Insurance Programs

As an employer, you are at risk of a claim being filed by the people you hire and even the people you decide not to hire.  You should be aware that there is a growing willingness for employees to seek compensation for real or perceived workplace injustices.

Are employment practices liability (EPL) claims common?
New employment laws protecting employees have led to an increase in employment-related claims against management. Every year for the past 14 years, over 75,000 claims for sexual harassment, wrongful termination, and discrimination (age, sex, race, pay, etc.) have been filed against employers under statutes enforced by the Equal Employment Opportunity Commission (EEOC website updated 2/26/08).

Are CPA firms vulnerable to EPL claims?
As a CPA firm, you are particularly vulnerable because you have highly educated staff, rigid apprentice periods, and labor-intensive products and services. The intense work and lengthy hours prevalent in professional firms can create an atmosphere that is ripe for hostile work environment claims. The potential for claims alleging employment discrimination, wrongful discharge, and sexual harassment is a significant issue for CPA firms like yours.

How do EPL suits fare in the courts?
Here are some case scenarios:

Case Scenario #1
Settlement Amount: $30,000
Attorney Fees: $10,000

A former manager, demoted by his CPA firm employer, filed a charge with the U.S. Equal Employment Opportunity Commission alleging that he had been discriminated against because of his age, that he had been subjected to a hostile work environment, and that he was terminated in retaliation for reporting his complaints to the firm’s Human Resources Department. The Claimant was terminated shortly after lodging his complaints. Despite reasonable efforts to secure alternate employment with a salary commensurate with his previous position, the Claimant was unemployed for one year.

The CPA firm denied the allegations and contended that the Claimant was terminated due to a need to reduce staff at the firm. Although the firm contemplated the termination prior to the Claimant’s complaints, the firm’s plan to terminate the Claimant was not clearly documented in the Claimant’s personnel file. Further, the timing of the termination — weeks after the Claimant’s complaints to the Human Resources Department — enhanced the Claimant’s argument that he was terminated solely because he lodged his complaints.

Case Scenario #2
Verdict: $7,000
Attorney Fees: $400,000

An Assistant Controller sued her employer, its parent company, and three individual supervisors alleging that she had been discriminated against because of her sex and constructively discharged in violation of the Civil Rights Act, and retaliated against for filing her claims. The plaintiff contended that, although she was qualified for a promotion, she was passed over because of her sex, that the Chief Financial Officer had stated that a woman would not be allowed in any of the higher positions, and that all of the available positions were given to males. She gave as her reason for resigning the lack of upward mobility for women within the company.

The defendants denied the allegations and contended that the plaintiff lacked the required experience for the promotions and that her resignation had been voluntary.

The examples provided in this material are for illustrative purposes only and any similarity to actual individuals, entities, places or situations is unintentional and purely coincidental. In addition, the examples are not intended to establish any standards of care or to serve as legal advice appropriate for any particular factual situations or to provide an acknowledgement that any given factual situation is covered under any CNA insurance policy.

Would you know if you had such problems with your staff?
Perhaps, but while you’re busy running your business, it is possible that you are unaware that:

• Your employment application may unintentionally contain illegal questions.
• A sexual relationship is taking place between a manager and a member of your staff.
• A staff member is being sexually harassed by another employee.
• You have not made what are considered “reasonable” accommodations for the disabled.

Is it possible to keep up with employment law and run your business?
Yes. This is a common concern, and fortunately, we have the solution. As a member of the AICPA, you are eligible to take advantage of an employment practices liability program designed especially for CPA firms.

It’s called CPA EmployerGard and it provides two important benefits: insurance coverage and risk control services to help you understand and comply with the rapidly expanding arena of employment law.

One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. CNA is a service mark registered with the United States Patent and Trademark Office. Copyright © 2009 CNA. All rights reserved.

Aon Insurance Services is a division of Affinity Insurance Services, Inc.: in CA, MN & OK, (CA License #0795465) Aon Insurance Services is a division of AIS Affinity Insurance Agency, Inc.; and in NY, AIS Affinity Insurance Agency.