Two years is too long to wait before reporting an EEOC charge to your EPL carrier, according to a recent a court decision from the Western District of Virginia. A company’s employment practices liability policy defined “employment claim” to include “a formal administrative or regulatory proceeding commenced by the filing of a notice of charges…including…a proceeding before the Equal Employment Opportunity Commission” and it required that notice of a claim be given to the carrier “as soon as practicable.”  The company received notice in April 2011 that a former employee had filed a charge with the EEOC alleging employment discrimination, but it did not report the charge to its carrier. More than a year later, after initially dismissing the charge, the EEOC found reasonable cause to believe discrimination had occurred and ordered the parties to engage in mediation in March 2013. The company waited another five months – to February 2013, nearly two years from the date of the original charge – before informing the carrier of the pending mediation. The carrier denied coverage due to the delayed report.

In later coverage litigation, the court sided with the carrier. The court held it was unreasonable as a matter of law for the company to have waited so long before notifying the carrier of the EEOC claim. The court reasoned that because the policy defined “employment claim” to include an EEOC charge, it was not reasonable for the company to wait until it knew a lawsuit would be filed before invoking the policy. The court also held that while the carrier was prejudiced by the delay, the length of the delay alone was sufficient to conclude that the company breached the policy’s reporting requirement. This serves as a not-so-gentle reminder to check your policy’s reporting requirements when you have information that might qualify as claim under your policy. While there may be arguments against a late notice defense in a given case, why give an insurance company the defense to begin with? The case is E Dillon & Company v. Travelers Casualty & Surety Company of America, Case No. 1:14CV00070, Western District of Virginia, and the court’s decision may be found here.