Gearing up for more age-related battles: a Supreme Court ruling, changing demographics and underfunded programs turn the tide against public risk management bodies

Risk & Insurance, June, 2005 by Michelle Kerr

As more baby boomers swell the ranks of the "graying workforce," the stage is set for an onslaught of employment practices liability litigation. This may be particularly troublesome for public risk managers, according to several industry experts.

The problem of age-related employment risk took a turn for the worse for employers in March, when the U.S. Supreme Court handed down a ruling that will make it easier for employees to bring age bias eases to court.

Public entities often find themselves on shakier ground than commercial businesses in age discrimination disputes for several reasons, the most intractable of which are shortcomings in training for supervisory personnel.

Explains Salvatore Pollaro, senior vice president for Zurich's Employment Practices group, "When you're dealing with for-profit corporations that tend to have more budget dollars available, there's more effort, perhaps, and a larger human resources department to support the kind of training which mitigates some of the losses."

Public entities face additional training challenges because of the regular turnover in elected and appointed officials. That's why gaps in training are all too common, leaving companies with serious exposures in the event of an age-related lawsuit.

The problem, says Dennis Molenaar, national director of risk control for public sector services at St. Paul Travelers in St. Paul, Minn., is that when negative personnel actions must be taken, many supervisors in public agencies don't document the steps they've taken "so when they get to court, they don't have a good sound record of what transpired and what rights the employee was afforded."

Both Molenaar and Jeff Chasen, COO of the Tulsa, Okla.-based AGOS Group LLC, will be speaking about employment practices liability issues this month during a two-part session at this year's Public Risk Management Association conference in Milwaukee.

Chasen says the best way public risk managers can combat the predicted rise in age-discrimination litigation is to go back to basics and renew their focus on the big three: training, supervision and follow-up. "If you do the training up front, supervise to make sure that the principles of the training are in force, and follow up with corrective or disciplinary, action, you'll go a long way toward eliminating the problems of age discrimination," he says.

To those three components, Zurich's Pollaro adds another: communication, specifically between public risk managers, their human resources and legal departments.

"I think if you understand upfront how you're going to handle things, it helps you understand how to prevent them," Pollaro says. "When you're talking about employment practices claims, they're very emotional. In some eases they're very akin to divorce settlements--they're highly charged. And you have this added issue with some public entities of brand equity. It's a different kind of brand equity, but you still don't want [negative allegations] showing up in the local paper."