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Can Reporting Employee Crime Lead to Lawsuits?

Can Reporting Employee Crime Lead to Lawsuits?Commercial crime can come in many forms; your clients may be the victim of a data breach, or even internal employee theft. In addition to ensuring they are financially protected with an adequate Commercial Crime Insurance Policy, they may also be utilizing another insurance policy, their Employment Practices Liability policy. How could a company director be held liable for an employment practices issue when the employee has committed a crime?

A recent court case may answer this question. The government strongly encourages companies to cooperate in employee crime investigations, however as revealed by the Shell Oil Company v. Writt case in the Supreme Court case, companies can still face civil suits in most jurisdictions if they identify individual wrongdoers to the authorities.

After Shell fired employee Robert Writt for his alleged role in a bribery scheme involving $2.1 million, Writt sued Shell for defamation and wrongful termination. Writt claimed that he had reported what he suspected to be a bribery scheme to Shell, which ordered him to reimburse the contractor of the project over his objections.

Writt did win the wrongful termination claim, with the defamation claim being dismissed. The case found that Shell could not be held liable by their employees even if its reports were false, under Texas’ adoption of absolute privilege for compelled records.

Cases such as this highlight the need for the appropriate insurance coverage. Even if an employee loses an EPLI case, the companies that are charged with the suit may find themselves facing devastating defense costs and legal fees.

At PL Risk we understand the unique liability risks faced by your clients in various professions. For more information on our products and services, please contact us today at 855.403.5982.

 

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