a practice that does not appear to be discriminatory on its face, but the application of the
practice has an adverse impact on members
of a minority group.
Of course, discriminatory acts are not
limited to the employer-employee relationship and can occur in many other contexts.
by an accident, the complaint did not allege
harm caused by an occurrence.
Jurisdictions generally agree that intended
consequences of an intentional act are not
occurrences, but some courts also hold that
unintended results of intentional acts are
covered occurrences. Other jurisdictions,
Disparate treatment involves singling out a group and
treating them less favorably than others who are similarly
situated. Disparate impact, however, deals with the
consequences of a practice that does not appear to be
discriminatory on its face, but the application of the practice
has an adverse impact on members of a minority group.
Consider the Wisconsin case of Gatlin
v. Delux Entertainment, LLC, 2010 WL
1904984. Five African-American men alleged they were refused entry into the insured’s nightclub because of their race on
several occasions. The men filed a lawsuit
based on alleged racial discrimination in
a place of public accommodation and discrimination in contractual relations, stating that the club implemented a policy of
denying African-American customers the
full and equal enjoyment of goods, services,
facilities, privileges, advantages, and accommodations on the same basis as non-African-American customers.
Society Insurance Company provided
coverage for the insured under a business
owners’ policy. The insurer argued that the
complaint did not trigger a duty to defend
because the claims did not arise out of an
occurrence because the doormen’s actions
in refusing the men entry to the nightclub
were not accidental. The insured countered
that while refusing entry was a conscious
decision rather than accidental, this did not
mean that the insured intended to discriminate against the men.
The district court said that the insured as-
sumed that a volitional act can constitute an
accident (and thus, an occurrence) simply
because the person committing the act did
not intend to violate the law or inflict harm
on the victim. Wisconsin courts have held
that a volitional act is not an occurrence even
if the actor did not intend to cause harm. Ac-
cordingly, because the complaint did not al-
lege that the plaintiffs’ injuries were caused
like the court in Gatlin, oppose that view and
say that it does not matter what the results
were because the initial act was intended.
Whether coverage applies could come down
to the luck of geography.
Susan Massmann, CPCU, is managing
editor of electronic publications for the
reference division of Summit Business
Media, the parent company of Claims
Magazine and PropertyCasualty360-
National Underwriter. She may be
reached at firstname.lastname@example.org.
The cost of insuring a business for
EPLI coverage depends on a variety of factors, such as the number of
people employed; if prior suits have
been lodged against the company;
the percentage of employee turnover;
and if the business established rules
and practices in place. Depending on
the size of the company, EPLI can be
offered as an endorsement to a business owner’s policy (BOP), or as a
specific stand-alone policy.
EPLI coverage is usually written on
a claims-made basis. This means the
incident resulting in the claim had to
occur during the coverage period. Because employment claims often come
months or even years after the alleged incident, an employer might be
vulnerable if the insurance coverage
was dropped or if tail coverage—
liability insurance that extends beyond
the end of the policy period—was not
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