Resources & Insights

Discrimination Ruling Argues for Employment Practices Liability Insurance

June 18, 2020

Spencer Mahoney,
Executive Vice President

3-minute read

Does the U.S. Supreme Court’s decision on LGBTQ civil rights mean that employers should gird for a flood of lawsuits brought by employees upset by discriminatory policies?

Absolutely, especially if they’re the kind of employer that fails to address discrimination based on sexual orientation and gender identity.

The good news is that fewer and fewer do nowadays. In fact, the Society for Human Resource Management estimates that 82 percent of employers nowadays offering health insurance extend those benefits to the same-sex partners of their employees. That figure was under 50 percent in 2014.

Also, as was widely reported, some 200 companies, including Hilton, Nike and the Walt Disney Co., signed a brief in support of the plaintiffs in the case — making it one of the largest instances of employer support for employee plaintiffs in Supreme Court litigation.

So, in other words, if your company for some reason allows what so many other corporations no longer tolerate, your odds of getting sued for discrimination – and losing – are higher than ever, thanks to the court’s landmark 6-3 ruling.

The high court found that an employer who fires an individual merely for being gay or transgender would be in violation of Title VII of the Civil Rights Act of 1964.

“An individual’s homosexuality or transgender status is not relevant to employment decisions,” Justice Neil Gorsuch wrote for the court. “That’s because it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”

From a risk management point of view, if your employment handbook at the moment does not address  nondiscrimination based on sexual orientation and gender identity, you should update it to explicitly list those categories.

Employment discrimination, of course, brings to mind Employment Practices Liability Insurance, or EPLI.

EPLI includes coverage for defense costs and damages related to discrimination claims as well as allegations involving wrongful termination, workplace harassment and retaliation, among others.

We’ve written about EPLI in this space before, most recently in an Insight about famed (and fallen) chef Mario Batali.

It may be worth reiterating, however, that EPLI covers legal costs whether your company wins or loses in court.

It’s also important to note that EPLI coverage is usually written on what’s known as a “claims-made basis.”

That means the event resulting in the claim typically had to occur during the coverage period. Because employment claims often come months or even years after the alleged incident, your company might be vulnerable if your insurance coverage was dropped or if “tail coverage” wasn’t purchased. What’s tail coverage? An enhancement to your policy that extends the reporting period beyond the end of the policy period.

The Supreme Court’s ruling extending legal protections to gay and transgender workers was welcomed by civil rights advocates and plaintiffs lawyers.

No wonder. While plaintiffs still lose most employment discrimination cases in federal court, the decision served to knock down a huge barrier to bringing a discrimination claim. More to the point, the cost of defending and settling employment-related litigation can be staggering. So, yes, more lawsuits against more employers would be no surprise at all and, yes, the need for EPLI is greater than ever.

Spencer Mahoney is the Executive Vice President at CCIG. Reach him at or at 720-212-2051.

CCIG is a Denver-area insurance, employee benefits and surety brokerage with clients nationwide. We do more than make sure you have the right policy. We help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.

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