Which statement is true?

Bullying behavior in the workplace:
" Is commonplace.
" Can have a significant adverse impact on a company's bottom line.
" Is usually ignored by management.

In fact, all three statements are true. Surprised?

Don't be. The workplace bully isn't exactly the new employment practices liability (EPL) kid on the block. In a 2007 survey conducted by Zogby International, 37% of American workers (an estimated 54 million people) said they'd been bullied at work. If you include witnesses, bullying has affected half of the American workforce, making it four times more prevalent than all types of illegal harassment, including sexual harassment. To make matters worse, the survey indicated employers who are aware of bullying behavior do nothing or make it worse 62% of the time.

The subject has even gotten the attention of The Wall Street Journal. In an August 4, 2008, article, it noted that two Canadian professors had concluded that "bullying can take a more severe emotional and physical toll than sexual harassment, perhaps because companies provide greater support for victims of the latter.

Bullying behavior can be physical or verbal and can be supervisor-to-employee or employee-to-employee. Although not yet illegal in the United States, it is getting the attention of lawmakers in a number of states and around the world.

Bullying can cost a company dearly. This behavior is often associated with:
" High turnover
" Poor employee morale
" Lost time at work
" Damaged reputation
" Difficulty recruiting new employees
" An increased risk of employment wrongdoing and EPL claims

Ultimately, if the bullying results in a claim, significant judgment or settlement costs can be incurred, plus defense costs.

Workplace Bullying and the Law
So far, no specific legal protection exists against workplace bullying in the United States. However, employers have been held liable for bullying that was driven by other charges of illegal employment practices, such as harassment. Consider two recent court cases:

" In 2005, three women filed a complaint with the Equal Employment Opportunity Commission (EEOC) alleging sexual harassment. In the complaint, they claimed they were verbally abused at work by their supervisor, and two of them quit. The women also alleged that the supervisor's conduct was much less severe towards male employees. The court initially granted summary judgment, stating that the harassing behavior was not sexual and that there was no evidence the supervisor intended to replace the women with men. However, on appeal, a higher court reversed the decision, holding that harassing conduct need not be motivated by the intent to discriminate against females, as long as the harasser treats males and females differently. Therefore, the supervisor's bullying behavior could be considered sexual harassment.
" A case that is considered to be the first true workplace bullying trial in the United States was decided in April 2008 by the Indiana Supreme Court. After being the target of intimidating behavior, an operating room assistant sued a surgeon, alleging intentional infliction of emotional distress. The jury awarded the assistant $325,000 in damages.

"Healthy Workplace bills, which would make it unlawful employment to subject employees to abusive work environments, have been proposed in 13 states. (To date, bills had died in committee in California, Connecticut, Oklahoma, Oregon, Vermont, and Washington, but bills were still under consideration Hawaii, Kansas, Massachusetts, Missouri, Montana, New Jersey, and New York.)

Internationally, several countries have taken a more aggressive approach to bullying behavior in the workplace:
" In Ireland, failure to comply with the Code of Practice for Employers and Employees on the Prevention and Resolution of Bullying at Work is admissible evidence in criminal proceedings in violation of the Occupational Safety and Health Administration (OSHA).
" In the United Kingdom, although there is no specific legislation against bullying, several court cases have recognized certain bullying behaviors as illegal employment practices.
" Australia has passed the Workplace Health and Safety Act and the Prevention of Workplace Violence Harassment Advisory Standard, which includes bullying in the definition of harassment.

Canada has taken the biggest strides against workplace bullying. In 2004, the Ontario legislature proposed an amendment to that country's OSHA that would have imposed a statutory duty on employers to ensure employees are free from "workplace-related harassment, but the effort was unsuccessful. However, also in 2004, Quebec passed the Respecting Labor Standards Act, which prohibits "psychological harassment. This Act was tested in a 2006 court case in which an employer was found liable for undermining the "dignity and psychological integrity of one of its managers.

How to Prevent Workplace Bullying
Taking steps to prevent workplace bullying, even where it is not illegal, is in everyone's best interest. Following are some "best practices that can help your company take preventative action against bullying and accomplish both of these goals.

Implement and execute strong anti-harassment policies. A good anti-harassment policy conveys zero tolerance for all types of workplace harassment and addresses specific types of inappropriate workplace behavior, including bullying. It is becoming more common today for employee handbooks to include an anti-bullying provision.

Maintain an open reporting policy and clearly communicate complaint resolution procedures. Ensure that victims of bullying can report incidents without fear of reprisal. The best policies encourage employees to report everything from intimidating behavior to sexual harassment, knowing they will not face retaliation.

Extend anti-sexual harassment training programs to include all types of workplace harassment, including bullying. Additionally, the training should include information on reporting complaints.

Train managers and supervisors to identify and handle bullying behaviors. Such training is especially effective when incorporated into the organization's sexual harassment or equal opportunity training programs.

Stay up-to-date with your state's legislative progress on workplace bullying. With seven states currently considering legislation, it is likely that more states will take up the challenge and that anti-bullying laws will be passed in the near future.

Purchase employment practices liability insurance: Even the best-managed companies are not immune to EPL charges and lawsuits. That is where EPL insurance comes into play.

According to the Chubb 2007 Private Company Risk Survey, nearly two in three private companies don't buy EPL insurance, most often citing "low risk/no exposure as the reason. When you consider that the EEOC alone (not including state employment agencies) handled 82,792 employment practices charges last year, awarding plaintiffs $290.6 million in benefits, the low purchase rate for EPL insurance appears to be misguided. As an emerging employment issue, workplace bullying only heightens the need for insurance protection. Besides covering awards to the plaintiff, an EPL insurance policy also covers defense costs, which can be incurred even if a company is innocent of any wrongdoing.

Does EPL Insurance Include Coverage for Bullying?
Because bullying is not illegal (at least in the United States), bullying alone is not a cause of action and therefore, by itself, may not be covered by your EPL insurance policy. However, if the bullying conduct manifests itself as an illegal employment practice, such as harassment or discrimination, then it may be covered.

The word "bullying does not necessarily need to be included in the policy wording in order to have coverage as long as there are covered causes of action, such as harassment, discharge, constructive discharge, employment discrimination, assault, etc. Some insurance companies may be open to specifically adding bullying to the policy's definition of workplace harassment.

Your EPL insurance policy's definition of "harassment should specifically address "workplace harassment. In some policies, this may be defined as "harassment of a non-sexual nature that interferes with performance or creates an intimidating, hostile or offensive work environment within the organization, or words to that effect. Additionally, look for a broad definition of employment discrimination that may refer to "any violation of employment discrimination laws.

Of course, if bullying legislation takes root, EPL insurance policies may be expected to evolve to include specific policy wording on bullying. Until then, however, you should consider consulting with general counsel, an insurance advisor and/or an EPL insurance provider to help determine whether your policy will cover acts of bullying.

Bullying, regardless of legality, can still cost your company a great deal. Effective supervisory training and well-designed HR policies are critical in helping to prevent bullying and can also bolster your company's defense if a claim is brought. A good employment practices liability insurance policy should provide a critical financial backstop if a bullying claim arises manifested as sexual harassment, discrimination, or other illegal employment practice.

Cathy Padalino is Vice President and Employment Practices Liability Product Manager for the Chubb Group of Insurance Companies. She can be reached at cpadalino@chubb.com.