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Insurance to Reduce Liability in Retaliation Cases

Businesses may be able to lessen the losses from retaliation claims with liabi

The Dodd-Frank Wall Street Reform and Consumer Protection Act includes a provision that prohibits a company from retaliating against an employee in the form of termination, harassment, threats or discrimination just because they give information about unethical or illegal practices to federal regulators.

While that rule and other labor laws that forbid retaliation may seem fairly straightforward, it can prove much more difficult to prevent these practices from happening, particularly in the lower ranks of a company, where activities occur far from the view of the boardroom.

As CFO magazine reports, the rate of employees filing retaliation claims has been growing in the past decade, in part because of more terminations, but also because the number of protected groups is increasing.

The losses from retaliation lawsuits can be steep, even if an employer wins the case, so one way companies can protect themselves is with directors' and officers' insurance policies, which will often include employee retaliation charges, the news source reports.

"When deciding whether to buy insurance for employee retaliation, companies will have unique considerations, depending on size," CFO says. Big companies are more likely to see more serious claims, but small companies have more at stake if they lose in a retaliation suit, according to the source. When reviewing policies, check to see if they cover third-party discrimination or contractor claims, the news outlet advises.