performance reviews. The most important strategy to help prevent a lawsuit is to keep a paper trail for every employee and include corrective actions and performance reviews. Never embarrass a terminated employee by bringing in security to escort unless they were terminated for theft or a violent offense. Institute a zero-tolerance policy against discrimination, drug abuse and harassment. Also, establish an “open door” policy in which employees can report incidents without the fear of retaliation.

Add another line of defense with Employment Practices Liability Insurance. Even if you or your company are not found guilty of wrongful termination or discipline, lawsuits can be expensive, even devastating. EPL insurance can help offset some of these costs.

To learn more about ways to protect your business before disciplining or terminating an employee, read this informative article. At Conrey Insurance we want to ensure your business is properly protected against potential risks. That’s The Conrey Difference. Give us a call at 877-450-1872 or visit our website.

Contracts can feel like a tangled mess of legal jargon, but we’re here to help you make sense of it all.

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Once you’re ready to sign a contract, it can be tempting to look right at the dotted line and ignore all of the legal jargon. However, you need to know what you’re signing and how it affects the amount of risk you’re accepting. Use this guide to understand how to transfer risk using contractual provisions and help ensure you (or your organization) won’t be caught in an unexpected dispute.

What do contracts have to do with insurance? Everything! Insurance and risk management go hand in hand. If your insurance representative is not helping you evaluate and mitigate your risk, give us a call. Conrey Insurance Brokers and Risk Managers are specialists at making sure that everything you’ve worked so hard to achieve is well preserved and protected; we’re here to help you navigate through every aspect of managing your risk. That’s The Conrey Difference. It’s easy to get started. Just call us at 877-450-1872 or visit our website. Before you sign on the dotted line.