Category: Liability

Most employers know that sexual harassment is a form of discrimination that violates Title VII of the Civil Rights Act of 1964. The legal definition of sexual harassment is “unwelcome verbal, visual, or physical conduct of a sexual nature that is severe or pervasive and affects working conditions or creates a hostile work environment.”

While this definition may seem clear cut, the issues surrounding what constitutes sexual harassment are not. One of the most difficult aspects of examining a sexual harassment charge is deciding whether or not the conduct in question was truly harassment, and not just an innocent exchange between consenting adults.

There are two scenarios, that when they exist, are a definitive sign of sexual harassment:

1. Hostile environment – This is the most prevalent type. A work environment becomes a hostile environment when an employee is made so uncomfortable by a pattern of repeated, unwanted behavior that they cannot perform their job.

2. Quid pro quo – This Latin phrase literally means “this for that.” Quid pro quo occurs when a supervisor, or other person acting with authority, withholds, demands, or promises a benefit if the employee submits to unwelcome sexual conduct.

Keep in mind when trying to determine if an employee’s/supervisor’s actions constitute harassment; you have to view the conduct in question from the victim’s perspective. The victim determines whether the conduct is severe and pervasive enough to create a hostile environment. The harasser’s intentions do not play a role in the matter.

If there are recurring incidences of employees making sexual harassment charges in your organization, it is probably not a question of supervisors being unaware of inappropriate behavior. Rather it’s a matter of supervisors not taking action when they see inappropriate behavior. Failure to act is far more common than you may think. It is usually the result of a supervisor feeling unsure as to whether the behavior was really unacceptable, or not knowing the proper way to confront the parties involved.

The best way to remove these hindrances is to:

· Establish a sexual harassment policy that sets forth what actions are acceptable, what actions are considered sexually threatening, and what steps will be taken if anyone is found to be in violation of company policy. Once you have clearly defined your policy, document it and provide a copy to each employee. All employees should sign a disclosure that says that not only have they read the policy and understood it, but they also understand the consequences for failing to uphold it.

· Provide training – Supervisors should be given appropriate training in the correct manner of investigating a charge of sexual harassment including the types of questions to ask, how to file a written report, and to whom the report should be given.

It is also a good idea to be proactive in avoiding formal confrontations by periodically walking around and talking with employees. Many times an informal conversation can tip you off to a potential powder keg.

Are you due for a workers’ compensation premium audit? Audits are how insurance rates are determined, and it’s possible that an audit will uncover information that can actually save you money. In any case, it pays to be prepared. These five tips can help you get ready.

1. Let your broker know when there are changes in your staffing, payroll or areas of operation. This is important not just at audit time but all the time. Your rates are based on variable rating information, including the number of employees, job classifications, the states in which you operate, etc. Updated information results in more accurate premium assessments.
2. Get your records ready. Your auditor will need to see records such as federal and state tax returns, ledgers, checkbooks, contracts and employee or contractor tax documents. If you prepare your records in advance, you’ll speed up the audit process.
3. Make sure you break out various types of compensation in your records. For example, to set your premium, your broker considers pay but not contributions to employee benefits packages and other perks, so it’s important to make sure your records are clear on the various types of compensation. Also make sure overtime pay is clearly defined since it’s classified as regular pay for workers’ compensation insurance purposes.
4. Ensure that contractors have their own insurance. This is important not only from an audit standpoint but from a liability prospective as well. If an uninsured contractor has an accident while performing work on your behalf, you can be held liable. If an audit identifies contractors for whom you don’t have certificates of coverage, you can be charged for their premiums.
5. Remain on hand to answer questions. As your auditor reviews your material, he or she may have questions or need additional data. If you are available to provide answers, your audit will be completed more quickly.

By following these tips, you’ll be more prepared for your workers’ compensation premium audit. A fast, efficient audit process can save time for both you and your auditor, so it pays to be prepared.

When making the decision to return an injured employee to work, there are several significant legal issues that must be considered as a result of both state and federal law.

The first consideration is your state’s workers’ compensation laws. While a common objective of workers’ compensation laws is to facilitate the injured worker in returning to a productive job, not all states approach this goal in the same manner.

Your state’s approach probably falls into one of the following three categories:

• States that provide for a specific number of weeks of rehabilitation and a limited amount for training for the injured worker. After training is complete, the worker is considered rehabilitated. This training component also limits the employer’s liability to find another job for the claimant.
• States that are considered defined benefit states. A worker is paid for his temporary total disability. If disability reaches a predetermined percentage of body loss, however, the employer can issue a lump-sum payment and close the case, whether the worker can return to work or not. Rehabilitation is a minor part of this approach.
• States that use loss of earning power as qualification for benefits. Once a worker is injured, his workers’ compensation benefits will continue for life unless he is proven to have an earning power. In these states, the employer at the time of injury must offer a job to the injured employee if one is available within the employee’s physical restrictions. If this is not possible, the law requires that rehabilitation efforts begin.

The Americans with Disabilities Act (ADA) also presents certain legal considerations concerning the manner in which an injured employee is returned to work. The first consideration is regarding the collection and maintenance of the injured employee’s medical information.

The ADA requires employers to collect this information to determine how to accommodate an employee’s disability and whether the employee is capably of performing a specific job. However, the ADA also mandates that employers:

• Treat this information as a confidential medical record.
• Maintain this information on separate forms and keep the forms in separate files.
• Not use this information for any purpose that is inconsistent with the ADA.

There are also specific rules regarding the disclosure of such information. Supervisors and managers may be informed about necessary restrictions and accommodations arising from the disability. In addition, first aid and safety personnel can be informed if the employee’s condition may require emergency treatment.

Another key consideration under the ADA is whether or not the returning employee is eligible for a particular job. The law says that if an employee can perform the essential parts of a job, they are eligible, even if certain minor aspects of the job cannot be performed. Employers are required to make reasonable accommodations as necessary so that the employee can perform the job. This is what is commonly referred to as a “light-duty” assignment.

Decisions regarding necessary accommodations must be accomplished through a joint process involving the employer, employee, and the employee’s doctor. A company refusing to make reasonable accommodations is at risk for a lawsuit. A worker who refuses reasonable light-duty work risks having their benefits or employment terminated.

If you are looking for ways to keep your workers’ compensation insurance costs under control, it’s a good idea to take a look at your experience modifier. In fact, tackling your experience modifier is generally a far more effective method of lowering your costs than shopping around for cheaper workers’ compensation coverage. That’s because the experience modifier is used to calculate your individual rate.

However, many employers don’t fully understand how experience modifiers work. They don’t completely understand how lowering it can help them drastically reduce workers’ compensation costs. Let’s take a closer look.

What is an experience modifier?

The experience modifier is a formula insurance companies use to predict losses that an employer is likely to incur. To arrive at the experience modifier, the insurance company considers losses over a three-year period in history, not including the current policy period. It takes into account not only amounts actually paid as claims but also estimates of future payments for medical treatments or compensation that will be paid to make up for lost wages.

Your experience modifier compares your actual losses with the expected losses for employers operating similarly sized companies in your state and industry. If your experience modifier is 1.00, that means your losses match the average rate. A modifier that is higher than 1.00 reflects higher losses, while a modifier less than 1.00 means lower than expected losses.

Your experience modifier is used to calculate your workers’ compensation insurance premiums, so the lower your modifier, the less you’ll pay. Let’s take a look at ways to lower your experience modifier.

Toward a lower experience modifier

Here are a few tips on lowering your experience modifier:

Create a safer work environment. Since your experience modifier is derived from your workers’ compensation claims history over a three-year period, the most obvious first step is to create a safer work environment. A workplace focus on safety is a great way to improve morale and help keep costs down. Some companies form safety committees to find new ways to reduce workplace injuries and to provide training that helps employees stay safe.

Return employees to work as soon as possible. Another excellent way to keep costs down is to consider a return-to-work program for injured employees. Remember, workers’ compensation claims involve not only medical bills but also claims for lost wages. In many cases, injured employees who are not yet able to return to their former jobs can come back to perform light duty jobs while they complete their recovery. This helps lower claims costs. It’s a good idea to work closely with physicians who specialize in workplace injuries since they can more efficiently treat your employees and may have more experience authorizing returns to work for light duty assignments.

Hire the right people. Another long-term strategy for lowering your experience modifier is to implement good hiring practices. For example, you may want to consider a candidate background check and drug screening program. Employees who use drugs are far more likely to be injured on the job, lowering morale and driving up your costs. It’s always a good idea to be selective about whom you hire, and the likelihood of future on-the-job injuries is one more factor to consider.

The bottom line

When workers’ compensation insurance prices rise, it’s tempting for employers to shop around for new coverage. But the fact is, employers themselves control a major factor in determining rates: the experience modifier. Take control of your workers’ compensation costs by taking steps to create a safer work environment, return employees to work and hire the right people. Not only will you improve operations and employee morale, you’ll save money too.

We all know that persistent pain from work-related injuries affects an employee’s attitude about returning to work. Unfortunately, the psychological ramifications of chronic pain can also result in prolonged legal action, increasing legal fees, large settlements, and ultimately, failure of the employee to return to work. So, how can we prevent chronic pain from escalating workers’ compensation costs?

In a study titled Integrating Psychosocial and Behavioral Interventions to Achieve Optimal Rehabilitation Outcomes that appeared in the December 2005 issue of the Journal of Occupational Rehabilitation, researchers studied the psychological factors that impede an injured worker in returning to work:

• Obsession – The persistence of the pain becomes so overwhelming that it is the only thing the employee thinks about.
• Fear – The employee fears the possibility of becoming re-injured, which increases their current pain. As a result, the possibility of another injury and resulting disability cripples the employee psychologically and causes them to put off returning to work.
• Perception – When an injured worker has been on disability leave for an extended period, they may feel that co-workers believe they are faking their pain. This causes uneasiness about returning to work and facing co-workers.
• Self-fulfillment – If an employee believes they are not physically capable of returning to work because of the severity of their pain, this can lead to a failed transition back to the workplace.

In addition to internal factors, researchers noted that there are external psychosocial issues that can impact the injured employee’s desire to return to work.

• Co-worker support – When injured employees feel there is a lack of social support to help them transition back, they delay returning to work.
• Job stress – Employees who believe that the stress level at work will intensify their physical pain tend to remain on disability.
• Workplace attitudes toward disability – Injured employees who feel that the general attitude about disability is that it is a way to “milk the system” sometimes delay returning.

The researchers concluded that understanding the significance of the internal and external psychosocial factors on the employee’s successful transition back into the workplace is critical to the design of return to work programs. First-line supervisors should be trained to detect if an employee is experiencing any of the psychosocial risk factors, as well as how to eliminate or lessen the impact of those risk factors.

In a study titled It Pays To Be Nice: Employer-Worker Relationships and the Management of Back Pain Claims, published in the February 2007 edition of The Journal of Occupational and Environmental Medicine, Richard J. Butler PhD; William G. Johnson PhD; and Pierre Cote DC PhD discovered that workers’ satisfaction with their employer’s treatment of their disability claim is more important in explaining successful return-to-work outcomes than satisfaction with health care providers or expectations about recovery. The researchers added that dissatisfied workers have worse return-to-work outcomes because they are more likely to have lost time claims and multiple instances of joblessness.

The study found that the 64 percent of workers polled who were satisfied with their employer’s response had a medical claim only, while the 56 percent polled who expressed dissatisfaction had lost time claims in addition to the medical claims. For those workers who do have at least one lost time claim there is a lower likelihood of frequent injury-related absences. Only 32 percent of those satisfied with their employer’s response had multiple episodes of injury related absences, as opposed to 58 percent of those dissatisfied with their employer’s response who had multiple absences.

Maintaining a proper attitude toward injured workers is often a Catch-22 in most organizations. On the one hand, efforts to retain a skilled workforce are important because they give workers a greater sense of security, which is typically met with greater commitment to the success of the organization. However, there are concerns about how productivity is affected by reintegrating workers who are not yet fully recovered. That concern can result in instances where injured workers are treated with suspicion, and the validity of their claims questioned.

The pressure created by an injured worker on productivity and workflow is immediate. Although maintaining a good relationship with the injured employee will ultimately benefit the company, it can be difficult to keep this long-term goal in mind with the imminent demands of production looming. What usually happens is that the company ends up conveying to the injured worker that maximizing profits takes priority over their well-being.

This type of response on the part of their employers can alienate injured workers, and typically results in the worker extending the duration of the absence, or having more frequent reoccurrences. The overall outcome is increased workers’ compensation costs, not to mention the costs to train a new employee.

To combat the problem of alienation, organizations need to train first line supervisors in the empathetic treatment of injured workers. Supervisors need to learn how to express to the injured worker how much they are missed without making it seem as though their absence is only regarded for its economic impact. If the worker truly feels that they are needed in the workplace because they are a vital part of the team, and not because someone else has to cover for them, they will be motivated to return as soon as possible. The best way to give the injured worker this sense of belonging is through frequent expressions of sincere regard and regular communication that keeps them in the loop. If the return-to-work program incorporates these two elements, it will accomplish the goal of reducing the probability of lengthy lost time.

Running a company can be a risky business. According to the Department of Labor, the amount workers received from employers due to discrimination claims rose nearly 78% between 2001 and 2006. A total of more than $51 million dollars was awarded to employees who pursued claims in federal court.

You may have seen news stories about huge jury awards in workplace discrimination claims. It happens every day, and every business is vulnerable. Here are just a few examples:

·   Thirteen current or former computer company employees claimed employment discrimination on the basis of race and national origin. Employees claimed they were treated unequally and subjected to a hostile work environment. Amount of settlement: $635,000 (salary increases, enhanced promotional activities).

·   Eight employees filed a class action suit alleging sex discrimination by their employer in the handling of wages, promotions, pregnancy leaves and other conditions of employment. Amount of settlement: $600,000 (plus $5 million in legal fees).

·   A senior regional attorney sued a securities dealer claiming age discrimination and retaliation. He claimed he was unfairly terminated for advice he gave to a co-worker regarding his employment rights. Amount of verdict: $443,000.

All businesses are at risk from issues related to employment practices. It can come up during hiring situations if you don’t hire someone who then assumes you were discriminating. It can happen if you terminate an employee who then decides he or she was treated unfairly. Employment-related lawsuits are filed every single day, and up to half of all businesses will face a lawsuit at some point. Is your business prepared?

How can you protect your business?

As an employer, you do everything you can to treat your employees fairly. However, you can be held liable for the actions of your other employees or even vendors and customers. And with new employment-related regulations being added to the books frequently, it can be difficult to understand exactly what you are expected to do.

It’s important to make sure you remain in compliance with laws governing treatment of employees. But there’s an added layer of protection you can obtain: employment practices liability insurance, or EPLI.

What EPLI covers

Employment practices liability insurance can protect your business against claims made by potential hires, employees currently on your payroll and terminated employees. With a good EPLI policy, your company is protected against claims of:

·   Wrongful termination

·   Employment-related emotional distress and invasion of privacy

·   Defamation

·   Retaliatory/constructive discharge

·   Sexual harassment and discrimination

·   Workplace torts such as slander

EPLI coverage generally includes the cost to defend against the charges plus any damages you are ordered to pay. Depending on your business needs, it might make sense to purchase EPLI coverage as part of your company officers’ liability insurance since company officials can be named in lawsuits against the business.

Learn more about EPLI

Your business insurance agent can answer your questions about EPLI and recommend the coverage that is right for you. Your agent can also discuss how employment-related lawsuits can affect your business by assessing the risk typically associated with your industry.

Remember, employment-related claims can affect businesses of all types. Even if you are just starting out, you could be the subject of a discrimination suit if someone you interview but fail to hire feels that he or she was treated unfairly. And even if you do everything right and comply with all federal, state and local regulations, you can still be held liable for the actions of your employees, vendors or customers. EPLI can provide much-needed protection – and welcome peace of mind.

If you own a business, the last thing you want to face is a lawsuit filed by a current or former employee. In addition to the obvious financial risk involved in defending a case, a lawsuit can result in lower employee morale and a damaged reputation in the community. Even if you win your case, you’ll lose time and money in the process.

For these and many other reasons, it’s a good idea to be proactive about avoiding employment-related lawsuits. How do you do it? A good approach is to familiarize yourself with situations that can prompt employees to file suit. When you understand the common legal pitfalls, you’ll be in a better position to avoid them and protect your business.

Understanding why employees sue

If you’re like most employers, you try to treat your employees fairly. But complicated situations can arise. And remember, your perceptions may not match your employees’. Here are some issues that can result in employment-related litigation:

• Employees feel they have no voice: If you provide employees with a way to express opinions or address problems, you’ll generally have more motivated employees and may also reduce exposure to lawsuits.
• Employees aren’t in the loop: If your business is going through changes, it’s a good idea to keep employees in the loop. Otherwise, their expectations may not match future business plans, which can result in hard feelings.
• Managers don’t understand regulations: There are hundreds of employment-related regulations governing the relationship between employers and employees. Make sure you understand them and abide by them.
• Employees are dissatisfied: When employees are unhappy, they aren’t as productive, and they may also be more likely to resort to litigation to express their unhappiness. Good morale can reduce exposure to litigation and improve business performance.

Avoiding situations that may create a lawsuit

Even employers with the best intentions can make mistakes that result in legal action. There are many regulations that can lead to legal pitfalls, especially in the areas of hiring, managing and firing employees. Employment-related regulations are not only numerous, they change from time to time, so keeping up with them can be challenging, but it’s vitally important. Here are some of the situations you should be aware of as an employer:

• Promotion opportunities: Be sensitive to employee perceptions when you reward good performance or hold employees accountable for short-comings. If a court finds you created barriers to advancement for a protected class of employees, you could be held liable.
• Compensation issues: Employee wage and hour regulations can be complex. Make sure you understand them and follow them to the letter. If you’re unsure, it’s a good idea to seek expert advice.
• Harassment and discrimination: Employers have a responsibility to ensure a harassment and discrimination-free work environment. A sound harassment and discrimination prevention policy is essential.
• Accommodation issues: Employees or potential hires who are disabled or who have accommodation needs due to religion are a protected class. It’s important to understand the regulations around accommodation.
• Leaves of absence: Employers in certain locations and those who employee more than a specific number of employees should make sure they comply with state, local and federal regulations on leaves of absence.

How you can reduce legal exposure for your business

We’ve reviewed why employees might sue and some of the reasons employers get into trouble. The next step is to formulate a strategy to reduce risk for your business. A good first step is to formalize a method to address conflicts. If you have an employee handbook, outlining a way to address problems at work as a policy is a good idea. Another effective step is to implement harassment and discrimination prevention policies and outline how incidents will be addressed.

Taking steps to reduce your exposure to employment-related lawsuits takes some time and effort, but in the long run, it’s worth the effort. Not only will these steps help you stay out of court, you’ll improve morale at your company.

Your business could face big problems if one of your employees becomes a victim of identity theft. That’s an alarming fact considering the rapid growth of this costly white-collar crime.

How does identity theft among your employees affect your business? One of the provisions of the Fair and Accurate Credit Transactions Act is that an employer whose action (or lack of action) results in the theft of an employee’s information can be sued. As an employer, you should keep in mind that the workplace is the biggest source of identity theft.

Businesses should be concerned with more than just the lawsuits associated with employee identity theft. Reoccurring identity thefts lead to negative publicity – which can impact sales and significantly damage employee recruiting and retention efforts.

How can you protect your employees and your business? There are two things you should seriously consider: Offer identity theft coverage as an employee benefit, and tell your employees what they can do to reduce their chances of becoming a victim.

What does identity theft coverage give employees?

• Insurance coverage: To help them get back on their feet after they’ve been a victim.
• Credit monitoring: That alerts them when unusual credit changes take place.
• Computer protection: Such as anti-spyware and wireless security.
• Protection of personal information: Such as assistance with opting out of marketing databases, as well as tracking data in Social Security databases and financial databases.

What can you tell your employees about protecting themselves from identity theft? Start with the following checklist of do’s and don’ts.

Identity theft prevention do’s

• Always shred sensitive information rather than just throwing it in the trash. (This is wise advice whether you’re at home or at work.) Things to shred include any confidential information – like credit card pre-approvals, credit card receipts, bank statements, etc.
• Review your credit report regularly. Take the time to make sure it’s accurate. It’s also important to carefully check your bank statements every month.
• It may seem like a hassle, but it’s a smart idea to have your financial mail deposited in a post office box rather than in your home mailbox.
• Remove the mail from your mailbox as soon as possible to afford less opportunity for someone to steal it. Also, be sure to pinpoint when all your bills are supposed to arrive.
• As elementary as it may sound, it’s important to do whatever it takes to keep your personal identification numbers (PINs) secret.

Identity theft prevention don’ts

• ·  Obviously, you should never give personal information to anyone without a good reason for having it.
• ·  Never carry your Social Security card or passport in your purse or wallet, and never keep them in their vehicle. Remember that thieves are very interested in your private information – just as they’re interested in your tangible valuables.
• ·  Never put your address or driver’s license number on a credit card receipt.
• ·  Never put your Social Security number or phone number on your personal checks.
• ·  Never carry credit cards you don’t plan to use.

By helping employees keep their vital personal information from falling into the wrong hands, you’re doing your part to look after their financial health – and protect your business from a growing risk. Identity theft coverage as an employee benefit not only helps employees stay safer, it makes your business a more attractive place to work.

Did you know your business is liable for how your employees use the internet while they’re on the job? Many business owners protect themselves by monitoring their employees’ email and internet usage, including instant messaging.

Some employers are reluctant to implement an email and internet oversight policy. But monitoring email communication and web surfing has become an important part of protecting your business.  

Suppose an employee at your business has been emailing inappropriate images or messages around the office, and these images make their way to a co-worker who finds them offensive. If that co-worker chooses to sue for harassment, your company could easily be held liable. Why? Because businesses can be held responsible for their employees’ activities while using company computers.

If your business had a monitoring policy in place that enabled you to review the emails going around the office (as well as your employees’ web surfing), you would have been able to take measures to stop the offensive email before it was sent.

Creating a monitoring program

Here are some useful tips to consider as you formulate your internet monitoring and usage policy:

·   Implement policies about what employees are allowed to send: Tell your employees never to write – or even forward – any material that could
be considered obscene, hateful, defamatory, offensive, harassing or otherwise inappropriate. This includes racist or sexist language and/or jokes.

·   Gain control over what can be accessed at your business: You have a right to ban questionable websites at your business. Forbid employees from viewing any sites containing sexually explicit messages or imagery, sites that are violent, or sites containing other content that may be considered inappropriate. Consider installing blocking software to stop access to these sites in the first place.

·    Disallow non-work-related web use while employees are on the job: It’s becoming increasingly common for employees to use the internet at work for non work-related purposes. This trend is only getting worse with the rise of social-networking sites like Facebook. Therefore, unless employees are on a break, it’s a good idea to insist that emails are being sent and web pages are being viewed for business purposes only.

·    Provide separate computers for off-the-clock purposes: Consider setting a few computers aside specifically for employee non-business use. Put them in a common area and allow employees to surf while on their lunch hour. Coupled with an internet monitoring program, this is an effective practice for many companies. (Just remind employees that your monitoring policy also applies to this non-business use.)

·    Communicate your monitoring policy to employees: A common pitfall of implementing an internet and email usage program is that many companies don’t tell employees about their policy. By not telling your employees, you’re actually increasing your exposure to employee lawsuits. Telling them you’ll monitor their email and internet use will help deter improper use.

·    Keep reminding your people about your internet policies: Once your policy has been communicated to employees, remind them about it regularly. It should be included in your company’s employee handbook. You might also want to consider having a reminder on your employees’ log in screen.

When you put effective internet and email policies in place, you’re taking a positive step toward protecting your company. It takes some time and effort, and communication must be ongoing, but it’s worth it to reduce liability exposure for your business.