Is Your EPLI Insurance Covering You For ADA Accessibility Suits?
Digital accessibility lawsuits, once perceived as litigation trend that would quickly die down, have now become commonplace, creating a headache for many companies. These lawsuits allege that a company’s website, mobile app or its digital features violate the American’s with Disability act by denying access to those with visual or hearing impairment or other disabilities. Many of these suits arise from very simple formatting and programming errors such as:
- Failing to include closed captioning or subtitles on audio or video files
- Failing to create easily digestible content with headers and lists for screen readers
- Design that contains poor color or contrast ratio
- Failing to include appropriate alt text / meta tags for website images
- Implementing registration portals and online forms that are not ADA friendly
- Requiring a mouse for website navigation
Despite the fact that the companies hit by these claims mean absolutely no malice and are entirely unaware of any discrimination laws they may be violating, the only warning received is a lawsuit which will likely cost a minimum of 20k-40k to defend against. Additionally, many companies, after being sued once, will implement some remedial fixes to their websites, only to be sued again. In fact, implementing quick fixes such as a website widget to address any compliance issues are not only often inadequate but may also inadvertently make you more of a target. Smaller companies, assuming they won’t be targeted would also be operating with a false sense of security – these lawsuits are affecting everyone from “mom and pop” retailers to fortune 500 companies. Many of these claims are also being driven by litigation “trolls” some of which have individually filed over 200 claims. According to Acessibility.com, a website that maintains a database of these lawsuits across the country:
- There were 2,352 lawsuits in 2021 alone
- More than 80% of lawsuits were brought in New York and California
- More than 22% of all suits filed in 2021 were filed by 5 plaintiffs
- Suits against the consumer goods, retail, apparel and beauty industries accounted for more than 50% of all claims
When served with a digital accessability lawsuit, many companies may assume they are covered by their general liability policy or the media liability coverage provided by their cyber insurance policy. Those coverages however are almost always restricted to cover personal injury or IP-related claims, such as suits alleging plagiarism, infringement or libel/slander. Despite its name, employment practice liability (EPLI) insurance policies are best suited to cover lawsuits alleging ADA violations, however there are certain terms and conditions that need to included, and even then EPLI policies are limited in their scope of coverage.
- Third Party Coverage: Being that these claims are brought by clients or prospective customers, at its most basic, the policy would need to provide coverage for claims brought by 3rd parties.
- Website/Media Coverage: Given that the digital nature of these lawsuits, the policy’s definition of “wrongful act” should specifically include conduct that takes place via electronic communication, electronic media and/or any websites. For companies providing SAAS (software as a service) solutions, that should be further expanded to include software and media as well.
- Broad Definition of Discrimination: 3rd party coverage by default provides coverage for claims brought by persons (other than employees), that may allege harassment or discrimination. In situations where the policy contains a definition of 3rd party discrimination it should be sufficiently broad to include “any actual or alleged violation of any discrimination laws”. Policies containing a more restrictive definition covering only “violations of employment discrimination laws” would be inadequate to cover such claims.
- Coverage for Injunctive Relief: Website accessibility lawsuits almost always include a request for injunctive relief, requiring that the policyholder implement remedial measures to make their website ADA compliant. For that reason, it’s critical that the policy includes within the definition of claim “requests for injunctive and non-monetary relief”. It’s also important however, to remember that most policies explicitly exclude injunctive relief from the definition of “loss”. So any costs related to implementing those remedial fixes, such as hiring a web designer or software developer to implement those required compliance changes, will almost always need to be paid by the organization.
- Fines and Penalties: Fines for ADA violations can range up to 50k-75k for the first violation, with those numbers doubling for any subsequent violation. However these costs will also likely need to be paid by the organization as nearly all EPLI policies exclude coverage for any resulting fines and penalties. Policyholders can however negotiate with the carrier and request that coverage for fines and penalties be included (subject to the most favorable jurisdiction), an enhancement some carriers will agree to.
- Plaintiff’s Attorney Fees: In many cases, the courts may award attorney’s fees to a prevailing plaintiff, so it’s important to review your EPLI policy to ensure claimant’s attorney’s fees are included as a covered “loss”.
- The Hammer Clause: The hammer clause contained within an EPLI policy incentivizes the policyholder to accept the insurance company’s stance regarding any potential settlement. It holds the insured responsible for a specified percentage of any settlement amount above the initial settlement amount proposed by the insurer. Some policies may set that percentage as high as 50%, whereas others may remove the hammer clause entirely. Policies that contain hard hammer clauses can create a slight conflict of interest. The insurance company may be inclined to offer a “nussance payment” (of say 50k), in the interest of expediting litigation, however the insured, believing they have done nothing wrong may prefer not to settle, especially if this is their 2nd or 3rd such lawsuit. In the interest of preserving the ability to fight these claims as aggressively as possible, policyholders should carefully review the hammer clause, asking for it to be removed, or reducing its applicable percentage it as much as possible.
- Retentions & First Dollar Defense: EPLI policies contain a wide range of retentions, ranging from 1,000 to more than 25,000 depending on the size of the company purchasing coverage. Given that these lawsuits are often on the smaller scale, companies with large retentions may ultimately be forced to incur all of the associated costs. Companies operating in industries that are particularly prone to these lawsuits, should consider pricing lower policy retentions. Additionally, some carriers may be able to offer first dollar defense at an additional premium which would only apply the retention to any resulting settlement.
Digital accessibility claims are here to stay and only expected to increase. While the above specifically addresses such lawsuits, the same coverage discussion above also holds true for all 3rd party ADA claims.