By now, employers should all realize and understand that sexual harassment is illegal. However, what employers might not be aware of is that the U.S. Supreme Court issued two rulings in June of 1998 that expanded what is termed sexual harassment; expanded the responsibility that employers have to provide a work environment that’s non-hostile; and did away with harassed employees having to prove that their company holds some responsibility or that their career suffered from lack of promotion, firing, demotion, or such. Employers are now directly responsible for employee behavior, thereby giving harassed employees more recourse in bringing about legal actions against employers. Work-related harassment and discrimination cases have been climbing steadily since the Civil Rights Act of 1991 allowed for trial by jury, compensatory damages, and punitive damages in legal cases involving discrimination. In fact, according to the Equal Employment Opportunity Commission, the amount of annual employment harassment and discrimination cases being filed grew by more than 13% between 1997 and 2009.
Any employer that’s ever been involved in a sexual harassment suit can attest that the cost to settle or defend a sexual harassment lawsuit can be jaw dropping. The average award for damages in these types of lawsuits is around $650,000, and that isn’t even including the secondary cost from workplace disruption, bad publicity, and those involved in the suit being absent from work.
What Constitutes Sexual Harassment? The first step in protection is understanding what is defined as sexual harassment. State and federal law prohibits behavior that involves an employee in authority basing professional expectations or decisions regarding a subordinate employee being willing or unwilling to exchange sexual acts. The following are examples of such behavior:
- Altering expectations of job performance when a subordinate repeatedly refuses advances for a date or sexual encounter.
- A superior demanding sexual acts in order for a subordinate to receive a raise or promotion.
- Disciplinary action, including termination, of a subordinate that refuses sexual advances or ends an existing romantic relationship.
However, sexual harassment doesn’t always involve a subordinate/authority figure relationship. An offender can be anyone from a coworker to a customer or business vendor. The offender can be male or female, as can the victim. Furthermore, the victim doesn’t even need to be the employee actually harassed. Anyone that’s affected by the harassing or offensive behavior can be termed a victim; for example, an employee that overhears two other employees discussing a taboo subject. The two employees directly involved might not be offended, but if the overhearing employee is offended, then it can constitute sexual harassment.
Verbal, visual, physical, or written behavior that causes another employee to view the work environment as hostile, are unwanted, or focus on the sexuality or gender of another person may constitute as sexual harassment. Specific examples of such would be teasing, suggestive objects or pictures being displayed, and repetitively requesting sexual acts or dates verbally or in writing.
Protection with Employment Practices Liability Insurance (EPLI). After knowing what constitutes sexual harassment, businesses can further financially protect themselves with Employment Practices Liability insurance (EPLI). This is an insurance to protect employers when an employee makes the claim that their legal rights have been violated. Although policies vary, EPLI generally doesn’t cover criminal or civil penalties and punitive damages. EPLI does generally cover settlements, judgments, and incurred legal costs arising from an array of incidences – wrongful termination, employment contract breaches, employment and promotion failures, wrongful disciplinary actions, wrongful emotional distress infliction, negligent employee evaluations, employee benefit plan mismanagement, discrimination, and sexual harassment.
Coverage is specific. So, before purchasing a policy, decide who should be covered. For example, should full and part-time employees, contracted persons, supervisors, department heads, subsidiaries, company divisions, and so forth be covered or not? One other note about EPLI is that it’s mandatory for employers to report incidents within a reasonable amount of time. Some policies might feature an ERP (extended reporting period) or prior acts. The length, cost, and availability vary by carrier.
Purchasing EPLI has been challenging for small companies in the past. However, the 2004 rate increases have somewhat plateaued. Some rates have even decreased. Keep in mind that EPLI cost is figured based on the business type, employee numbers, and past lawsuits associated with the business.
Prevention of Harassment Lawsuits. Prevention is the cornerstone in decreasing the risk of a sexual harassment lawsuit. Prevention steps include the following key elements:
- If the business has EPLI, any incident should be reported immediately.
- Create, communicate, and enforce a zero-tolerance policy for workplace sexual harassment.
- Have an effective harassment complaint process in place and take immediate, consistent, and appropriate action when a complaint is made.
- Thoroughly document all complaints and the following investigation and actions.
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The more heavily your business relies on electronic technology, the greater your vulnerability to cybercriminals.
Criminal activity conducted through the Internet impacts businesses of all sizes. One study found that companies with 100 or fewer employees accounted for 72% of data breaches worldwide.
Today’s cybercrimes put your grandmothers’ spam email list to shame. According to a nationwide study by Ponemon Institute, the median annual cost of cybercrime for a large company in 2011 came to $5.9 million.
Cybercrime covers a variety of activities, from malicious codes and hacks in which private client or company information is made public or stolen, to disruption of normal operations. Perpetrators include rogue employees, “hacktivists” seeking to make a political statement, or third parties seeking financial gain.
Businesses, such as coffee shops, that allow customers on their premises to use Wi-Fi face unique risks. In one case, a Hollywood producer sued the owner of a restaurant offering Wi-Fi access after a customer used the network to download a film for bootlegging.
To help protect your business against potential losses from cybercrime, here are some recommendations:
- Review your specific exposures. For example, if you allow people outside the company to use your WiFi, this can increase your exposure.
- Focus on the human element in data security by offering employees effective training and specific guidelines.
- Re-evaluate your guidelines frequently.
- Evaluate the potential risks of adopting new technology.
Last, but not least, make sure that you carry adequate Cyber Liability Insurance.
Our agency would be happy to tailor cost-effective coverage to your needs, and help you develop and implement a comprehensive program for managing your exposure to cybercrime.
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Insurance spreads the risk of loss among every policyholder and the insurance company.
The “coinsurance clause” in a Business Property policy reflects the fact that the coverage divides this risk by setting premiums based primarily on the value of the property. Those who insure their property for less than its actual cash value (ACV) or replacement cost will have to pay the uninsured portion of any covered loss out of their own pocket — in other words, “coinsuring” the risk — which encourages policyholders to buy coverage for the full value of their property.
The coinsurance clause usually requires policyholders to insure their property for 80% of its ACV. For example, if the property of your business is worth $500,000, you would need to purchase a $400,000 policy. If a fire caused $300,000 worth of damage, the insurance company would pay $240,000 (80% of $300,000), leaving you to pick up the other $60,000. However, if you had purchased the full $500,000 in ACV coverage — paying a higher premium — the insurer would cover the entire $300,000 claim.
We’d be happy to discuss the benefits that the coinsurance clause offers. Feel free to give us a call.
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Identifying and preventing the incidences that might harm your firm’s reputation can be a challenge at best.
The explosive expansion of Web-based communications and social media has aggravated the risks of reputational damage, while dramatically reducing response time to counter these threats.
According to Reputation Review 2012, a report from Oxford Metrica sponsored by Aon P.L.C., a public company runs an 80% chance of suffering a reputational risk that can cost at least 20% of its equity value in any month over a five-year period. Privately held companies face similar risks.
These exposures can come from a wide variety of sources, from product safety and unhappy customers to regulatory pressures and behavior by managers. Examples include recent massive breaches of consumer data held by major financial institutions, and the effect on companies that faced supply chain disruptions or radiation fears after the Japanese earthquake and tsunami of 2011 — not to mention the impact of that year’s outbreak of listeria in cantaloupes. Although this infection came from a single farm, other producers (and even companies selling different types of melons) suffered a loss of reputation.
With reputational risks coming in various and sometimes unpredictable forms, experts recommend that you help protect yourself by:
- Creating an “early warning system” to monitor print, electronic, and social media for negative references to the company.
- Evaluating whether a negative comment should have a response (not every tweet or Facebook post matters).
- Getting frontline employees involved in responding to reputational threats, rather than having top management and PR staff deal with them.
Our agency’s experts stand ready at any time to help you discuss your risk, review potential scenarios, and then build and test a plan for dealing with events that threaten your reputation.
Having an effective plan to deal with these threats can actually improve your company’s reputation.
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In the controversial Citizens United case, the Supreme Court ruled that corporations have rights similar to those of an individual. It follows that they have identities and are vulnerable to identity theft.
Although insurance offers one way to manage this risk, it might well be a long time before a company discovers the theft — at which point, it would be too late. To avoid or minimize the danger of having your corporate identity stolen, we’d recommend a three-step approach:
- Storing sensitive information. Sensitive files and information (credit card numbers, medical data, Social Security numbers, etc.) might be stored on computers, external drives, filing cabinets, or mobile devices. It’s wise to consolidate and secure this data either physically behind lock and key or by using electronic network security measures. Be sure to train employees on handling, storing, and disposing of this type of information properly.
- Your business documentation. Identity thieves might use highly sophisticated or surprisingly elementary and low-tech techniques for delving into a company’s records and misappropriating them. These might include intercepting paper mail, stealing trash, or physically taking documents. To safeguard this information, determine what records you need to run the business, inventory them, and use electronic statements to limit the amount of mail containing company information. Never share financial details or documents through e-mail!
- Credit reports. Check your company’s credit reports regularly for unusual charges or bills.
The Federal Trade Commission (http://www.business.ftc.gov/documents/bus69-protecting-personal-information-guide-business) provides a variety of resources you can use to help protect your corporate identity and confidential customer information against identity thieves.
Our agency’s professionals would be happy to offer their help — just give us a call.
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It’s a regular occurrence for contractors: You receive a request from another party (an owner, general contractor, lien holder, other contractor, or a government entity) to add them as an additional insured on your insurance policies. Whether that’s a good idea is up to you — but the party often makes it clear that if you want to do business you’ll need to add them as an additional insured.
However, it’s not necessarily a good idea to add this entity to all of your policies. For example, your Excess Liability coverages — such as those under Umbrella insurance — were probably bought specifically for your own protection in case of catastrophic loss. If an additional insured, who might be well within their rights, is added to your policies with protection up to your basic coverage limits, will they also be allowed to “piggyback” up to the full amount of your coverage?
We’d advise you not to set up any procedure that makes all of your coverage limits available automatically to any additional insured. Add them to the specific coverages and amounts that they request, but go no further. If in doubt, consult with your attorney about contractual requirements and possible gaps between what the entity is requesting in being added to your coverage and what your coverage will actually provide.
Once you’re certain what you’re being asked to do, and have decided that it’s in your best interest to meet this request, there’s one more action to take before adding the additional party to your coverages. Contact us to determine if your current coverage already meets the needed conditions, or what modifications (if any) might be required to do so.
Remember: Although we want to help you meet your needs, our focus always remains on protecting you, even if against unreasonable demands from other entities. We’re here to help.
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