More than 80,000 employment practices claims were filed with the EEOC in 2001, resulting in monetary damages of more than $247 million. With the numbers continuing to climb, the next target could be virtually any company -- large or small, public or private.  It could be your business.

The frequency and severity of employment practices claims continues to rise rapidly. And the cost of defending an employment practices lawsuit, even one that ultimately proves groundless, easily runs tens of thousands of dollars.

Adding burdens for the unwary or unprepared employer, recent Supreme Court rulings have created limited affirmative defenses. When faced with a claim of sexual or other form of harassment, an employer must show that it published an anti-harassment policy; it offered an easily used remedial procedure; and that the alleged victim unreasonably failed to use that easily available program. Even then, an employer still may be liable for tangible economic harm caused by harassment ( or even hostile environment harassment under state law).

Raising The Bar

"Employers are likely to be held liable for punitive damages unless they can show that they had implemented a plenary program to avoid harassment and discrimination.  In effect, the employer must show that the discriminatory behavior by a supervisor occurred despite the safety net created by preventive policies and management training" says Lucy Ann Galioto, Employment Practices Liability Insurance (EPLI) product manager at American International Companies.

"Brokers helping clients to combat discrimination claims and other employment practices liabilities must consider this new environment and support clients in mounting a two-tiered assault that combines sound financial protection with proactive loss prevention", Galioto says.