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Handling Employment Claims

Spring 1996

All employers, both public and private sector, should consider implementing a procedure for the handling of formal complaints filed against the employer by employees. The risk of failing to respond to a lawsuit or state or federal agency proceeding is too great without some type of procedure in place.

It is becoming more common for employers to have purchased some type of insurance coverage to handle claims of discrimination and other allegations of wrongful acts against employees by the employer. Insurance policies generally contain a requirement that the insurance carrier be put on notice of any claims against the carrier that might be covered by the policy.

The internal policy of an employer should be to systematically submit all claims against the employer to the insurance carrier and let the carrier make the determination as to whether coverage exists. The types of claims contemplated by this article are claims of employment discrimination, wrongful termination, or any other variously crafted claims against an employer filed in court or an administrative agency. The scope of the article does not cover grievances which would be covered pursuant to collective bargaining agreements, and not covered by insurance policies. However, while the grievance itself would not generally be covered by an insurance carrier, depending upon the allegations of a grievance, it may be advisable in certain circumstances to submit matters to the insurance carrier at the earliest stages to put the carrier on notice.

By submitting claims to insurance carriers in a timely manner, the employer is in a better position to have the insurance company provide coverage for the case. If a carrier questions whether coverage is applicable, it will sometimes provide an insurance defense with a reservation of rights as to the ultimate outcome. However, this is beneficial to the employer, as it generally obtains assistance through the insurance policy for a defense to employee lawsuits.

Public sector entities should also implement a procedure for handling notice of claims against the public entity. Pursuant to Sec. 893.80, Stats., before a claim can be brought against a governmental entity, the claimant must file a written notice of claim and an itemized claim of damages. If the municipality formally denies the claim and sends a letter to the claimant with specific language as to the rights of the individual to bring suit, such procedure will reduce the statute of limitations to six (6) months. This can be beneficial to the municipality and should be followed on a routine basis. Appropriate letters and procedures would need to be reviewed with counsel.


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