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By DAN REYNOLDS, senior editor of Risk & Insurance®

If the facts of the accuser can be believed, what went on at Pleasant Grove, Utah-based Lone Peak Controls is a bit strange and unusual.

Some of the more eye-catching elements of the 12-page complaint allege that company owner Derek Wright set a dress code for Anderson that included "miniskirt Mondays", "tube-top Tuesdays", "wet t-shirt Wednesdays" and so on.

You get the picture. If these facts are straight, Wright wasn't out to win any Mr. Sensitivity awards.

Kenneth Parkinson, Ms. Anderson's Provo, Utah-based attorney, didn't return a phone call. But a response filed on behalf of Wright and Lone Peak Controls by Barnard Madsen and Aaron Dodd of Fillmore Spencer LLC, also of Provo, asserts that Anderson was in on the game and may have only objected after a point.

"Plaintiff was fully engaged in and participated in said banter and jokes, and...Plaintiff often initiated such banter and jokes on her own," according to the complaint response.

In addition, according to the Fillmore Spencer attorneys, Anderson "often sent off-color e-mails and funny stories" to Wright.

Okay, let the e-discovery begin.

If things go against Wright in court, he and his employer finds themselves in an environment for these types of employment liability claims that isn't what it used to be, said Mike Tompkins, a Kansas City, Mo.-based vice president and senior claims consultant with Lockton Companies LLC.

"The public, in general, are upset by covert sexual harassment, and willing to punish employers who do not stop sexual harassment from occurring in the workplace," Tompkins wrote an in e-mailed response to questions from Risk & Insurance®.

"There are a lot of sympathy factors at play when an individual is subjected to unwanted advances, comments or physical contact," he wrote.

Some of the larger settlements in recent memory included a $34 million judgment against Mitsubishi stemming from charges from female employees at its Normal, Ill. plant and a $95 million judgment handed down against Atlanta-based rental company Aaron's Inc. in June. Federal caps could limit the Aaron's award to south of $40 million and the company said it plans to appeal.

For cases involving even a single accuser, the legal costs can get into the six figures pretty quickly, according to members of the Management & Professional Risk Group at Frank Crystal & Co.

"Every claim has to be defended and where that defense goes depends on your initial posture and the plaintiff's posture in the case," said Brian Dunphy, a New York-based managing director of that group.

What is an even scarier employment practices liability exposure these days for carriers are wage and hour disputes, said Mike Santocki, a director in the Frank Crystal group.

"Insureds are not going to be able to transfer that risk much longer," Santocki said.

That opinion was echoed by Bertrand Spunberg, a New York-based senior vice president of private company management for Hiscox.

"EPLI claims frequency and severity is on the rise, which is starting to lead to some dislocation in appetite among carriers," Spunberg wrote in e-mailed responses to questions from Risk & Insurance®.

"For example, some carriers are starting to retrench from jurisdictions that are seen as presenting a higher exposure (e.g. California).Also, some carriers are tightening terms (e.g. higher deductibles), or are pulling away altogether from coverage areas that are perceived as being more risky (e.g. defense costs coverage for wage and hour claims)," Spunberg wrote.

September 30, 2011

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