Employer Insurance Coverage

Employers can consistently succeed in addressing daily personnel matters and complaints only when they are prepared to integrate legally sound employment strategies into their everyday workplace operations.

In addition, applicable insurance coverages, such as employment practices liability and directors and operators coverages, must be affective assessed and evaluated to ensure proper coverage.

We regularly counsel our clients on such issues as:

  • Employment Practices Liability Coverage
  • Schmidt Claims
  • Errors and Omissions Insurance Coverage
  • Directors and Officers Coverage

Employment Practices Liability Insurance

Employment practices liability insurance provides protection for an employer against claims made by current, former or potential employees. It covers discrimination, whether based on age, sex, race, disability, etc., wrongful termination of employment, sexual harassment, hostile work environment claims and other employment-related allegations.

Employment practices liability insurance is needed as soon as an employer begins to hire employees. Most investors and directors will require that the employer carry this coverage as part of directors and officers liability insurance, since they can also be held liable in suits relating to employment practices.

"Schmidt Claims" under Workers Compensation Coverage

"Schmidt Claims" are allegations contained in an individual's civil complaint that fall under an employer’s workers compensation coverage. "Schmidt Claims" derive their name from the New Jersey Supreme Court case of Schmidt v. Smith, 155 N.J. 44 (1998). Claims made under Schmidt are based upon the legal view that coverage limitations under the New Jersey’s workers compensation law cannot be permitted to conflict with the state’s legal mandate that all occupational injuries of employees must be afforded insurance coverage.

It is because of this mandate that all employers are required to carry workers compensation coverage and that coverage must afford protection for (1) claims made in the workers compensation courts and (2) claims for work related injuries asserted by persons in the civil division of the State’s Superior Courts. It is this latter form of coverage that is the focus of claims under Schmidt.

By way of definition, "Schmidt Claims" arise when a person experiences a "bodily", or physical injury as a result of claimed emotional trauma. For example, an individual may argue in a civil lawsuit that, as a result of an action or inaction on the part of his or her employer, the individual was caused to suffer emotional forms of distress. These emotional claims may be argued to have emanated from acts of coercion, demotion, discipline, defamation, harassment, discrimination, termination or on charges of hostile work environment on the part of the employer.

Should these claims of emotional damage or distress be shown to directly result in physical conditions on the part of complainant, such as increased blood pressure, vomiting, heart attack, stroke, etc., a "Schmidt Claim" may be alleged to exist. It is at this point that the employer requires our experience with this unique type of claim under the terms of its workers compensation policy.

Errors and Omissions Insurance Coverage

Errors and omissions coverage extends to both W2 Employees and 1099 Subcontractors, and can be worldwide in scope. Generally, this form of coverage is recommended at the time when any business forms and, as such, it should be at the foundation of every company’s insurance portfolio.

Errors and omissions coverage is not provided by a commercial general liability policy which does not provide coverage for errors, contract performance disputes or any other professional liability matters. Quite simply, mistakes happen every day. Employers cannot be in all locations at all times. Errors and omissions coverage insures not only your mistakes, but also the mistakes of employees and independent contractors you hire.

Directors and Officers Coverage

Directors and officers liability insurance provides financial protection for the directors and officers of employers in the event they are sued in conjunction with the performance of their business duties. Directors and officers insurance can be best thought of as a management errors and omissions policy.

Employers need directors and officers liability insurance when they assemble a board of directors. Investors frequently require an employer to show evidence of directors and officers liability coverage as part of the conditions of funding an company. Finally, having employees opens management up to employment practices lawsuits - which usually can be covered under a directors and officers policy.