AICPA Insurance Programs

Every day, in every state, hundreds of employment-related complaints are lodged against employers. While many of the larger, more sensational cases make headline news, most jury verdicts and settlements do not. The most common types of employment-related actions brought against employers involve allegations of sexual harassment, and discrimination based upon race, gender, age, disability, and pregnancy. The following selection of actual published cases illustrates the broad spectrum of costs associated with jury verdicts and settlement amounts. Most defendants in employment-related actions do not have Employment Practices Liability Insurance.

Case 1

Morse V. Southern Union Co., 1997 WL 1716524 (LRP Jury)
A 52-year old male employee was terminated when his position as a supervisor, which he had held for 32 years, was eliminated. The employer claimed that the position was eliminated because the installation of a new computer system allowed one employee to do the work previously requiring four employees. The discharged employee claimed age discrimination based on the president's remarks favoring the hiring of younger employees because they were more ambitious and willing to accept change. In a subsequent trial, the jury found that age was a motivating factor in the employer's decision to terminate the plaintiff.

Compensatory damages: $185,000
Punitive damages: $400,000

Case 2

Cloud V. Western Atlas ET AL, 1997 WL 1716546 (LRP Jury)
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.

Verdict: $7,235
Attorney fees: $400,819

Case 3

Atchley V. Nordam Group, Inc., 180 F. 3d 1143 (10th Cir. 1999)
A document clerk supplied by a temporary agency sued an aircraft component manufacturer alleging violations of the Pregnancy Discrimination Act, Title VII of the Civil Rights Act of 1964 and the Family Medical Leave Act (FMLA). When the plaintiff took maternity leave from her job, she received assurances that she could return to the position at the completion of her leave. When she tried to return as promised, she learned that there was no position for her.

The company argued that is was not the plaintiff's employer since she was paid by the temporary agency. The court ruled that since the company controlled every aspect of the plaintiff's employment, the company was the plaintiff's statutory employer under Title VII. The jury returned a verdict in favor of the plaintiff on her Title VII and FMLA claims.

Compensatory damages: $26,000
Punitive damages: $65,000

Case 4

Pence V. Speaco Foods, Inc., 1999 WL 1823215 (LRP Jury)
A human resources director alleged that her employer, in violation of the Americans with Disabilities Act, failed to accommodate her medical condition after she was diagnosed with Multiple Sclerosis. After being fired, she claimed wrongful discharge, lost income and lost benefits. She claimed that she had never been warned of her alleged poor performance or disciplined prior to her discharge. The defendant denied the plaintiff's allegations and contended that she had not been fulfilling her duties.

Settlement amount: $200,000