Alleged sexual harassers like Bill O'Reilly and Harvey Weinstein could lead to a boom in a $2 billion industry
- Many sexual harassment allegations against powerful men have emerged recently, from Bill O'Reilly to Harvey Weinstein.
- Billy O'Reilly's latest settlement to become public is one of the largest at $32 million.
- To protect against the financial risk of sexual harassment, companies are purchasing employee practices liability insurance - a $2 billion industry with room to grow.
Sexual harassment comes at a cost.
If recent headlines are any indication, settlement agreements - deals typically made behind closed doors in exchange for dropping the claims - can be particularly expensive.
Bill O'Reilly reportedly paid $32 million to Fox News legal analyst Lis Wiehl in a sexual harassment settlement reached earlier this year. In 2016, 21st Century Fox paid Gretchen Carlson $20 million to settle her suit against former Fox News chairman and CEO, the late Roger Ailes. Harvey Weinstein paid off accusers throughout his career, including a $100,000 settlement to actress Rose McGowan.
These numbers don't come out of thin air. Settlement amounts are based on many factors, including wrongful termination and retaliation if any. The alleged harasser may foot the bill, like in the case of Bill O'Reilly and Lis Wiehl, but the employer could be on the hook as well.
Companies have taken note.
A growing number of businesses, from Fortune 500 companies to small employers, are opting to purchase employee practices liability insurance (EPLI) to protect the company and its executives from employment-related claims, ranging from sexual harassment to racial or disability discrimination. When human resources trainings fall short and employee rights are violated, EPLI policies limit the financial downside.
Virtually unheard of before Anita Hill's accusations against Clarence Thomas during his Supreme Court confirmation hearings in 1991, EPLI is now a multi-billion dollar industry. Companies paid over $2 billion in EPLI premiums last year.
Even Warren Buffett's insurance company - Berkshire Hathaway Specialty Insurance - offers an EPLI product. Launched in November 2016, not long after Gretchen Carlson's settlement with 21st Century Fox, Berkshire Hathaway's EPLI policies provide up to $25 million in coverage for a wide variety of claims, from harassment to "improper internet activity."
"Claims are so common now that its more or less part of the cost of doing business," New Jersey employment lawyer Stephanie Gironda told Business Insider.
Industry insiders expect the Trump administration will be 'much more business-friendly'
Sexual harassment suits can be brought at the state or local level, but complaints are often handled at the federal level through the Equal Employment Opportunity Commission and the National Labor Relations Board. Under President Donald Trump's administration, however, business leaders and insurance providers expect oversight by those organizations to become more lax.
"They have been very aggressively protecting employees. I think we generally expect that this new administration will be very different in that approach, and they'll be much more business-friendly," Aon Financial Services Group national EPLI practice leader Thomas Hams told the Insurance Journal in January.
That assumption may prove true. Trump's labor secretary, Alex Acosta, previously faced criticism when, as a federal prosecutor in Miami, he agreed not to bring federal charges against New York billionaire Jeffrey E. Epstein for paying underage girls for sexual acts.
"Women everywhere are used to being dismissed, ignored, or attacked when raising complaints about men in authority positions," Megyn Kelly said on NBC on Monday. "They stay silent so often out of fear. Fear of ending their careers, fear of lawyers, yes, and often fear of public shaming, including through the media."
For many women, speaking out against powerful men is too big a risk - a risk they can't limit by buying a specialty insurance product. And, as the Harvey Weinstein accusations show, some stay silent long after they achieve success and power in their own right.
But the positive public response to women who have come forward recently could cause the tides to turn. If it does, the potential economic upside potential is huge. Recent research from McKinsey shows increasing gender equality in the workplace could add $4.3 trillion to US GDP by 2025.
Given that, rooting out sexual harassment in the workplace could be worth far more to companies than the protection EPLI offers.