The Employer Strikes Back,

1. The Employer Strikes Back, or so the Retaliation Claimant Says Washington, D.C. ~ November 7-9, 2007

2. The Employer Strikes Back Panel Members • MODERATOR: Thomas Paschos, Attorney at Law, Thomas Paschos & Associates, PC • Wendi Barish, Partner Weber Gallagher Simpson Stapleton Fires & Newby LLP • Thomas Katona, Managing Member Apogee Insurance Group LLC • Gene Mason, Vice President W.R. Berkley Company (Watch Hill Division) • Anthony J. Fowler, Assistant Vice President & Claims Counsel The Hartford

3. Why and How Burlington has Changed the Game • What are the trends in retaliation claims post Burlington? • What is the affect on underwriting? • What is the market doing in light of Burlington?

4. Why and How Burlington has Changed the Game • What can Insurers/Employers/Legal Counsel do to Protect Against Retaliation Claims? • How is the EEOC reacting in light of Burlington? • How Proactive Must Insurers/ Insureds/ Employers/ Legal Counsel be in light of Burlington?

5. Burlington Northernv. White • Supreme Court, 2006 • Employee reassigned to another position with same pay and benefits • Employee claims higher scrutiny lead to suspension which was overturned • Court found conduct could be found to be retaliatory • Reasonable employee standard emerges (a/k/a employers’ nightmare created)

6. McGowan v. City of Eufala • Third Circuit, 2006 • Employee claimed retaliation for supporting a co-worker’s claim • Suspension, denial of reassignment, harassment • Termination/Suspension for prisoner hanging with belt • Court found retaliation claim lacked evidentiary support to show proximate cause • Lesson: document, document, document

7. Williams v. W.D. Sports • Tenth Circuit, 2007 • Female hockey player claims retaliation after claiming sexual harassment • President confronts her with rumors of sexual relations with players, coaches, season ticket holders; suggestion to resign as continuing might ruin marriage • Court found President’s conduct could be retaliatory • Lesson: don’t go there!

8. Jenks v. Modern Woodman of America • 2007, Tenth Circuit • Employee was a manager at an insurance company. • Demotion and termination results in settlement of claim. • Reapplies after receiving form letter and is denied employment based on release • Court found conduct did not constitute retaliation. • Lesson: do not invite people who have sued you to reapply for a position. Make sure release includes language specifying no re-employment.

9. Michael v. Caterpillar Financial Services • 2007, Sixth Circuit • Employee gets involves in a dispute and is placed on leave, files EEOC Complaint same day claiming race discrimination. • Internal investigation of dispute results in places on 90 day performance plan or job transfer. Successfully completes performance plan. • Ultimately transferred and promoted. • Court found no retaliation. • Lesson: employees can still do wrong in the eyes of the court.

10. Hare v. Potter • 2006 Third Circuit • Postal worker claims sexual harassment and files EEOC claim. • Requested time off for deposition and was told not so nicely by Supervisor to drop case and starts receiving harsher treatment by Supervisor. • Postal worker has mental breakdown, ends up on leave and Supervisor changes locks. • Court found conduct = retaliation. • Lesson = order your stamps online.

11. Kessler v. Westchester County Dept. of Social Services • 2006, Second Circuit • Employee claimed he was denied promotions due to age, gender, and religion. • Transferred to Yonkers, same pay and benefits but less people to supervise • Court found conduct could be considered retaliatory. • Lesson: Do not transfer people who claim discrimination just because you can.

12. How is Burlington Impacting the Underwriting Side? • Burlington has changed the game • Retaliation exposure touches all industry groups and risks of all sizes • Reinsurance underwriters are digging deeper • Underwriters updating forms and applications • Plaintiff lawyers desire to get into the courtroom • Concern over increased defense costs and up tick in claims

13. Market Impact Comparison from 2000 to 2006 • Retaliation claims, all statutes, have risen from 27.1% of all EEOC claims to 29.8% or up 2.7% • Retaliation Claims for Title VII only, has gone from 24.7% to 25.8% in 2006 or 1.1% increase • Age discrimination risen from 2000 to 2006 by 1.8% • Sex discrimination gone down from 31.5% to 30.6% • Race down from 36.2% to 35.9% *Source EEOC.gov charge Data System

14. Market Impact Insurance Carrier Reaction • Soft market impact is far greater than Burlington Northern, competition still aggressive • Offering multiple year terms sometimes without renewal application • Higher Deductibles in larger employee insured’s • Little impact on under 200 employee accounts • Carve back for retaliation, especially union NLRA exclusions • More documentation required • Mark

15. Claims Impact Frequency of claims • Retaliation tacked on to discrimination claims • Liability analysis-Change the game, broader standard-reasonable person-(inherently broader) • Damages analysis- huge potential for greater damages due to retaliation component (Isaiah Thomas case) • Cases more difficult to settle early • Advantage Plaintiff • High Plaintiff demands likely

16. Market Impact Still seeing: • Full Prior acts • Defense outside the limits • Deductibles as low as $1000 for under 200 employees, higher deductibles for over 200. • Policy Language changes coming • Typical exclusions like FSLA (Fair labor) NLRA (Labor Relations) OSHA etc can evolve into Retaliation defense but have specific language excluding retaliation. • NLRA typical provisions exclude “discharging or discriminating” outdated definition

17. Helpful Tips for Employers to Protect Against Retaliation Claims • Employer should modify their employment policies and handbooks to include reference to retaliation as a prohibited practice. • Managers must be trained on compliance and understand the new definition of retaliation. • Employees must be advised of the company policy prohibiting retaliation for any type of protected activity.

18. Helpful Tips for Employers to Protect Against Retaliation Claims • Standard best practices consist of written procedures on how to report a complaint of retaliation, insuring prompt and effective investigation and giving feedback to the complaining party about the results of the investigation. • Consider immediate separation of the complaining party from the alleged harasser. • Assign a neutral party (i.e. human resource representative) to monitor the situation after a complaint is made. • Establish a moratorium on any potential adverse action against a complaining employee.

19. Underwriting Considerations Post- Burlington: • Updating applications to address retaliation exposure • Use of higher deductibles • Breakdown prospective Insured’s policies and procedures for reporting a claim, investigating a claim, providing feedback • Documentation procedures

20. Underwriting Considerations Post-Burlington:(cont’d) • Whether or not the prospective insured’s policies include the appointment of a neutral party to monitor a situation after a complaint has been made? • Appointment of an Ombudsman • Employers history of complaints

21. Underwriting Considerations Post-Burlington:(cont’d) • Employee turnaround • Recent mergers or acquisitions • Changes in senior management (possible “whistle blower” potential)

22. Market Conditions: Impact on Claims • Broader terms • Greater frequency and severity • Increased limits and deductibles • Carriers have increased skin in the game

23. Five Key Lessons: Burlington hasChanged the Game • Burlington has dramatically changed how we handle employment discrimination actions. • Everyone must be proactive. Retaliation exposures touch all industry groups and risks of all sizes. • Increased frequency potential and increased defense cost potential. • Education and training is critical all the way around. Market will dictate increase in EPLI sales. • Employers must modify employment policies to prohibit retaliation.

24. AudienceQ & A

25. Many thanks to … • Wendi Barish • Anthony J. Fowler • Thomas Katona • Gene Mason • Thomas Paschos