Looking For Something?

Guide to Preventing Workplace Violence: Planning and Strategic Issues

As with most other risks, prevention of workplace violence begins with planning. Also, as with other risks, it is easier to persuade managers to focus on the problem after a violent act has taken place than it is to get them to act before anything has happened. If the decision to plan in advance is more difficult to make, however, it is also more logical.

Any organization, large or small, will be far better able to spot potential dangers and defuse them before violence develops and will be able to manage a crisis better if one does occur, if its executives have considered the issue beforehand and have prepared policies, practices and structures to deal with it.

Planning Principles & Components
In forming an effective workplace violence strategy, important principles include:

• There must be support from the top. If a company’s senior executives are not truly committed to a preventive program, it is unlikely to be effectively implemented.
• There is no one-size-fits-all strategy. Effective plans may share a number of features, but a good plan must be tailored to the needs, resources and circumstances of a particular employer and a particular work force.
• A plan should be proactive, not reactive.
• A plan should take into account the workplace culture: work atmosphere, relationships, traditional management styles, etc. If there are elements in that culture that appear to foster a toxic climate—tolerance of bullying or intimidation; lack of trust among workers, between workers and management; high levels of stress, frustration, and anger; poor communication; inconsistent discipline; and erratic enforcement of company policies—these should be called to the attention of top executives for remedial action.
• Planning for and responding to workplace violence calls for expertise from a number of perspectives. A workplace violence prevention plan will be most effective if it is based on a multidisciplinary team approach.
• Managers should take an active role in communicating the workplace violence policy to employees. They must be alert to warning signs, the violence prevention plan and response, and must seek advice and assistance when there are indications of a problem.
• Practice your plan! No matter how thorough or well-conceived, preparation won’t do any good if an emergency happens and no one remembers or carries out what was planned. Training exercises must include senior executives who will be making decisions in a real incident. Exercises must be followed by careful, clear-eyed evaluation and changes to fix whatever weaknesses have been revealed.
• Reevaluate, rethink and revise. Policies and practices should not be set in concrete. Personnel work environments, business conditions and society all change and evolve. A prevention program must change and evolve with them.

The components of a workplace violence prevention program can include:

• A statement of the employer’s no threats and violence policy and complementary policies such as those regulating harassment and drug and alcohol use.
• A physical security survey and assessment of premises.
• Procedures for addressing threats and threatening behavior.
• Designation and training of an incident response team.
• Access to outside resources, such as threat assessment professionals.
• Training of different management and employee groups.
• Crisis response measures.
• Consistent enforcement of behavioral standards, including effective disciplinary procedures.

Written Workplace Violence Policy Statement
Here an employer sets the standard for acceptable workplace behavior. The statement should affirm the company’s commitment to a safe workplace, employees’ obligation to behave appropriately on the job, and the employer’s commitment to take action on any employee’s complaint regarding harassing, threatening and violent behavior. The statement should be in writing and distributed to employees at all levels.

In defining acts that will not be tolerated, the statement should make clear that not just physical violence but threats, bullying, harassment and weapons possession are against company policy and are prohibited.

Preventive Practices
Preventive measures can include pre-employment screening, identifying problem situations and risk factors, and security preparations:

• Pre-employment Screening. Identifying and screening out potentially violent people before hiring is an obvious means of preventing workplace violence. Pre-employment screening practices must, however, be consistent with privacy protections and antidiscrimination laws.

A thorough background check can be expensive and time-consuming. The depth of pre-employment scrutiny will vary according to the level and sensitivity of the job being filled, the policies and resources of the prospective employer, and possibly differing legal requirements in different states. However, as an applicant is examined, the following can raise red flags:

• A history of drug or alcohol abuse
• Past conflicts (especially if violence was involved) with co-workers
• Past convictions for violent crimes

Other red flags can include a defensive, hostile attitude; a history of frequent job changes; and a tendency to blame others for problems.

Identifying Problem Situations and Risk Factors of Current Employees
Problem situations—circumstances that may heighten the risk of violence—can involve a particular event or employee, or the workplace as a whole.

No “profile” or litmus test exists to indicate whether an employee might become violent. Instead, it is important for employers and employees alike to remain alert to problematic behavior that, in combination, could point to possible violence. No one behavior in and of itself suggests a greater potential for violence, but all must be looked at in totality.

Risk factors at times associated with potential violence include personality conflicts (between co-workers or between worker and supervisor); a mishandled termination or other disciplinary action; bringing weapons onto a work site; drug or alcohol use on the job; or a grudge over a real or imagined grievance. Risks can also stem from an employee’s personal circumstances—breakup of a marriage or romantic relationship; other family conflicts; financial or legal problems; or emotional disturbance.

Other problematic behavior also can include, but is not limited to:
• Increasing belligerence
• Ominous, specific threats
• Hypersensitivity to criticism
• Recent acquisition/fascination with weapons
• Apparent obsession with a supervisor or co-worker or employee grievance.
• Preoccupation with violent themes
• Interest in recently publicized violent events
• Outbursts of anger
• Extreme disorganization
• Noticeable changes in behavior
• Homicidal/suicidal comments or threats

Though a suicide threat may not be heard as threatening to others, it is nonetheless a serious danger sign. Some extreme violent acts are in fact suicidal—wounding or killing someone else in the expectation of being killed, a phenomenon known in law enforcement as “suicide by cop.” In addition, many workplace shootings often end in suicide by the offender.

While no definitive studies currently exist regarding workplace environmental factors that can contribute to violence, it is generally understood that the following factors can contribute to negativity and stress in the workplace, which in turn may precipitate problematic behavior. Such factors include:

• Understaffing that leads to job overload or compulsory overtime
• Frustrations arising from poorly defined job tasks and responsibilities
• Downsizing or reorganization
• Labor disputes and poor labor-management relations
• Poor management styles (for example, arbitrary or unexplained orders; over-monitoring; corrections or reprimands in front of other employees, inconsistent discipline)
• Inadequate security or a poorly trained, poorly motivated security force
• A lack of employee counseling
• A high injury rate or frequent grievances may be clues to problem situations in a workplace

Security Survey and Measures
One important tool can be a questionnaire or survey for employees to get their ideas on the occurrence and potential for violent incidents and to identify or confirm the need for improved security measures. Surveys can be repeated at regular intervals, or when operations change or an incident of workplace violence has occurred, to help identify new or previously unnoticed risk factors. Responses can help identify jobs, locations, or work situations where the risk of violence appears highest.

As well as being trained in how to respond to violent incidents, security personnel should be trained in techniques for handling threats or other confrontations without letting them escalate into violence. Security supervisors should have an up-to-date contact list for all employees, in case there is a need to advise workers of an emergency or distribute other information. There should also be a list of outside emergency contacts: police, rescue, medical, social service, violence assessment and employee assistance professionals, etc. The security director should maintain regular liaison with local law enforcement agencies, familiarizing them with the company’s location and with evacuation and other emergency plans.

The floor plan and physical layout of a workplace should be reviewed and, if necessary, modified to improve employees’ safety. Aspects to consider include:
• Visibility
• Alarm signals or emergency phones
• Control of access
• Arrangement of work space so employees cannot be trapped in a small enclosure
• Adequate and clearly marked escape routes

A plan for emergency evacuation should be designed and practiced. The evacuation plan should include not only procedures for getting workers out of a building, office, or plant, but some method for those evacuated to assemble or report in so that it can be determined who is safe and who may still be missing. Evacuation plans should include provisions for workers with disabilities—for example, a way to make sure warnings are received by employees who may be hearing-impaired and a system for safely evacuating anyone who uses a wheelchair.

Addressing Threats and Threatening Behavior
Many times, a violent act is preceded by a threat. The threat may have been explicit or veiled, spoken or unspoken, specific or vague, but it occurred. In other instances, behavior may be observed by others, which might suggest the potential for some type of violent act to occur. Yet in other cases, it may be the off-handed remark or comments made to people close to the individual, which may suggest problematic behavior.

Dealing with threats and/or threatening behavior—detecting them, evaluating them, and finding a way to address them—may be the single most important key to preventing violence.

Any workplace violence strategy must include measures to detect, assess and manage threats and behavior. Saying that is easier than doing it. Normally there is no doubt that a homicide or assault has been committed; often it is harder to establish that a threat has been made. In addition, the effects of a threat are subjective and subtle; usually there is no physical evidence. Some threats are not criminal and, therefore, not subject to law enforcement intervention and prosecution.

Despite these difficulties, threat response is an essential component of any workplace violence plan. The first need, obviously, is to define the term.

What Constitutes a Threat?
Webster’s Dictionary defines a threat as “a statement or expression of intention to hurt, destroy, punish, etc., as in retaliation or intimidation.” That’s clear enough, as far as it goes, but it leaves open a question that legal authorities or employers have to answer in framing and carrying out a policy on threats: who determines when an intention to hurt has been expressed?

A purely subjective determination—whatever makes someone feel threatened is a threat—is an uncertain guide for behavior, since different people can respond differently to the same words or acts. Employees who are required to observe “no” threat rules have a right to a reasonably clear statement of what will be considered threatening behavior. That does not mean that subjective factors can or should be completely excluded from the definition, however. Employees can and should be held responsible for a reasonable regard for the feelings and concerns of co-workers and others in the workplace, and employers properly have an obligation to make sure employees do not feel frightened or intimidated.

For these reasons, a workplace violence prevention program addressing threats needs to include both a subjective and objective component. It must set reasonably explicit standards of behavior so employees know how they are expected to act or not act; it must also make clear to employees that no one has a right to make anyone else feel threatened.

The definition of a threat for workplace conduct standards need not be the same as the definition of a threat as a criminal offense.

A sample definition could be “an inappropriate behavior, verbal or nonverbal communication or expression that would lead to the reasonable belief that an act has occurred or may occur which may lead to physical and/or psychological harm to the threatener, to others, or to property.” Alternative: “Any verbal or physical conduct that threatens property or personal safety or that reasonably could be interpreted as intent to cause harm.”

Identifying and Reporting Threats and Threatening Behavior
The best plans for threat assessment and response will be useless if employers or those assigned to respond to workplace violence don’t know that a threat has been made. Detecting threats depends in large measure on the workplace culture. If employees are too afraid or too alienated from management to report violent or threatening behavior by co-workers, no violence prevention program will be effective .To encourage reporting, employers can create a climate in which safety is accepted as a common goal for workers and management and all employees—including management, feel free to report disturbing incidents or possible danger signs.

Along with encouraging employees to report violence or threats, employers also have to inform them where to report and what to report. A designated office or person to whom complaints are directed, and perhaps a hotline number or suggestion box for employees who prefer to remain anonymous, can provide a concrete and clear venue for reporting.

To the extent that employees feel comfortable in reporting incidents to their immediate supervisors, the information may come through the normal management channels. However, having additional reporting channels can facilitate reporting where an employee finds it difficult to report through a supervisor. Whatever reporting system is adopted, publicizing it on bulletin boards, employee newsletters, and notices distributed with paychecks, or other means, will help ensure that all workers know how to report any behavior they consider troubling.

Just as important as knowing how to report incidents is knowing that reports will be heard and responded to. A feedback procedure through which employees will be notified —subject to confidentiality rules—of how their reports were investigated and what actions were taken will provide assurance and helpful “closure” to employees who make a report.

To further facilitate the identification of threats, employees, supervisors, and managers can receive training to help them detect out-of-bounds behavior or other warning signs. Training can also help educate workers and supervisors on how to respond to someone who seems troubled or potentially dangerous and how to report that behavior to managers. Training can also include a very clear statement to all employees on what to do if they see or become aware of a weapon (in almost all circumstances, leave the location and call for help). Any training program should be sensitive to cultural assumptions and stereotypes and emphasize focusing on an individual’s manner, conduct, and behavior rather than ethnic or other group identity or a “profile” of a dangerous person.

Threat Assessment
Threat assessment has two parts: an evaluation of the threat itself; that is, the assessment of the credibility and overall viability of an expression of an intent to do harm, and an evaluation of the threatener. Together, these evaluations can help lead to an informed judgment on whether someone who has made a threat is likely to carry it out—a determination that has been described as “differentiating when someone is making a threat versus posing a threat. ”The assessment can also help the employer decide what will be an appropriate intervention.


A good threat assessment will thoroughly analyze:
• The exact nature and context of the threat and/or threatening behavior
• The identified target (general or specific)
• The threatener’s apparent motivation
• The threatener’s ability to carry out the threat
• The threatener’s background, including work history, criminal record, mental health history, military history, and past behavior on the job

Clearly, there are characteristic signs to look for in evaluating a threat and a threatener, but an assessment must not turn into a mechanical process of checking off items on a list to see if someone fits a predetermined “profile.” Every case should be examined and evaluated on the basis of its particular nature and circumstances.

Every employer and organization will have to develop their own structure and procedures for threat assessment and response, depending in large part on the resources available. Large companies may find the necessary expertise in their own security, medical, human resources, legal, and employee assistance departments. Smaller organizations may have to seek outside help from law enforcement, mental health and social service agencies, and other professionals. Such contacts should be established beforehand and an up-to-date contact list maintained so company officials know whom to call when assistance is needed.

It should be noted that, typically, threat assessments will be conducted by a psychologist or psychiatrist specifically trained to evaluate a potential risk of violence. Both legal concerns and practical limitations often will render it inadvisable to seek threat assessment evaluation from an employee assistance program, security or mental health professionals who lack training in this area.

Threat Management
The goal of threat assessment is to place a threat somewhere on a hierarchy of dangerousness and, on that basis, determine an appropriate intervention. If a threat is immediate, specific and critical, the obvious response is to call the police right away.

A threat that is veiled or less specific and does not appear to presage immediate violence may call for less urgent measures: referral for psychological evaluation and counseling, for example. Many threats will turn out to be harmless blowing off steam and require nothing more than a formal admonition to the employee that his or her language or conduct was not appropriate and violated company policy.

A recurring problem in threat management is what to do when someone is evaluated as dangerous, but has not committed any serious crime. In those cases, managers will need legal and, often law enforcement advice. Workplace violence plans should advise managers where they can get guidance, on an emergency basis, if necessary.

Managers should understand that a threat assessment in some cases should be completed before disciplinary action is taken. Executives or senior supervisors may sometimes want to terminate an employee on the spot after a threat or other incident—in effect, kicking the problem out the door. Termination may indeed be appropriate, but doing so in the heat of the moment without any time for evaluation or preparation may be exactly the wrong thing to do, removing the potentially dangerous person from observation and possibly bringing on a violent act instead of preventing one.

Threat Assessment and Incident Response Teams
An employer’s workplace violence prevention program should designate the personnel who will be specifically responsible for overseeing the organization’s antiviolence policy, including threat assessment and crisis management. Teams should have the authority, training, and support needed to meet their responsibilities.

The threat assessment and incident response teams will be responsible for responding to ALL reports of violence, threats, harassment, or other events or conduct that may frighten any employee.

Often, team members will receive special training in risk evaluation, threat assessment, conflict resolution and procedures to monitor, document, and develop a response to all cases brought to their attention. They also need to be aware of, and have contingency plans for, issues such as dealing with the news media in the event of a major incident and helping meet employees’ needs in the aftermath of a violent death or other traumatic workplace event.
It should be explained that, often, these teams will not conduct threat assessments themselves, but instead will seek the assistance of outside threat assessment professionals to perform the function with the team’s collaboration.

Teams often will benefit from consulting with law enforcement officials, mental health professionals, emergency response personnel, and other outside specialists or agencies that could become involved in a crisis. To be fully effective, these relationships should be established and maintained before an emergency occurs.

The composition of assessment and response teams will reflect a multidisciplinary approach. Teams often include representatives from security, human resources, medical and employee assistance in organizations large enough to have those departments.

Other possible members are union representatives, where employees are covered by a union contract. While team members may belong to different departments, as a team, they should report to one senior manager, so that lines of communication and authority are clear and there will not be conflict or confusion in the midst of an emergency.

The team’s composition, tasks and powers should be clearly defined.
Employers may want to hire outside experts to train and advise the assessment and incident response teams. Those teams, in turn, can conduct violence prevention and emergency response training for employees, supervisors and executives.

Teams should keep good written records of all incidents and interventions, monitor results, and evaluate the actions that were taken.

Training in workplace violence prevention will vary according to different employee groups. Training should be provided to new/current employees, supervisors, and managers, be conducted on a regular basis, and cover a variety of topics, including:

• The workplace violence prevention policy, including reporting requirements
• Risk factors and that can cause or contribute to threats and violence
• Early recognition of warning signs of problematic behavior
• Where appropriate, ways of preventing or defusing volatile situations or aggressive behavior
• Information on cultural diversity to develop sensitivity to racial and ethnic issues and differences
• A standard response action plan for violent situations, including availability of assistance, response to alarm systems, and communication procedures
• The location and operation of safety devices such as alarm systems, along with the required maintenance schedules and procedures
• Ways to protect oneself and co-workers, including use of a “buddy system.”
• Policies and procedures for reporting and recordkeeping
• Policies and procedures for obtaining medical care, counseling, workers’ compensation or legal assistance after a violent episode or injury

An evaluation program should involve the following:

• Establishing a uniform reporting system for incidents of harassment, bullying, threats and other inappropriate behavior and regular review of reports
• Measuring the frequency and severity of workplace violence in order to determine if prevention programs are having an effect
• Analyzing trends and rates in violence-related injuries, lost work time, etc.
• Surveying employees before and after making job or work site changes or installing security measures or new systems to determine their effectiveness
• Keeping abreast of new strategies for dealing with workplace violence as they develop

Any changes in the program should be discussed at regular meetings of the safety committee, union representatives or other employee groups.

Disciplinary Philosophy and Procedures
Disciplining an employee for abusive, threatening or violent behavior serves two purposes. For the abusive or violent employee, the disciplinary action should serve as an appropriate penalty for past conduct and a deterrent against future offenses. For the rest of the work force, it should serve to reaffirm the employer’s commitment to a workplace free from threats and violence and reinforce employees’ confidence that their safety is protected by strong but fair measures.

To achieve those goals, penalties and the disciplinary process must be—and must be seen to be—proportionate, consistent, reasonable and fair. Erratic or arbitrary discipline, favoritism, and a lack of respect for employees’ dignity and rights are likely to undermine, not support, an employer’s violence prevention efforts. Workers who perceive an employer’s practices as unfair or unreasonable will nurse grievances; and not report them with the expectation of a fair hearing and settlement. Grudges at unfair treatment will fester and may even erupt into further troublesome behavior.

Fairness in discipline begins with fairly and clearly spelling out what the rules are. Policies on workplace conduct should be written to clearly state the employer’s standards and expectations. Penalties should be proportionate to the offense.
If there is a complaint or incident, the incident response team will conduct or ensure a thorough investigation of the facts and based on the results, will consider and determine appropriate disciplinary measures.

The Zero Tolerance Question
When it began appearing in the language three decades ago, the phrase “zero tolerance” customarily referred to a standard, rather than a penalty. Zero tolerance on drugs meant that the standard of conduct would be no drug use. Zero tolerance on harmful substances in food or water supplies meant that no amount of a particular toxic chemical or infectious agent would be considered safe.

Over the last decade, zero tolerance has taken on a different meaning: the application of an automatic penalty for a designated offense. In that sense the policy has at times been criticized for overriding judgment and common sense, as when school administrators acting under a zero tolerance drug or weapons policy expel a student for bringing a nail file to school or having a cold pill or a couple of aspirin tablets in a lunch box.

With regard to workplace violence, employers should make clear that zero tolerance in the original sense of the phrase applies—that is, no threatening or violent behavior is acceptable and no violent incident will be ignored. Company violence prevention policies should require action on all reports of violence, without exception. That does not mean, however, that a rigid, one-size-fits-all policy of automatic penalties is appropriate, effective or desirable. It may even be counterproductive, since employees may be more reluctant to report a fellow worker if he is subject to automatic termination regardless of the circumstances or seriousness of his offense.

Whether to use the phrase “zero tolerance” in its written workplace violence policy or find a different expression is a decision each employer will have to make. Whatever phrase is used, it should be made clear that the intent is to set a standard of conduct, not a system of penalties. Instead of warning of “automatic termination,” discipline policies should declare that violent workplace behavior will lead to penalties “up to and including termination. That leaves room for managers to consider circumstances and exercise judgment on each case. It also properly puts the responsibility on management to ensure that penalties are not imposed arbitrarily, but are consistent, proportionate and fair.

Warren G. Bender Co. can assist you in developing a comprehensive Workplace Violence Prevention Program. Keys to consider in doing so are a strong commitment by upper management, identification of a response team, development of clear and concise procedures and methods of intervention, and monitoring and tracking of incidents and your results.

Source: FBI

Filed under: Safety — Jillian Bender-Cormier @ 9:14 pm March 16, 2018

Cyber Criminals Stole Almost $20 Billion from U.S. Consumers in 2017

According to Symantec’s 2017 Norton Cyber Security Insights Report, more than one-half of the adult internet population in the United States was affected by some form of virus, malware, spyware or phishing scam in 2017. That accounts for roughly 143 million Americans. From those attacks, consumers lost $19.4 billion, and the average cyber crime victim spent 23.6 hours dealing with the aftermath.

Many of the crimes resulted from consumers making basic security mistakes. For example, 60 percent of victims made the mistake of sharing at least one of their passwords for their online accounts or devices with another person. Another cyber mistake was using a single password across multiple online accounts, which is something 24 percent of U.S. consumers made the mistake of doing, according to the survey.

The group of U.S. consumers with the best password management was the baby-boomer generation, with 69 percent ensuring they used a different password for each online account. However, 24 percent of them made the mistake of writing down their passwords on a piece of paper.

Prevention is Key

Symantec recommends following these basic cyber security best practices to ensure safety online:
• Change your passwords every few months.
• Don’t use the same passwords for multiple accounts.
• Don’t share your passwords.
• Use an anti-virus program.
• Use due diligence when opening emails, clicking on links or downloading attachments online.

Filed under: Cyber Liability — Jillian Bender-Cormier @ 7:42 pm March 9, 2018

Technology to Improve Home Safety

As a homeowner, one of your top priorities is keeping your property and family safe from intruders. With the advent of smart homes and new technology, home security is easier and more affordable than ever.

The following are some new technologies that can protect you and your loved ones from criminals:

Doorbell cameras—Doorbell cameras are a great way to see who is at the door before you open it. This is especially useful if you have children who are frequently home alone.
Smart door locks—Smart door locks allow you to lock or unlock your doors remotely. This can be helpful if you forget to lock your doors before you leave the house.
Motion sensors—Homeowners can attach motion sensors to doors and windows. Even the slightest movement can trigger these devices and alert you to intruders.

Above all, it’s important to have a strong security system in place. These systems should include Wi-Fi-enabled cameras, smart smoke detectors and an alarm system that notifies the authorities in an emergency.

Filed under: Personal Insurance,Safety — Jillian Bender-Cormier @ 7:31 pm

The Costs and Drivers of Directors & Officers Liability Coverage

Directors and officers liability (D&O) insurance is a fundamental component of any company’s risk management program. A lack of D&O insurance may dissuade talented individuals from seeking an executive position at your company, as they don’t want to put their personal assets at risk in the event of a lawsuit.

As a savvy business owner looking to protect your bottom line, how do you weigh the cost of insurance to protect your senior leadership with the potential risk of a lawsuit? As regulatory investigations and defense expenses increase, prices for D&O insurance have gone up as well. Corporate indemnification provides the first line of liability protection; but certain circumstances—most notably, if the company goes bankrupt—necessitates that additional protection is offered to directors and officers.

A variety of factors determine the price of a company’s D&O insurance. Some low-risk companies pay pennies on the dollar; others pay a lot more, but they understand it’s a lot less than the expenses they’d incur in a lawsuit. Recognizing the cost drivers of D&O insurance—a company’s exposures, legislation and trends in D&O lawsuits—can help you decide what coverage your company needs to mitigate its unique exposures.

Company Characteristics and Exposures

Public, private and nonprofit corporations with assets of all sizes purchase D&O liability insurance. To determine the cost of premiums and the limits of coverage, insurers review several facets of the company’s structure and price D&O insurance accordingly. Some of these attributes include the following:
1. Is the company mature or young and developing? Companies with less experience and a shorter history of proven effective management can be a riskier policy to underwrite than well-developed companies that have experienced directors and officers.
2. What industry is the company involved in? Operating in certain industries, such as investment banking and securities, may expose their executive management to more risks than those for the board members of a small nonprofit.
3. Is the company financially stable? Insurers consider the amount of debt a company has. Corporate indemnification usually protects directors’ and officers’ personal assets. However, if the company’s finances are unstable, they have an increased chance of becoming insolvent during a lawsuit.
4. Is the company planning on going public soon? Initial public offerings, the most common way to go public, increases the exposures for a private company. Issues, such as a lack of disclosure or if the company’s performance fails to meet expectations, are significant risks for directors and officers during this process.
5. Does your company have employees? From nonprofits to large, publicly held companies, employment-related claims are the primary cause of lawsuits against an organization’s directors and officers.
6. Does the company operate in foreign markets? Conducting business internationally can complicate the D&O insurance needed. For example, in addition to domestic laws, European countries have their own set of regulations to follow.
7. What is the company’s history of past litigation? Insurers will analyze a company’s history of previous lawsuits and any adverse business developments and executive management changes.

Current and New Legislation

Securities Exchange Commission (SEC) regulations continue to impact the cost of D&O insurance. Publicly held companies especially must be cognizant and keep current on SEC disclosure obligations and provisions in the Sarbanes-Oxley (SOX) Act of 2002, which was enacted in response to the corporate scandals of Enron, Tyco, WorldCom and others.

Also recent changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act have caused a spike in whistleblower reporting, bringing to light many D&O claims and increasing the need for D&O insurance. The new whistleblower provision in the Act now gives whistleblowers a “bounty,” or monetary compensation, if the lawsuit results in more than $1 million in monetary sanctions. Given this new incentive, there has already been an increase in the number of whistleblowers that have emerged since the Act added the provisions in early 2011.

Trends in D&O Lawsuits

Even after a thorough assessment of a company’s risks, D&O insurance continues to be a high-severity product, as carriers are often hit unexpectedly with catastrophic claims. It’s no surprise that as litigation increases, the price of D&O insurance increases as well. In addition, as the litigation process grows lengthier and if multiple lawsuits erupt from a single transaction, a company can quickly exhaust its primary layer of D&O coverage.

Some types of lawsuits occur less often, but result in catastrophic losses. Other types result in smaller payouts, but occur more frequently. Nonetheless, defense expenses can cost millions of dollars, even if the director or officer is not found liable. Some of the types of lawsuits that affect directors and officers include the following:
• Breach of fiduciary duty lawsuits
• Employee Retirement Income Security Act (ERISA) lawsuits
• Employment-related lawsuits
• Mergers and acquisitions (M&A) and “merger objection” lawsuits
• Securities class-action lawsuits
• Shareholder derivative suits

Within the last few years, there has been an increase in M&A lawsuits. In 2014, there were more than 600 lawsuits regarding M&A. Some M&A cases involve multiple lawsuits and a lengthy litigation process, which can deeply cut into a company’s primary D&O policy.

Know What Your Policy Covers

While many companies usually focus on the cost of their D&O policy, understanding the scope of the policy is even more critical. Most D&O policies are renewed yearly, and the terms and conditions can change. Read through your policy carefully. Be aware of the following:
• Look at the limits of your liability. Are they enough to cover your exposures? Companies with a lot of risk exposures usually find that they need more than just the primary coverage, and purchase excess insurance as well.
• Be aware of exclusions; most D&O policies do not cover claims that arise from fraudulent or criminal acts.
• For some insurance carriers, Employment Practices Liability (EPL) insurance and Fiduciary Liability insurance are policies that are purchased separately from primary D&O insurance.

Don’t assume they are automatically included in your D&O policy.

For more information on D&O coverage options for your company, contact Warren G. Bender Co. today.

Filed under: Directors & Officers,Property & Casualty — Jillian Bender-Cormier @ 7:15 pm

Common Employment Law Claims

By nature, being an employer is filled with challenges and ever-changing risks. One of the biggest concerns to any organization, regardless of size, is the well-being of its employees. Skilled employees are the backbone of a successful organization. In the past, these valuable employees did not always get the fair treatment they deserved. As a result, Congress passed numerous laws to ensure that every person gets treated reasonably when at work.

Significant changes to past employment laws placed whole new areas of risk on employers, leaving them to redesign workplace policies in an attempt to limit their exposures. Employers today don’t just need to make sure that they follow all the rules, employees need to follow them as well. To manage this risk, most companies create a human resources team that is able to give advice and look out for the well-being of workers.

The landscape of employment law is continually evolving. With every new piece of legislation or court decision, employers learn about workplace discrimination and employee rights that previously may not have been relevant. To protect both employees and the company, management must stay up to date on the risks and issues inherent to the employer-employee relationship.

A majority of U.S. workers today are hired under the agreement of an “employment-at-will” clause. This clause states that either the employer or employee can terminate the employment at any time and for any reason (or no reason). This serves both parties by preventing long-term contracts from restricting either side’s future.

Since the 1960s, the employment-at-will agreement has steadily grown to favor employee rights. Anti-discrimination laws and various other laws have broken the idea that an employer can truly fire an employee at-will. Managers who hire or fire employees must realize the limitations of the employment-at-will policy, and that such a clause does not offer protection if any discrimination or bad faith can be proved in court.


“Wrongful discharge” is a claim made by workers whose employment was terminated because their government-protected rights interfered with the function of the company. Whistle-blowing, assisting a government investigation, using workers’ compensation and missing work for civic duties are all actions that employers have mistakenly tried to use to fire employees. Since these claims are eligible to collect punitive damages as well as lost wages, the HR team should make sure no employee is being fired out of revenge or convenience.

Similarly, there is the issue of firing employees without “just cause.” While the employment-at-will statement is meant to cover employers, everything from handbooks to workplace conversations can imply a contract of employment to workers. If employees have evidence that employers historically have only ever fired workers because of just cause, they could make a case that their own employment cannot be terminated without reason. To avoid such claims, employers need to make it perfectly clear that all positions are at-will and never promise or speculate specifics of future employment.

A final point to note is that many state courts have ruled that employment implies a contract of “good-faith” between the company and the employee. This contract is meant to help determine blame in a situation where no legal misdoings were technically committed. For these cases to reach court, the actions taken by either party must be very unscrupulous; a possible case could include the firing of an employee in order to ensure a different employee gets a promotion or sales opportunity.

Often reported as one of the most dangerous times for employers, the hiring process can be a drawn-out event where an inappropriate question can lead to expensive litigation for a company. The Americans with Disabilities Act and the Civil Rights Act promise all potential employees that no employer is allowed to discriminate against them for any reason.

Extensive in detail, the two acts comprise a vast number of rules and implications for the questions asked on applications and in interviews. No inquiries concerning race, religion, gender or family are to be asked; additionally, no questions about health or physical condition are to be asked unless pertinent to the requirements of the job. Reasonable accommodation must be made for applicants with special needs and no test that tends to discriminate against a protected class may be issued (unless the test is related to job requirements).

The best method to avoid the appearance of discrimination is to be as clear as possible about job requirements. When doing interviews, only ask questions directly related to the position and make no implication that the interview is a job offer. Small talk can be essential for getting a feel for an employee, but conversational questions posed during this time can be as much of risk as any official question. Interviewers should always prepare a list of official questions for an applicant to answer.

Non-criminal Action

Offensive and litigation-worthy actions against employees are not just limited to termination of employment. Ranging from assault to defamation of character, there are any number of civil offenses, or torts, that can land a company or a co-worker in a courtroom. The following are the most common:

Negligence – Though it comes in several specific forms, negligence is usually the suit that follows an incident the employer was indirectly responsible for. Negligence is typically claimed by employees who were affected by the actions of another worker. Affected employees blame employers for being irresponsible in their decision to hire (or continue to employ) an individual who is a known threat in the workplace. Alternatively, employees can also claim they were falsely fired or punished for actions the employer did not fully investigate.

Harassment is possibly the biggest source of negligence claims. Employers are held responsible for the workplace environment. If direct acts of harassment from co-workers, vendors or customers are not dealt with immediately, claims could be made that manager negligence led to a hostile work environment. Any vendors and contractors should fill out signed agreements to abide by company harassment policies.

In all situations of reports of misconduct or punishment, it is essential that managers thoroughly investigate the situation and respond quickly and appropriately. Since litigation could be the result of punishing or not punishing the alleged offender, managers should document everything and discuss the situation with others only as necessary.

Personal Facts – Employers, especially those who do background checks, should take caution to prevent any breach of privacy. Any leak of an employee’s personal information can result in a claim for invasion of privacy. At any point when personal information is disclosed from employee to management, the employee should fill out a form of written consent.

Employers need to take special care while doing background checks during the hiring process; it is likely the most sensitive information that will ever be handled by the company. Application forms should clearly state the company’s requirement of a background check and present guidelines for how the information will be used.

Connected with this, tort suits will often be filed because employees thought they had private use of something that was, in fact, company property. The most common instance of this is email records. Employees have litigated their employers for firing them over company emails. Though usually unsuccessful if clear handbook policies are in place, these claims are avoidable by having employees sign disclosure agreements when they are hired. Additionally, reminders about company rights (email ownership, locker searches) should be posted around the workplace.

Often thought of in conjunction with slander, defamation of character can occur whenever harmful information about an employee is spread around an office, regardless if it is true. This most commonly happens with medical information, but could potentially be the result of a former employer reporting an unrequired piece of sensitive information during a reference check. In either case, medical and punitive records should be handled delicately and never disclosed unless special permission is obtained.

Lies – Lying, both by employers and employees, can cause sudden litigation for unsuspecting companies. The most obvious and avoidable forms of lying come in the form of fraud. Fraud is usually linked to promises of employment or change in type of employment. Companies that promise terms of employment far greater than they know they can provide are typical offenders in this area, but managers that promise unverified raises for completion of special training or schooling can be just as liable.

Fraud is easy to avoid, because it requires intention to mislead. Managers that honestly admit they cannot fulfill an earlier promise could possibly be subject to violation of an implied contract, but cannot be alleged of intentionally harming an employee by means of false information. As stated earlier, promises of future employment are always a risk and should not be made.

Attacks against individuals – The final area of employment law tort claims involves attacks on individuals. Intention to cause physical or emotional harm and unlawful detainment are grounds for the majority of these tort cases.

Assault, battery and emotional harm are all instances where an employer or co-worker makes a direct action against an individual. Threats constitute assault while physical contact composes battery. Cases of non-criminal assault and battery involve unwelcomed physical contact (often linked to sexual harassment.) Neither should be tolerated in the slightest, and any employee complaints should be addressed immediately. Criminal actions of assault should be handled by police.

Intentional emotional harm is as serious an issue, but the “intentional” aspect is difficult to establish. Accusations of an employee causing emotional harm should also be handled quickly, but intent should be established as well. At the very least, sensitivity training should strongly be considered for the offending individual.

Finally, unlawful detainment occurs when an employer or manager holds an employee against her or his will. Many times these detainments are the result of the employee being suspected of violating a law while at work. With no authority, an employer cannot hold employees against their will (unless they present a clear danger to society.) When a law has been violated, police should be contacted to deal with the issue.

Because there are so many types of violations that can occur in the workplace, employers should establish two different channels for employees to report complaints. This way, if one of the contacts is involved in the complaint, the employee still has a way to comfortably report the incident. Employers must take as many steps as necessary to ensure clear communication between management and employees.

The greatest threat to employers from employees usually starts with the employer making a mistake. An email or small talk might not be received as intended, or a general statement of idealism could be misconstrued as a promise. Employers and managers must take time to understand what can make them liable and, more importantly, why an employee has government-sanctioned protection from it.

As stated earlier, employees are an essential part of any business. For employers, the employer-employee relationship is ripe for potential miscommunications. Review your company’s handbook so you know what everyone is supposed to understand and what rights are to be expected.

In the end, no company is perfect and a mistake from a manager or employee could result in costly litigation, regardless of the court’s decision. Employment Practices Liability insurance can provide coverage for employer risks inherent to your organization and the unsanctioned actions of employees. Contact Warren G. Bender Co. to discuss your company’s exposure and how you can prepare for imminent risks.

Filed under: Employment Related Practices,Property & Casualty — Jillian Bender-Cormier @ 7:19 pm February 21, 2018