Emerging policies and practices being initiated by the EqualEmployment Opportunity Commission may increase litigation and thecosts of defending employment practices lawsuits down the road, EPLinsurance experts say.

“The EEOC sets the tone of employment litigation,” said CathyPadalino, vice president and Chubb Specialty Insurance Companyemployment practices liability product manager.

That being the case, “employers should be aware of the EEOCinitiatives and other employment industry trends,” she said,expressing concern that there are still a great number ofemployers, both public and private, that don't purchase employmentpractices liability insurance.

In addition to recent, formally announced education andlitigation initiatives that Chubb and other carriers aremonitoring–like the federal agency's increased focus on “systemicdiscrimination” and its “E-RACE” initiative–even changes inemployer reporting requirements could have EPL claims implications,according to insurance experts. (See related story, page 12, formore on systemic discrimination, E-RACE initiatives.)

For example, the EEOC has updated the EEO-1 form, a demographicreport that many employers are required to file with the federalagency. The form is required to be filed by private employers of100 or more and federal contractors with at least an annualcontract of $50,000 or 50 or more employees.

This form requires a breakdown of work force by job category,race, ethnicity and gender. While the new format has a number ofchanges to the race and ethnic categories, a change that insuranceexperts believe is significant requires the reporting of jobcategories for executives, managers and supervisors.

This new division will make it easier for EEOC officials toquickly determine the percentages of women and minorities inexecutive positions and to ascertain whether “glassceilings”–informal barriers to advancement–are in place.

The changes go into effect in 2007, and the first reportingperiod is July-September 2007.

Companies must submit the report to the EEOC by Sept. 30.

From an insurance perspective, “we need to evaluate potentialexposure to class-action litigation of our existing and potentialclients,” Ms. Padalino said.

“And it is important that our insureds are prepared to defendthemselves against such allegations,” she added. “We have to focuson how they are staying ahead of the curve before they areinvestigated, particularly with respect to recruiting, hiring andmaintaining a diverse workforce.”

At the same time, insurers are monitoring the potential of newrules of Civil Procedure the EEOC implemented last year dealingwith e-discovery.

The changes provide guidance to employers and their lawyersregarding the retention and production of electronic information inlitigation.

“It is likely that the impact of this is that it will increasedefense costs down the road,” Ms. Padalino said. The new rulesoutline specific regulation dealing with retention of electronicinformation.

“The question employers are asking is, What is the potentialimpact of these initiatives from a best practices standpoint?” Ms.Padalino said. “It's critical that employers go beyond the minimumrequirements when establishing employment practices programs.” Thiswill help provide stronger defenses should they be faced withemployment liability lawsuits, she said, noting that Chubb providesonline tools to assist EPL customers in putting the best employmentpractices programs in place.

Asked why the EEOC has updated its form, Ms. Padalino said thatit appears the agency changed the form “to reflect the workplacedemographics of today.”

She explained that the new form, and the report provided by it,“may better enable the agency to monitor the advancement of womenand people of color into upper management ranks.”

As underwriters, Ms. Padalino added, “we will be able to usethis information to better evaluate any potential glass-ceilingissues.”

“We have to focus on how they are staying ahead of the curvebefore they are investigated, particularly with respect torecruiting, hiring and maintaining a diverse workforce.”

Cathy Padalino, VP, Chubb Specialty