Employment Practices Liability

Why do today’s business owners need to be concerned about an employment practices lawsuit? Due to the economic recession layoffs have been at unprecedented levels, unemployment rates are holding at higher than expected rates, and time out of work for many is steadily increasing. There is a direct correlation between reductions in force and increases in employment claims.

The legal landscape also continues to evolve with amendments to laws and expansive court cases, which may make it challenging for employers. For instance:

  • The Americans with Disabilities Act (ADA) Amendments Act of 2008, effective January 1, 2009, broadened the interpretation of “disability” by expanding what is meant by “major life activities.” A result of the ADA Amendments Act may be increased employment practices liability exposure for employers because more employees will now be considered disabled.
  • The Lily Ledbetter Fair Pay Act of 2009 modifies Title VII, the Age Discrimination in Employment Act, the Rehabilitation Act and the ADA to clarify that a discriminatory pay decision occurs each time compensation is paid pursuant to the discriminatory decision. The law is retroactive, with an effective date of May 28, 2007. The Act may lead to an increase in discriminatory pay claims as well as an increase in defense costs for such claims. Plaintiff lawyers may be more likely to bring pay discrimination claims, particularly mass/class actions.
  • The U.S. Supreme court continues to open the floodgates for retaliation claims. On January 26, 2009, the U.S. Supreme Court issued its latest decision broadening the circumstances under which employees can pursue retaliation claims against their employers under Title VII. In Crawford v. Metropolitan Government of Nashville and Davidson Cty., the high court held that the “opposition clause” of the anti-retaliation provision of Title VII “extends to an employee who speaks out about discrimination not on her own initiative, but in answering questions during an employer's internal investigation.”
  • The American Recovery and Reinvestment Act of 2009 contains broad new protections against retaliation for whistleblowers. Given the state of the economy and growing job losses, the new Amendment is likely to create a significant opportunity for retaliation claims against employers.

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Next: Fiduciary Exposures