An incident that occurred at a New York City hotel over the weekend caught my attention for many reasons, including the potential insurance ramifications and coverage gaps that could arise.

A white woman accused a young Black teen of stealing her iPhone. They were both guests at the boutique hotel in Manhattan. The teenager was with his father, a prominent musician, who recorded the incident with his smartphone and shared it on social media. In the video, the woman can be seen accusing the teen of stealing her phone and getting fairly aggressive.

Here is a link to the story from CBS: https://www.cbsnews.com/news/woman-falsely-accuses-boy-stealing-iphone-nyc-keyond-harrold-son/

Spoiler alert: the woman’s phone was dropped off by an Uber driver a few minutes after the incident.

At one point in the video, someone identifying themselves as the hotel manager asks to see the teen’s phone, but the father responds that he doesn’t have to show his phone to anyone. Hotel staff then called the police on the woman because of her aggressive behavior.

The teenager’s family has secured representation from a prominent civil rights attorney and is putting pressure on the city to bring charges against the woman in the video. At this time, it doesn’t seem that they are accusing hotel employees of discrimination or wrong-doing, but that could change.

It’s easy to see how things could have gone differently. There could have been less experienced staff on hand, or the teenager might have been alone at the time.

What happens when an employee acts in a way that brings allegations of discrimination from the public or customers? Employment Practices Liability Insurance (EPLI) with a third party coverage endorsement is a type of insurance created to cover this exposure.

What is EPLI and Third Party Coverage?

EPLI is a type of management liability insurance coverage that would respond to claims or lawsuits alleging things like:

• Hostile work environment
• Sexual harassment
• Discriminatory hiring and firing (or failure to hire)
• Whistleblower retaliation
• Unpaid overtime

If you or your company has ever dealt with the Equal Employment Opportunity Commission (EEOC), then you are familiar with the types of issues EPLI insurance would cover. If an employee wants to sue their employer for discrimination, they first need to file a complaint with the EEOC.

There is a lot of litigation going on right now in this area, and EPLI is important coverage to have. Furloughs and layoffs resulting from the COVID pandemic have only exacerbated the situation. However, just buying EPLI would not have helped the hotel because the potential discrimination involved a member of the public. That’s where third party coverage comes in.

“Third party” basically means anyone who is not management or an employee at the company. Third party coverage is added to an EPLI policy by endorsement and would cover claims of discrimination or sexual harassment brought by vendors, clients or members of the public.

For example, a vendor accuses one of your employees of sexually harassing them. Or, a prospective customer claims that your salesperson wouldn’t sell to them because of their race.

I insure a banquet hall that doesn’t actually have any employees. The hall is run by a charitable organization and volunteers. We write EPLI for them just to get third party coverage, because they are interacting with the public on a daily basis.

As a business owner, you can’t watch all of your employees all of the time. The owners at the hotel may be the most upright, open-minded people you have ever met. However, they can’t control decisions made by managers, employees or other guests on a daily basis.

If you currently have EPLI, find out how much it would cost to get third party coverage. If you don’t have EPLI, let’s get you a quote.

If you have any other questions, email me, Phil Yanan at pyanan@wwfins.com or call me at 786-454-8383.