Month: January 2013

Responding to Religious and Racial Harassment

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If an employee complains of being harassed on the basis of racial or religious differences, the employer is obligated by federal and state laws to take prompt remedial action. That action should start with conducting an immediate, thorough investigation. When the investigation is over, the employer must determine the best course of action to respond to what was revealed. What the employer does at this point can make all the difference in the world as to whether or not the problem is resolved.

There is more than one scenario that can result from an investigation of this type. The investigation can reveal that some of the conduct complained about was inappropriate, but not illegal. Most employers’ harassment policies make it clear that inappropriate conduct will not be tolerated. But such policies also infer that the employer must follow through and address inappropriate conduct even if it does not violate the law.

In this case, employers have a number of options to resolve the problem, but the resolution must be appropriate to the circumstances. If the conduct was not severe, and happened on only a couple of occasions, an employer can issue verbal warnings, written warnings, or some other form of disciplinary action.  An example would be the ineligibility for promotion or bonuses for a period of time during which the offender’s conduct will be monitored.

On the other hand, if the conduct is severe, the employer may need to take a sterner approach. Depending on the offending employee’s work history, the relationship between the offender and the victimized employee, the type of conduct and the context in which it occurred, the employer still might have alternatives other than termination. Demotions, ineligibility for pay raises and bonuses for significantly longer periods of time, negative employment reviews, and the removal of supervisory duties can be effective in stopping the behavior. These should be accompanied by requirements to attend counseling or special training sessions. The employer should also include training for the entire affected department as part of his/her remediation plan.

It is important to remember that each situation requires an individual determination. The employer must balance the need to stop the conduct, prevent it from happening in the future, reduce liability risks, and maintain an environment that is conducive to productivity. That’s why it is imperative the employer works with human resources professionals and legal counsel to assess harassment complaints. Prompt, effective resolutions will ensure a loyal workforce and minimize the risk of any future litigation.

How to Prevent and Treat Mold in Your Home

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The impact of mold has become a prevalent topic recently, but do you know all you need to know about its impact on you and your home?  Although certain molds may be discussed more than others, all molds are treated the same when it comes to their potential health risks and their removal. 

It is easy to know if you have a mold problem.  Large mold infestations can be seen or smelled.  Mold grows naturally in the environment and may enter your home through open doors, windows, and ventilation systems such as heating and air conditioning.  Mold spores may even attach themselves to your clothing and pets, which then bring them inside the home.  Once inside, mold attaches itself to areas with moisture, such as a leaky roof, pipes, wet wallboard, plant pots, areas of condensation, and where flooding has occurred.  Many building products make a hospitable place for mold to grow.  

Stachybotrys chartarum is a greenish-black mold, which grows in areas with a high cellulose and low nitrogen content, such as fiberboard, gypsum board, paper, dust and lint.  Even carpet, fabric and upholstery can easily support mold growth.  

The most common health concerns resulting from mold exposure are allergy-type symptoms.  The severity of the reaction depends on the amount and duration of the exposure to the mold.  Individuals with chronic respiratory disease, including asthma, may experience difficulty breathing.  Also, those on immune suppression therapy may be at an increased risk for health problems associated with mold.  If you feel that you or your family members are at risk for infection, see your doctor for diagnosis and treatment.

Prevention is the key to combating mold. Just as with termites, buildings should be inspected for mold growth.  Areas affected by water damage should be inspected thoroughly.  Leaks and other conditions that supply moisture should be corrected, so as to prevent mold from taking root.  Remove and replace flood-damaged carpets and carpet pads.  Helpful tips are to keep humidity levels in your home below 50%, using air conditioning or a dehumidifier if necessary.  Also, make sure your home is well ventilated, checking heating and air conditioning units as well as exhaust fans.  Clean bathrooms and kitchens with mold-killing products.  And, consider using paint that contains a mold-inhibiting agent.

If you are going to rid your home of mold, a bleach and water solution will suffice for most jobs.  Mix 10 parts water to 1 part chlorine bleach and never mix bleach with ammonia.  Clean walls and other flood-damaged items with the bleach solution and discard moldy items.  Professionals may be needed to clean larger areas of mold.

Liability Insurance Is a Must-Have Protection for ERISA Fiduciaries

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Fiduciary liability under ERISA is an exposure individuals or organizations may have as a result of their position in relation to an employee benefits plan. ERISA fiduciaries can be personally liable for breaches, and can be held responsible for the breaches of co-fiduciaries. Either of these situations can impact a fiduciary financially; for individual fiduciaries, this can mean their personal assets may be at risk. Fiduciary liability insurance can offer some protection against this exposure.

Under ERISA, a fiduciary is any person (or organization) who the plan names as such, or who exercises discretionary authority or control with respect to the management or administration of a plan or its assets. This broad definition encompasses the plan sponsor, plan administrator, trustees, investment managers, consultants and actuaries, to name a few. On an individual level, it can snare the small business owner and employees who are involved in plan administration or management.

Legal liability can arise for plan fiduciaries when they are alleged to have failed in the obligations that ERISA establishes (prudence, acting in the best interests of plan beneficiaries, etc.). You don’t need a high-profile situation like Enron to trigger allegations of a fiduciary breach. Claims that a fiduciary duty has been breached can involve situations such as benefit claim denials; a reduction in benefits; inadequate plan funding; plan terminations; or questionable choice of an outside service provider, insurance company, or investment management firm. These claims can be filed by plan participants or beneficiaries, by a government agency (such as the Department of Labor), or by another fiduciary.

Fiduciary liability insurance can protect an insured fiduciary against the legal liability arising from alleged breaches of the duty, including the cost of the fiduciary’s defense. Fiduciary liability insurance should not be confused with a fidelity bond or with employee benefits liability insurance. A fidelity bond (also known as an ERISA bond) is for situations involving dishonesty, and its protections are for the plan and its beneficiaries. Employee benefits liability insurance protects against claims of administrative errors, and thus is quite narrow in its scope. Neither of these affords protection to a fiduciary that, for example, is alleged to have been imprudent in selecting an investment management firm for the company’s 401(k) plan.

Like any type of insurance, fiduciary liability insurance policies can vary, and finding the policy that is the best fit for you and your business requires research and understanding of the available options. The International Foundation of Employee Benefit Plans posts on its Web site a “Short List” of questions to ask when investigating these policies. For example, whom does the policy cover? Does the policy cover multiple plans and, if so, to what limits, and what would be the cost of covering each plan separately? Are defense costs counted against the plan’s indemnity limit? Is there coverage for penalties, fines or taxes assessed against fiduciaries?

These and other questions should form the basis for your conversation with your insurance broker when assessing the type of fiduciary liability insurance that is best for you and your business.

Thorough plan oversight, use of qualified benefit plan professionals, and proper training of employees who handle benefit plan functions are the key elements to ERISA compliance. However, an appropriate fiduciary liability insurance policy is a must for those situations when, for whatever reason, a fiduciary breach is alleged to have occurred.

Understanding Mold Exposures for the Homeowner

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National estimates show that one in three houses has a moisture problem, and one in ten houses has enough mold that could cause allergic reactions.  All of us are exposed to some mold every day with no side effects. We may breathe in mold spores that are present in the air or eat foods in which mold has begun to grow. People with mold allergies, however, may have a reaction if exposed to too much of the fungus.

While not everyone is allergic to mold, if a person has a mold allergy it can cause a variety of reactions throughout the body, and in particular the central nervous system.  Symptoms can include the inability to concentrate, memory loss and headaches.  Children can react with behavioral and learning disorders, sometimes misdiagnosed as attention deficit disorder or asthma.  One form of mold, black mold, is extremely toxic and can be deadly, especially to children with mold allergies.

Recently, a jury awarded a Wichita couple $1 million in damages because a house they bought was infested with mold the plaintiffs claimed had caused allergic reactions.  The jury ruled that the sellers were negligent in failing to disclose a leaky roof that caused the mold.  Around the nation, juries have awarded damages in the hundreds of millions of dollars for mold lawsuits, not only against previous property owners, but also construction firms, engineers, architects, and others alleged to be responsible for mold problems.  In fact, mold lawsuits have been one of the fastest growing areas of litigation in recent years. 

A homeowner’s insurance policy usually covers mold damage only if it results from something sudden and accidental, such as a burst washing machine hose.  But if the root cause was a maintenance defect or neglect, mold removal most likely would not be covered.  Due to skyrocketing losses from mold and other water-related damage claims, some homeowner’s policies in 44 states have exclusions for mold and other water-related damage in standard policies, according to the Insurance Information Institute.  Homeowners facing this change have two options:  purchase extra insurance for mold in the form of a rider or take measures to prevent the problem from occurring.  Riders can cost from $50 to $1,400 per year, depending on the insurer and location, according to a spokesman for Tillinghast, the insurance-consulting unit of Towers Perrin.

     What to Do About Mold

Whenever water gets into a house-through a leak in the roof, a burst pipe, a hard rain seeping into the basement, etc.-the affected area must be dried completely within 48 hours (72 hours tops) to prevent mold.

Mold can also result from high humidity, but this problem can usually be solved with a dehumidifier.  Yet another cause of mold is clogged air-conditioning coils.  Ask a service technician to check the air-conditioning coil to make sure the condensation drain line is free flowing and the coils are clean.

Mold may be present in your basement without your knowing.  Hold a flashlight toward the floor so that the light shines down the wall but not directly at it.  Look for shadows cast by the fuzz of mold, usually in a band on the bottom of the wall.  Also look at the tack strip under carpeting for signs of rot and behind baseboards for mold.  If you find mold anywhere, it may be advisable to contact a professional for further assessment.

According to the Environmental Protection Agency, mold that covers an area smaller than a 3-by-3-foot square can be safely removed by a homeowner.  Many people use bleach on mold, but the EPA disagrees.  Bleach can kill mold, but the dead mold will remain and could cause the same allergic reactions as live mold.  Instead of bleach, just use detergent and water.  Detergent lifts the mold away.  Then dry the area as quickly as possible.   

For larger problems, you should consult a professional environmental consultant.  Fire and water damage restoration companies will provide free or low-cost assessments, too, but keep in mind there could be a conflict of interest with these companies.

For more information about mold, consult the EPA brochure, “A Brief Guide to Mold, Moisture and Your Home.” It’s available online at www.epa.gov/mold.  For more in-depth information, see the EPA brochure “Mold Remediation in Schools and Commercial Buildings” which also applies to homeowners.

Employee or Independent Contractor?

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A common scenario many business owners face is hiring an independent contractor, who operates as a sole proprietor, for a task where the possibility for injury exists. Yet, you fail to obtain workers’ compensation coverage for this person because you assume if they were injured on the job, their independent contractor status would prohibit a claim against your insurance.

What you may not realize, however, is that just because someone is a sole proprietor of a business doesn’t automatically make them an independent contractor if they come to work for you. They may very well be considered an employee.

Determining whether someone is an employee or independent contractor is complicated by the fact that three separate agencies, your state Workers’ Compensation Board, your state Department of Labor and the IRS, each make a determination of status based on their own criteria. The IRS requirements can be found online at http://www.irs.gov. You can obtain state requirements by contacting your local Workers’ Compensation Board and Department of Labor office.

In spite of all of this seeming confusion, there are general rules of thumb you can utilize to determine if a worker should be considered an employee. The commonality among these criteria is that the employer directly controls the how, what, and when of the worker’s employment.

DIRECT EVIDENCE OF THE RIGHT TO CONTROL

-Do you have the right to require compliance with your instructions?

-Will you be training this person through meetings, classes, or apprenticeship with a more experienced worker?

-Will the worker’s services be integrated into your overall business operations?

-Do you set the number of hours this person will work?

-Will the worker devote full time hours to your business?

-Do you determine the order or sequence in which the worker’s tasks are performed?

-Is the worker required to submit regular oral or written reports?

-Do you pay the worker’s business expenses?

METHOD OF PAYMENT

-Do you provide this person with hourly, weekly, daily, monthly or other regular periodic payments?

FURNISHING OF EQUIPMENT

-Is the work being performed on your premises?

-Do you provide the worker with tools, materials, or other equipment?

RIGHT TO TERMINATE RELATIONSHIP WITHOUT LIABILITY

-Do you have an ongoing relationship with the worker?

-Do you have the right to discharge the worker without liability?

The general criteria for determining whether a worker should be considered an independent contractor or employee are as follows:

-Does the worker perform services for several unrelated persons or firms at the same time?

-Does the worker make their services available to the general public on a regular and consistent basis?

-Does the worker realize profit or suffer a loss as a result of his/her services beyond the profit or loss ordinarily realized by employees?

-Does the worker invest in facilities used in performing services that are not typically maintained by employees?

-Will the sale of business assets provide the worker with a gain or recovery?

-If the worker suddenly stops working, is there contractual liability?

Remember, a worker’s status is subject to the particulars of the specific work to be performed. While someone may qualify as an independent contractor for one assignment, they may become an employee for the next job. Therefore, you must always re-evaluate the worker’s status on regular basis to ensure compliance.

Stay Dry with Sump Pump Coverage

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Outside a violent storm slams rain against your house, the streets fill with water, the rain rushes down the down spouts, but through it all you hear the comforting sound of the sump pump hard at work. Before going to bed, you check on the condition of the basement and find it remains dry. The sump pump is purring and easily removing the water rising in the pit. You sleep soundly.

The next morning, the storm has passed but you feel something is not quite right. You rush to the basement and find it completely flooded. The pump has broken down sometime during the night. You make a frantic call to your insurance agent to report the damage and what a relief when you learn you are covered — you elected sump pump protection with your homeowner’s policy.

Basements are areas that homeowners should never overlook when insuring their homes. Often valuable personal property is stored in basements, in addition to heating, cooling and refrigeration systems.

Subject to an additional premium and underwriting, homeowners’ policies may be endorsed to cover losses, either structural or personal property, caused by water that either backs up from a sewer or drain or overflows from a sump pump or similar system, even if the loss occurs from a mechanical breakdown of the sump pump (Damage caused by loss of electricity to the sump pump is not covered.). Such damage is normally excluded from basic homeowners’ policies. A deductible often applies to any occurrence covered by the endorsement and there is usually a maximum limit of liability for any loss.

Even with the sump pump or backup endorsement, water damage from flooding or from water below the ground’s surface continues to be excluded from homeowners’ policies. Most insurance policies are clear that if a flood is the cause directly or indirectly of the sewer back up or sump pump failure, the damage is not covered by either the homeowner’s policy or the sump pump endorsement.

But you can cover some of the losses from flooding by purchasing protection from the federal government’s National Flood Insurance program. This program will cover direct physical loss caused directly or indirectly by backups through sewers or drains; discharges or overflows from a sump pump or related equipment; or seepage or leaks on or through the insured property but only IF there is a general condition of flooding in the area and the flood is the proximate cause of the sewer or drain backup, sump pump discharge or overflow, or seepage of water.

Checking with your professional insurance agent and broker can forestall problems from water damage by making certain that you understand why you may need the optional coverages – sump pump and/or flood – to protect your home.

Sump Pump Tips

-A yearly check up of your sump pump can prevent problems in an emergency. A well functioning sump pump drains water from a pit and prevents water from overflowing into your basement.

-Check to see if any debris, garbage, or build up may have worked its way into the sump since the last time it was used.

-Connect a garden hose and fill the sump with water. If the pump does not start, you may need to replace the switch or even a fuse.

-While pumps do not have filters, they do have screens or small openings through which water flows. Check this area to make sure it is not plugged or clogged.

-While sump pumps are usually a good line of defense against flooding, under isolated conditions like a power outage, you may find yourself standing in knee-deep water surrounded by thousands of dollars worth of damage. If you live in an area where power outages are common, especially during severe thunderstorms, it may be worthwhile to invest in a generator to keep your sump pump operating.

Understanding the Difference Between Claims Made & Reported and Pure Claims Made

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Under a claims-made policy, the insured is required to file claims during the policy period or during the extended reporting period (ERP), if applicable. However, there are two distinct types of claims-made policies. One is the “Claims-Made & Reported Form” and the other is the “Pure Claims-Made Form.” While the differences of the policies are subtle, not understanding the differences can have a significant impact on your coverage.

The most commonly used claims-made policy is the “Claims-Made & Reported Form.” This policy requires that not only must the claim be made during the policy period or ERP; it must also be reported during this same period. This means that the insured has a designated time frame within which claims can be filed.

The “Pure Claims-Made” Form is less prevalent. It also requires that a claim be made during the policy period or the ERP. However, the major difference between this and the “Claims-Made & Reported Form” is that under this type of policy, the insured is only required to report the claim as soon as possible. This means that the report of a claim may happen after the policy’s expiration.

If your company’s professional liability policy is a “Claims-Made & Reported Form,” then time is an important factor when a claim needs to be filed. It is your obligation to report a claim or a potential circumstance that could lead to a claim to your carrier within the policy period or the ERP. If you attempt to handle the situation internally to avoid reporting it to your carrier, the delay could negatively affect your coverage. Professional liability polices are very specific as to how and where to report a claim. Failure to comply with these provisions can negate your coverage. The “Pure Claims-Made” policy, on the other hand, only requires that the claim be reported as soon as practical, which allows for more flexibility. This means that the claim can be reported at any time in the future even after the policy expires.

In addition to the issue of claim reporting time, many “Claims-Made & Reported Form” policies have an awareness provision that allows the insured to report any circumstance that may lead to a future claim. Such notice must also be given during the policy period or ERP.

When a circumstance is reported, it’s considered to have been reported during that policy period even if it results in litigation after the policy has expired. Because each policy has a different reporting provision, it is important that you know your policy’s reporting requirement to ensure your coverage remains in effect.

Keep in mind that any extended reporting period provided by the policy only extends the period in which a claim may be reported. The wrongful act that precipitated the claim must have taken place before the policy expired.

Why Just One Speeding Ticket May Significantly Increase Your Auto Insurance Rates

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Most drivers drive faster than posted speed limits, at least now and then, and many speed every time they get behind the wheel.  It does not seem to matter that average speed limits across the country are higher now than they were a decade ago.  Whatever the speed limit is, a substantial percentage of drivers are going to push beyond it; whether it’s because they are running late, because they are not paying attention to their speed, because they have a new sports car or because they just plain enjoy driving fast, and so on.  Clearly, there are not enough highway patrol officers to give speeding tickets to all those who speed, which means that the odds always favor the speeder in terms of not getting caught and ticketed.  

Until they do have a speeding ticket, most drivers give little thought to how this may affect their auto insurance rates.  They may be in for an unpleasant surprise.  To the cost of the ticket itself may be added an even more expensive increase in their auto insurance rates.  In cases of extreme speeding, a driver’s cost for auto insurance could double even on a first offense.

Why do insurers often raise rates after only one speeding ticket?  It’s simple.  Numerous studies by highway safety experts show that “the faster you go, the more deadly it is,” says Jeanne Salvatore, spokeswoman for the Insurance Information Institute, an industry trade group. “There’s a higher possibility you’re going to cause a lot of damage to people or property.”

If you’re cited for speeding, your insurer may tack a temporary surcharge on your policy for three years.  At one large auto insurer, the surcharge may raise your rate by up to 26% the first year, then will gradually decline and disappear after three years, as long as you have no more moving violations.

The size and duration of the increase varies depending on several factors, including:

 

  • Your driving record and your relationship with the insurance company. Some insurers waive the surcharge if the customer has had a long relationship with the company and previously had a clean driving history.
  • Where you live. Insurance is regulated by the states, and different states have different laws regarding rate increases.  Some states don’t allow insurers to impose a surcharge for first-time speeding tickets, while others require insurers to raise rates for some speeding violations.  For example, a single male driver who lives in Phoenix and receives one speeding ticket will experience an average rate increase of 16%, but the same driver will pay no more if he lives in Philadelphia.
  • How much you were exceeding the speed limit.  An analysis by USA TODAY found that 10% of ticketed drivers in 2002 were “extreme speeders”-drivers who exceeded 90 mph or 15 mph above any speed limit.  Extreme speeding is considered reckless driving, a major violation. Even a first-time citation can more than double your insurance rates.

 

Speeding may also affect insurance rates other than for auto insurance.  Insurance companies may look at your driving record when deciding whether you’re a high-risk customer and could charge you higher rates for life, health, disability or long-term care insurance.

On average, auto insurance rates are expected to rise by 6% in 2004, following an estimated 8.5% increase in 2003, according to the Insurance Information Institute.  The average annual cost for auto insurance is estimated to be $898 this year, up $51 from 2003.  Avoiding speeding can keep your costs from going up even more.

Once upon a time in the ancient past-at least 30 years ago, anyway-there was a series of public service ads on television and radio with the overall message, “Speed kills.”  One showed a clock and then a car speedometer pushing up past 65: “Don’t try to catch this hand [the clock] with this one [the speedometer],” the announcer advised.  In other words, it might be better to be late than dead or seriously injured.  It’s been a long time since there was a public campaign aimed at getting America’s drivers to slow down and save lives.  But that doesn’t mean speeding is any safer.  Speeders are still more likely to have accidents injuring themselves and/or others than drivers who obey speed limits.  An increase in insurance rates caused by speeding is troublesome, but even worse is the increased risk of death or serious injury.