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Law Times • JuLy 13/20, 2009 FOCUS EPL flies under the radar in Canada BY JULIUS MELNITZER For Law Times no shortage of either these days. But a hybrid of the two is still fairly rare in Ontario — the employment practices liability insurance lawyer. EPL fi nds its origins in the U.S., E where the potential for workplace liability rose following passage of the Civil Rights Act in the '60s. "And when Anita Hill's testi- mony about Clarence Th omas put harassment in the spotlight, suing employers became a bit of an in- dustry," says Jordan Solway, gen- eral counsel and vice president for claims at the Munich Reinsurance Company of Canada. "Because employment at will is the rule in the U.S., the exposure tends to be on the human rights side." But while EPL has been avail- able in Canada for 15 years — Th e Chubb Corp., Zurich, Liberty Mutual Insurance Co., and Ameri- can International Group, Inc. are among the insurers who off er it — it tends to fl y under the radar. He says many companies "don't buy it. Th e ones who do tend to be American-based companies with Canadian exposure, or Canadian companies with U.S. exposure." Still, it's not uncommon for companies who have EPL to be unaware that they have the cov- erage. "EPL is frequently sold as part of a broader insurance pack- age usually including directors and offi cers coverage," says Jeff Good- man, an employment law specialist at Heenan Blaikie LLP. "Some em- ployers might not even realize they have insurance for their employ- ment claims. So they might only fi le for coverage with the insurer well after they have begun defend- ing the litigation on their own." Th e problem is that EPL re- quires employers to give notice of claims within a relatively short period, usually 20 to 30 days, and defi nitely before the employer takes any active steps in defend- ing any litigation. "Th e insurers are good about this type of mistake being made by the insured, but it's not the preferable way to go," Goodman says. "Unfortunately, not that many counsel are aware of this type of insurance, and more of them need to be asking whether their clients have EPL before they do anything to defend an employ- ment claim, because failing to do so might jeopardize the coverage." EPL policies can cover a myriad of situations such as human rights claims, occupational health and safety reprisal claims, and wrong- ful dismissal claims, including mass termination claims. But they don't cover the newly popular wage and hour overtime class actions. "Th e insurance isn't meant for situations where claims re- late to non-payment of wages or benefi ts," Goodman says. For many Canadian companies, the real benefi t lies in protection against claims of constructive ter- mination by senior employees. "By the time you factor in bo- nuses and stock options and the like, you can easily be looking at millions in exposure," Solway says. Th e dynamics of the legal mar- ket for EPL work have also shifted. "Originally, insurance boutiques Untitled-3 1 mployment law cases and insurance lawyers have one thing in common: there's that did personal injury work tend- ed to handle these claims, but they discovered that it was diffi cult to walk into a fi le when the client was accustomed to dealing with able employment lawyers," Goodman says. "Over time, the insurers have moved to specialty counsel, espe- cially with regard to the types of statutory claims that arise from the recent amendments to Ontario's human rights legislation." But which employment lawyers get the fi le? Is it the company's law- yers or the EPL specialists? "Sometimes the insurer stays with the company's counsel, and sometimes they bring in their own counsel. . . . A lot depends on the degree of ownership that the com- pany's counsel have in the advice given before the lawsuit started." For example, if cause is at is- sue, the insurer may perceive that company counsel, having advised the employer in respect of the termination, is not suffi ciently Key Developments in Environmental Law 2008-2009 objective to continue defending the action on the insurers behalf. "It's hard to give cold, objec- tive advice in these circumstances," Goodman says. "But there's no question that counsel don't like being removed from a case and having their client work with another capable fi rm." LT PAGE 13 Follow the continuing shift of the legal climate towards going "green" This collection of timely, insightful and judicious articles is written by a cross-section of highly qualified environmental law practitioners from across Canada. 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Hardbound • 150 pp. • May 2009 • Standing order $105 • P/C 0152140000 • Current edition only $115 • P/C 0152010000 • ISSN 1913-0252 For a 30-day, no-risk evaluation call: 1.800.263.2037 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. Berger_Key Developments (LT 1-3x4).indd 1 LT0629 6/24/09 2:40:29 PM Ownership notwithstanding, your business is our business. The most productive relationships are born of mutual understanding. That's why we're as committed to getting to know our clients' business as we are to helping them understand the intricacies of labour and employment law. Toronto 416.408.3221 I www.lawtimesnews.com London 519.433.7270 I filion.on.ca 7/6/09 3:02:37 PM (Formerly Stanley D. Berger and Dianne S and contributers The Year in R Enviro nmental Law: eview) axe John P. Barry, Jean- by Alfred Page, Adam Chamberlain and John Vellone by Florence Dagicour by Sandra A. 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