BEWARE OF YOUR INSURANCE RISK WHEN LAYING OFF EMPLOYEES

One of the most difficult aspects of running a business is the hiring and firing of employees. In particular, firing or terminating an employee can be a complex issue regardless of the circumstances involved. Proper handling is necessary in order to prevent the employee from harboring hard feelings against the company. Furthermore, in this situation the employee may develop a plan to find employment elsewhere. It is imperative for the business to handle the termination delicately to prevent the worst from happening, namely a lawsuit filed against the company by the ex-employee.

Even for businesses that use “at-will” employment, this risk is not fully alleviated. “At-will” employees are just as dangerous as contracted employees.

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When either the employee or the company can terminate employment at any time and for any reason, unless that reason is illegal, the phrase “termination-at-will” is used to describe this situation. This clause is important protection against the potential lawsuit of the employee. That does not mean that employers can let their guard down, however. In the jurisdictions where termination-at-will applies, employers need to tread very carefully to avoid putting the employee’s at-will status in danger. An example application of this principle would be if the employer gave the employee verbal assurances that their job was secured. If the employee is later fired, this could be grounds for a lawsuit, since the verbal assurances directly contradicted their at-will status.

If performance issues are at the forefront, the employer cannot simply fire the employee. First, they must schedule a comprehensive evaluation meeting with the employee and go over exactly where the employee is failing to meet their standards and what can be done about it. The two key components of this meeting must be a set of goals that the employee considers attainable and a reasonable timeframe in which to achieve those goals. Crucial to the success of this meeting is the understanding that the employee will be terminated if they cannot meet these goals within the timeframe.

It cannot be emphasized enough that this is the key protection the company has against a lawsuit. To finalize this protection, an action plan that documents the goals and the timeframe must be created and signed by both the employee and the employer. Until the goals are met or until it becomes clear that the employee cannot or will not meet them, the employer must monitor the employee’s progress. Satisfying these constraints provides firm legal ground for the termination of an employee, since that termination can be shown to be fair and the last resort.

Aside from job performances, the other two issues affecting termination lawsuits are termination based on misconduct and termination based on layoffs. If misconduct is at the forefront, the employer needs to marshal evidence that they did, in fact, conduct a thorough and unbiased investigation of the employee’s conduct. This investigation must be of a fact-finding nature that determines whether the employee violated any behavioral conduct standards. The employer must avoid trying to find out if the employee violated the law; only possible violations of company policy are the purpose.

When an employee is laid off, the layoff procedure must comply with the stipulations of the Worker Adjustment and Retraining Notification Act or WARN Act or the Older Workers Benefit Protection Act or OWBPA. Companies with 100 or more employees are subject to the constraints of the WARN Act. There is a time limit associated with the WARN Act: they do not cover employees who have worked less than six months at the company, or employees that work fewer than twenty hours per week.

If the worker is laid off due to age-related concerns, the employer must seek an agreement from the employee that the employee will not sue for age discrimination. Under the OWBPA, there are stringent constraints for age discrimination claim waivers. Previous court cases have handed down rulings that these stipulations are unqualified and meant to be applied exactly as written.

Contact our office today for information about the Business insurance products that can help to protect your company against employment-related risks.

This article should not be relied upon as legal advice. Please consult with an attorney familiar with the issues and laws of your state before taking any action.

BE PROACTIVE TO PREVENT CYBERCRIME AT YOUR BUSINESS

Legendary bank robber Willie Sutton supposedly said that he robbed banks because that was where the money was. Many small business owners follow this logic when it comes to computer system security. They believe that people who rob with a mouse and a keyboard rather than a gun target large corporations, because those businesses have the most money. This leads them to the misguided belief that cybercriminals will not bother them. In fact, the NACHA - The Electronic Payments Association - reports that Eastern European criminal syndicates have targeted small businesses precisely because they have allowed themselves to become easy marks.

Experts in the field estimate that one in five small businesses do not use antivirus software, 60% do not encrypt data on their wireless networks, and two-thirds lack a data security plan. This failure to take precautions makes a small business easy pickings for computer hackers. However, there are several things business owners can do to protect themselves.

1. Use two-factor authentication. This is a mechanism that requires the user to do more than one thing for authentication. It ordinarily has two components -- one thing the user knows (such as a password), the other a randomly generated number that the user must input. The number comes from an electronic token card, which generates a new number every few seconds. If the user enters a number that the system is expecting, the system will authenticate the user.
2. Inoculate systems against the Clampi Trojan virus. This virus resides on a computer, waiting for the user to long onto financial websites. It captures log-in and password information, relays it to servers run by the criminals, instructs the computer to send money to accounts that they control, or steals credit card information and uses it to make unauthorized purchases. The trojan monitors more than 4,500 finance-related websites.
3. Be on guard against “phishing” e-mails and pop-up messages. These messages purport to be from legitimate businesses with which the recipient does business. They ask the user to update or verify information, often threatening negative consequences if she fails to do so. Clicking on the links in the messages brings the user to an authentic looking Web site. However, it is actually bogus; the site collects personal information that the collector can use to steal the user’s identity. System users should ignore these messages.
4. Arrange for financial institutions to alert the business owner should they spot unusual activity involving the firm’s accounts.
5. Install firewalls and encryption technology to block uninvited visitors from uploading to or retrieving data from the firm’s servers and to protect data sent on public networks. Intrusion detection systems can inform the business owner of attempts to hack into the network.
6. Be cautious about opening attachments to e-mails, especially if the sender is someone unfamiliar to the user. Attachments may contain viruses or Trojan horses that can steal login information and passwords or corrupt a system.
7. Protect against intrusion by disgruntled former or current employees. Deactivate passwords for former employees, erect barriers to keep employees from accessing systems unrelated to their jobs, and implement sound accounting procedures for financial transactions.

In addition to these safeguards, small businesses may want to consider purchasing computer fraud and employee theft insurance. These policies will protect the business against those losses that still occur; insurance companies are likely to offer favorable pricing to businesses that take precautions against cybercrime. One of our professional insurance agents can give advice on the appropriate types and amounts of coverage. Modern technology gives businesses unprecedented abilities, but it also presents significant risks. Every business owner must take steps to keep the cybercriminals out.

GET THE PROTECTION YOU NEED BY PURCHASING BUSINESS INSURANCE

Most business owners would agree that it’s important to maintain insurance to protect business assets. When they think about insurance, business owners generally consider protection against hazards such as fire, flood or theft at their company sites. This is obviously an important protection to have. However, there are other types of hazards that may not be quite as high on the list, but protection could be every bit as important to offset significant financial losses. Here are five examples that underscore the need for comprehensive business insurance protection:

Company vehicle contents: If you operate a business with employees on the road making service calls to customers, chances are there is valuable equipment contained in the company vehicles. But a typical auto insurance policy would probably not cover the contents of a company vehicle if that valuable equipment is lost or stolen.

Tenant property improvement insurance: Do you rent space to conduct your business? Have you built out the interior of your space or made improvements to accommodate your business needs? If so, you probably made a considerable investment in the improvements. But many property insurance policies don’t include the value of the improvements made by a tenant to the existing structure. If you’ve invested in improvements, it’s worth taking a look at securing coverage to protect it.

Home-based business equipment: More and more people are working at home at least part of the time, even if they maintain an office or site elsewhere. Most don’t have insurance on the business equipment they keep at home; many assume their homeowner’s insurance would cover it. However, homeowner’s insurance generally does not cover business equipment. If you have expensive business equipment at home, you may want to consider purchasing additional protection.

Business interruption insurance: Remember the series of hurricanes that hit Florida? The wild fires that damaged cities and towns in California? The flooding that disrupted life in the Midwest? In addition to the effect that disasters have on individuals, they can bring businesses to a standstill for weeks or even months. Business interruption insurance can provide a way to get back on your feet.

Key person insurance: In many companies, the knowledge and skills of a single person or a top few are absolutely essential to the enterprise’s success. Key person insurance can help a company recover if an essential employee dies or becomes disabled for a lengthy time. The coverage can provide needed funds that allow the company to continue operating during a search for a successor or until the key employee returns.

As you can see, there are many hazards businesses face that aren’t covered under a typical insurance policy. However, you can get extra protection with the types of coverage outlined here. Since you invest so much time, money and effort into your business, it pays to make sure you have the protection you need. Call us for a consultation today!