Preparing for the ASA Lookback Mechanism Deadline

The New York Adult Survivors Act (ASA) made significant changes to the time limits for civil claims involving certain sexual offenses against individuals. Because the ASA's lookback mechanism to file a claim will close on November 24, 2023, please take a few minutes to review the information below. It’s safe to assume some people will file claims at the 11th hour, so here are actions you can take to protect your organization.

What is the New York Adult Survivors Act?

The ASA focuses on civil claims seeking monetary reimbursement for emotional or physical harm resulting from sexual offenses. Plaintiffs can include any individual who has interacted with your organization: current or former employees, customers, vendors, or other stakeholders.

The law incorporates a lookback mechanism that allows reopening of claims previously dismissed due to the statute of limitations. Additionally, the ASA introduces a lifetime lookback window for civil claims (regarding sexual offenses) against employers in New York. This means that no matter when the assault or offense occurred, even if it was decades ago, victims can file a claim.

If an organization conducts business in New York State (NYS), there is a risk of exposure under NYS jurisdiction, and this may also apply to third-party claims (e.g., independent contractors and vendors).

Insurance Implications: What Can Your Organization Do?

The ASA lookback mechanism increases the likelihood of claims against your organization, including your managers and executives. This creates greater exposure for management liability insurance policies. To mitigate the impact of claims arising from ASA, carriers are adjusting underwriting practices, pricing, and policy terms, conditions, and exclusions.

Seek guidance from your legal, finance, and insurance experts on the adequacy of your management liability insurance policies, particularly the following coverages:

• Directors and Officers (D&O): D&O insurance covers claims against company directors and officers for alleged wrongful acts, including those related to sexual misconduct, harassment, or discrimination. It offers protection against personal liability for individuals and reimburses the company for defense costs, settlements, or judgments.
• Employment Practices Liability Insurance (EPLI): EPLI coverage focuses on employment practices claims, including those pertaining to sexual harassment or discrimination. It offers protection for claims brought by employees, including those arising from the ASA lookback period. Typically, it covers legal expenses, settlements, or judgments related to covered claims.

Discuss how you will handle any ASA-related costs above what your current insurance policies cover.

Preventive Measures and Procedures

Ensuring a safe and inclusive workplace requires organizations to effectively address the risks associated with sexual offenses, sexual harassment, and gender discrimination. Here are strategies to mitigate your risks:

• Preventive policies: Create clear policies addressing sexual misconduct, harassment, and discrimination. Communicate and educate employees on their rights, responsibilities, and the consequences of violating policies. Regularly review and update policies to align with changing laws, best practices, and workforce needs. Enforce and apply your policies and procedures consistently across all internal business units and external business partnerships that interface with your organization (e.g., vendors, independent contractors, etc.). You may have liability if a third party such as an independent contractor or vendor has allegedly engaged in unlawful sexual conduct / assault.
• Education: Conduct regular training to educate all employees on workplace conduct, policies, procedures, and how to report a concern or violation. Confirm all employees in the organization have completed trainings and received the most up-to-date copies of your organizations’ policies and procedures. Your employee handbook needs to contain the current policy and procedures for sexual misconduct, sexual harassment, and gender discrimination.
• Communication: Promote an open communication culture for incident reporting, free from fear of retaliation. Provide multiple reporting channels, including an anonymous hotline, dedicated email addresses, or confidential HR contacts.
• Take complaints seriously: Take all complaints seriously and conduct prompt, thorough, and impartial investigations. Maintain confidentiality during investigations and implement appropriate disciplinary action.
• Prioritize equality: Promote a culture that values diversity, inclusion, respect, and equality. Encourage collaboration, teamwork, and mutual respect across all levels of the organization.

ASA lawsuits can implicate any organization for allegedly condoning an environment that facilitates the conditions for sexual misconduct to occur. Recent endeavors to enhance working conditions and reporting procedures can serve as evidence that an employer is striving for improvement. Underwriters, jurors, or judges may take these efforts into consideration when evaluating a case. However, these efforts do not absolve the employer of the conditions that were present at the time of the offense.

Preparing for Possible Litigation

While ASA-related litigation may arise unexpectedly, there are proactive steps your organization can take to prepare:

• Response plan: Create a response plan if one is not already in place, enabling you to address claims consistently, efficiently, and compassionately.
• Review past claims: Determine your previous expenditures related to sexual offenses and identify any dismissed claims where a plaintiff did not receive relief (due to statute of limitations or other reasons). Consult with your finance team to assess the need for setting aside a reserve based on a multiplier of those past expenses and exposures. The ASA statute poses challenges due to the difficulty in estimating the risk exposure.
• Review past complaints: Complaints of sexual harassment that did not previously rise to the level of a legal complaint or demand may give rise to a legal complaint under the ASA. A review of these records may also inform an organization with respect to its exposure and reserve considerations.
• Pre-digital investigation: Establish a method for researching claims predating your digital records.
• Policy review: Gather your current and historical employment policies and procedures, so you can provide them to a court or insurer, if required. Review your employment policies and procedures with legal counsel annually to ensure they are still adequate.
• Work with experts: Speak with your insurance broker to gain a comprehensive understanding of your existing management liability policies, including coverage and limitations.

Being thoroughly prepared is crucial in the event of litigation. Beyond that, remain vigilant and ready for any potential developments until the lookback mechanism closes on November 24th.