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September 2010

Sep 01
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BLOWING IT

By Your Employee Matters

A July 2010 Corporate Counsel article analyzed a huge discrimination verdict rendered against Novartis in a Manhattan federal district court jury trial. The jury determined that the company discriminated against its female sales representatives, creating an insensitive and hostile working environment. Instead of taking a conciliatory approach during trial, Novartis pressed hard and according to the article, responded by labeling the plaintiffs in front of the jury with demeaning and harsh stereotypes. The jury awarded $3.36 million to the 12 named plaintiffs, plus an additional $250 million to a class of additional 5,600 other plaintiffs. Of course, Novartis plans to appeal.

Interestingly, Novartis noted that Working Mother magazine had recognized the company for 10 years in a row as one of the top 100 firms for working mothers (Integrity, anyone?).

Lesson learned: Anytime an employer goes to trial justifying its conduct, and in fact, laying it on even thicker, it runs the risk of an enormous verdict. A conciliatory approach will usually result in a settlement or smaller jury verdict. Read the article here.

Sep 01
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EDITOR’S COLUMN: CASES OF THE WEEK

By Your Employee Matters

As part of my ongoing research efforts to help our members, I discipline myself to review Find Law’s weekly appellate court case summaries. A few weeks ago, the review summarized 29 cases – count ‘em, 29:

1. Rent-A-Center West, Inc. v. Jackson
2. Granite Rock Co. v. Int’l. Brotherhood of Teamsters
3. Rodriguez-Garcia v. Miranda-Marin
4. Malone v. Lockheed Martin Corp.
5. Zakrzewska v. The New School
6. NLRB v. Talmadge Park
7. Durakovic v. Bldg. Serv. 32 BJ Pension Fund
8. Ruiz v. Cty. of Rockland
9. Edwards v. A.H. Cornell & Son, Inc.
10. Air Line Pilots Ass’n v. US Airways Group
11. Kemp v. Holder
12. Winnett v. Caterpillar, Inc.
13. Pickett v. Sheridan Health Care Ctr.
14. Kobus v. Coll. of St. Scholastica, Inc.
15. Ringwald v. Prudential Ins. Co. of Am.
16. Jones v. Nat’l. Am. Univ.
17. Hawaii Stevedores, Inc. v. Ogawa
18. EEOC v. Peabody Western Coal Co.
19. Simonia v. Glendale Nissan/Infiniti Disability Plan
20. Medlock v. United Parcel Serv., Inc.
21. Narotzky v. Natrona Cty. Mem. Hosp. Bd. of Trustees
22. Armstrong v. Geithner
23. Schaefer v. McHugh
24. Gonzalez v. Dept. of Labor
25. Murthy v. Vilsack
26. Bifulco v. Patient Bus. & Fin. Serv., Inc.
27. Myrick v. Mastagni
28. Baker v. Am. Horticulture Supply, Inc.
29. Faulkinbury v. Boyd & Assoc. Inc.

Of course, none of these companies planned on being a defendant in an employment lawsuit. So, what were all the lawsuits about? Five were ERISA cases. We’ve had ERISA experts on some of our Webinars.

There were also five union cases, including one in which the company was suing the union under the Labor Management Recording Act for damages caused by a strike. In one of the union cases, the 2nd Circuit invalidated an NLRB Bush-era decision that only had two judges on the board. This is the beginning of the undoing of those Bush-era NLRB decisions. Again, we have had Webinar guests on union avoidance.

There were four race and discrimination cases, including an interesting one against a coal company by Hopi and other Native American, claiming that the coal company discriminated by favoring Navajo workers.

There were two ADA cases, one FMLA case, one privacy case, one breach of contract case, and one age discrimination case. Of the three wrongful termination cases, one was brought by a group of neurosurgeons who sued a hospital for “constructive discharge” in part because after the surgery operations shut down and the doctors left, the hospital claimed that they had stolen equipment and ordered a search of their lockers. Apparently, the search didn’t find any equipment, nor did the hospital claim that any of the surgeons specifically stole anything. The court held that it was reasonable for the hospital to do this search because it focused on instruments that could only be used in surgery.

There was a wage and hour class-action suit in California (no surprise there), claiming that security guards weren’t paid properly for their rest and meal periods. Another lawsuit was brought by a whistleblower who was transferred after testifying in an ethics probe.

That’s nearly 30 appellate cases decided during a single week in a country with millions of employers. Employment practices liability exposures might not be frequent. However, I can tell you from reading the results in these cases they are certainly severe. According to Jury Verdict Research, the average verdict hovers around $270,000, with million-dollar verdicts seemingly commonplace. Whether a company won or lost in any of these cases, it probably spent at least $200,000 in attorneys’ fees.

What should you make of all this? Very simple – be prepared to handle compliance basics! Get proper advice on managing your benefits. Focus on developing effective employee relationships and work with competent attorneys to prevent unnecessary union organization, as well as bargaining with an existing union. Make sure your HR folks stay abreast of the ADA, FMLA, age discrimination, race discrimination, and sexual harassment exposures. We have a ton of tools on HR That Works to help with those.

If you’re an HR That Works member and have a question in any one these areas, you can rely on the Hotline support of the Worklaw® members and yours truly to help get you through any tough spot.

Sep 01
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SECURE YOUR RETIREMENT INCOME WITH IMMEDIATE ANNUITIES

By Life and Health

As you approach retirement, it’s natural to worry about your retirement portfolio. It is also natural to become frightened during a recession, such as the ongoing downturn that started in 2008. During tough times, your entire strategy can suddenly become worthless. The supply of cash that you have carefully built over your working life is gone, vanished like so much dust. This is downright scary. What shall you do? Many individuals in this same situation end up taking part-time jobs in order to support themselves.

An immediate annuity can help you regain liquidity. Buying an annuity is like buying a monthly pension check. It is an insurance policy that pays you a lifelong income stream in exchange for a lump sum. There is no age limit for purchasing an immediate annuity; you can buy one at age 80 or 90 if you want. When the payments start is entirely up to you. Once you decide on a date, the payments are orderly and on time, appearing on that date every month for the rest of your life.

Consider several advantages to immediate annuities:

  • Your insurance agent will be able to tell you what the monthly payment amount is based on your lump sum.
  • The annuity is backed by the financial security and assets of an insurance company, so do your research before buying.
  • This product affords you, the beneficiary, immediate peace of mind since the payments start when you choose. You can rest completely assured of a secure, stable long-term monthly income. You can even add an inflation rider to the policy so that your income will not get eaten by inflationary pressures.
  • Since immediate annuities are different from stocks and bonds, there is no worry about volatility or market fluctuations. The value of the annuity remains constant. You have the protection of knowing that every month; the money will be deposited into your bank account.
  • There are no fees of any kind to be paid – no management fees, no setup or administrative fees, and no annual fees.
  • Favorable tax treatment – Only a small portion of income generated from an immediate annuity funded with after-tax dollars would be taxable. This is because part of every payment is considered a return of principal.

Is an immediate annuity right for you? That depends on your unique needs, of course. For those seeking to secure a future income stream, immediate annuities are a perfect way of achieving a guaranteed monthly income which will not fluctuate due to external forces. The peace of mind possible with having an income stream one cannot outlive should not be ignored.

Liquidated earnings are subject to ordinary income tax, may be subject to surrender charges and, if taken prior to age 59 1⁄2, may be subject to a 10% federal income tax penalty. Guarantees and payment of lifetime income are contingent on the claims paying ability of the issuing insurance company.

Sep 01
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EXERCISE EXTREME CAUTION BEFORE BUYING LIFE INSURANCE DIRECT

By Life and Health

When you are considering Homeowners or Auto insurance, you probably count on your insurance agent to assist you in understanding the many options available. For instance, what deductible should you choose? Should you pay for emergency road service or not? Should your teenager have his or her own policy? How much coverage do you need? You value this relationship, but you are wondering if you might get a better deal on your Life insurance if you buy direct and cut out the middleman.

Although it is possible that you might attain a better price, it is also likely that you might not. More importantly, you might get what appears on the surface to be a better deal, but on closer examination is not as good as you originally thought.

If you call a Life insurance company and apply over the telephone for the Life insurance they quote you, you might be in for several surprises, either now or later.

First, cutting out your insurance professional does not always result in a lower Life insurance premium. It does, however, mean that you will have to depend on an 800 number and the person answering the phone. As with any telemarketing organization, there is often high turnover in these positions, so you might never develop a relationship you can rely on.

Second, you should be warned that all “comparable” policies are not created equal. Although insurance plans might appear the same on the surface, when you examine the details, there could be extensive differences. The period where the premium stays the same (for Term Life) might vary; the guaranteed and current interest rates might vary (for Universal Life); the investment options might not meet your needs (for Variable Life); and the interest/dividend crediting might not be what you think (for Whole Life). There are many riders, options, and other features that can make one plan more suited to your needs. Unless you know about these options and can tell the voice at the other end of the phone exactly what you need and want, you might end up with the wrong insurance policy altogether.

Third, your trusted insurance professional knows you and understands your needs. Someone you have never talked to before might not know about your disabled daughter, your planned pregnancy, or your need for spousal insurance. If they don’t know you, how will they know to ask about these things? An advisor who knows you and your family is in a much better position to make sure you obtain both the right type and right amount of Life insurance. They can also decrease the likelihood that you are surprised, after underwriting, with a much higher premium than you were originally quoted.

Fourth, you might have existing Life insurance that can be adapted to meet your current needs. This reduces or avoids underwriting and might save lots of money in new premiums.

Your financial situation is complex as well as ever-changing. Working with a professional who knows you and can meet with you face-to-face can help you avoid problems, and might help prevent costly mistakes when you are buying Life insurance.

Sep 01
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DON’T POSTPONE THE DECISION TO PURCHASE LIFE INSURANCE

By Life and Health

For most people, death is not an easy subject. It is uncomfortable thinking about no longer being alive, not seeing one’s children grow up, leaving one’s family — perhaps a husband or wife, children, brothers and sisters, parents, and friends. Yet death is one common factor that binds the entire human family. We might not all be rich and famous, and in fact might be important only to our family and close friends; yet what happens to the rich and famous happens to the not-so-rich and obscure: Eventually we will all die.

It is easy for most people to put aside thoughts of dying as something that happens to other people; or if they think of it happening to them, only think of it as happening some time in the distant future. Maybe that will be your future, but maybe not. In the blink of an eye, you might go from apparently having years of life ahead to being killed in a car accident. Death is not something that happens only to old people, nor only to people after a long illness. No one is invincible.

Although it might be tempting to put off getting Life insurance until you are older, Life insurance is much less expensive when you are younger. Younger people are typically healthier, which usually translates into lower insurance rates. If you buy a Permanent Life insurance policy, the premium rate you sign up to pay at the beginning will stay the same for the life of the policy, even as you get older, and even if your health deteriorates. This is why it is important to get the policy when you are young — the rates are lowest then!

The question is not, “If I die … ” but rather becomes, “When I die … ” When it comes to your financial and familial responsibilities, how would you answer that? When you die, what will happen to your family? What will happen with your debts? Are they prepared to assume your financial responsibilities after your death? Or are you prepared to take care of them even after you die? You might not be able to save up enough money today or even in the near future for you to pay off all of your debts; however, you can buy enough insurance to pay off all your debts, in the event of your death, so that your family will not be burdened by it.

Although you as a person are irreplaceable, your income can be replaced with Life insurance. If yours is the main income in your family, this is vital. However, even if you don’t produce an income, but provide services in your family that would take money to replace (such as caring for young children), having Life insurance would still be wise. Having Life insurance to cover your debts and to take care of those you leave behind is the caring thing to do. Contact one of our qualified insurance professionals today to determine the type and amount of coverage that’s suitable to your unique circumstances.

Sep 01
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FOLLOW SIX BASIC STEPS AFTER AN AUTO ACCIDENT

By Personal Perspective

A car accident is always traumatic for any driver. Even if the damages are relatively minor, and both parties are uninjured, you might find yourself panicking over what to do next. There are important steps to take following any crash, no matter how severe.

Since car accidents involve insurance companies, both drivers need to collect the necessary information. They can do this by following six basic steps.

1. The most important thing is to stay calm at all times. Letting emotions get out of control will only make the situation worse, and make it harder to take care of the things that need to be done.

2. After remaining in control, the driver must make sure that they and their passenger(s) are okay and unharmed. Although it is important to move as far off the road as possible, it is also important if not more so to remain at the scene of the accident. If the driver or one of the passengers can do so, wave oncoming traffic into the other lane or warn traffic with hazard lights and flares, if available.

3. Alert the appropriate authorities by calling 911 right away. If a cell phone isn’t readily available, flag down a passing car and ask them to call.

4. The driver must contact their insurance company regardless of whether they were at fault. The sooner the insurance company knows, the sooner they can start working to resolve the claim. Both drivers should call their respective companies and report the accident, even if one of them was at fault.

5. For legal reasons, the driver must not admit fault to anyone. All those involved with the accident should only talk about it with the police and their insurance companies.

6. Finally, collect the information from all parties, which means that each driver must collect information from any witnesses. Most importantly, each driver should get the name of the other’s insurance company and their policy number.

Sep 01
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UNDERSTANDING YOUR CONDO INSURANCE POLICY COVERAGE

By Personal Perspective

Despite the slump in the real estate market in recent years, many people find condominiums an attractive alternative to owning a separate dwelling. Typically, the condominium association is responsible for much or all of the building’s maintenance. The selling price might be more affordable than free-standing homes in the same neighborhood. The structure might be younger and in better condition than separate dwellings in the same price range. For these reasons, owning a condo makes sense for many. Those who choose condos over separate dwellings, however, need to understand the proper way to insure their investments. Although similar in many ways to Homeowners insurance policies, condominium unit owner policies have some significant differences.

The most obvious difference is the subject of the insurance. A Homeowners policy insures against damage to a house and other structures on the property, such as an unattached garage or a fence. A condominium policy insures against damage to the condo unit, including alterations, appliances, fixtures, and improvements in it and parts of the real property that the condominium agreement makes the responsibility of the unit owner. Therefore, the subject of the coverage is much more limited in a condo unit owner’s policy.

Unlike a Homeowners policy, a condo policy does not cover structures that the owner rents or holds for rent to a person who is not a tenant of the building. However, there is coverage if the rented structure is a private garage. The policy also does not cover structures from which anyone conducts a business or which store some types of business property.

Another difference has to do with trees. A Homeowners policy provides a small amount of coverage for removing a downed tree that has damaged an insured structure or that is blocking a driveway or ramp for a handicapped person. The condo policy covers removal of an owned tree only if the insured person is the sole owner of it; if all the unit owners in the building share ownership of the tree, the policy does not provide coverage. Also, it does not cover a tree that has not damaged the structure and is blocking a ramp or driveway.

An important difference is in the range of perils the policy covers. A Homeowners policy provides “special” causes of loss coverage on the dwelling, meaning that it covers all perils other than those the policy specifically lists as not covered. In contrast, the condo unit owner’s policy covers the unit only for those perils that the policy lists as covered. It is possible that a loss covered by a Homeowners policy would not be covered by a condo unit owner’s policy.

If the building in which the condominium unit is located becomes vacant for more than 60 days, the policy ceases to provide some coverages. For example, it will not cover losses caused by vandalism or malicious mischief, accidental discharge or overflow of water or steam, or glass breakage that occur after 60 days of vacancy.

If the unit owner’s personal property such as household appliances is damaged, the insurance company will pay the difference between the cost to replace it and the amount by which it has depreciated. Property that is part of the building, such as carpeting, awnings, and outdoor equipment, are covered for their replacement cost without depreciation. However, the owner must repair or replace the damaged items within a reasonable amount of time; otherwise, the company will deduct an amount for depreciation.

Coverage for additional perils and for replacement cost on personal property might be available for an additional premium. Our professional insurance agents can help identify companies that provide the needed coverage at a reasonable cost. With the right combination of coverage and price, the new owner can enjoy her condo unit in financial security.

Sep 01
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ARE THE FIRE ALARMS IN YOUR HOME FUNCTIONING PROPERLY?

By Personal Perspective

A recent study from the National Fire Protection Agency, or NFPA, found that around 95% of U.S. homes have one or more smoke alarms installed throughout the house. Unfortunately, that same study revealed that the number of homes with nonfunctioning smoke alarms vastly outnumbered the amount of homes with no alarms at all. This shows that many homes are relying on broken and battery-less alarms to save their lives in the event of a fire. By following the advice of experts and maintaining a testing schedule, you can make sure your alarms will be ready when you need them the most.

Fire safety begins with purchasing the right type of smoke alarm, as dictated by your building code’s power requirements. The common types that are required vary from standard battery-operated alarms to ones that are wired into the home’s electricity. For individuals who have difficulty hearing, smoke alarms with flashing lights and devices called “bed shakers” are used together with audible alarms. Always purchase alarms that have been listed or approved by Underwriters Laboratories (UL), or a similar independent tester.

How Many?

The NFPA publishes the Life Safety Code 101 to inform people of the regulations and best practices when it comes to fire safety, and in this case, the amount of smoke alarms to install. It recommends having at least one alarm on each floor, including basements and attics, and within 15 feet of bedrooms. Place smoke alarms inside of bedrooms if family members usually sleep with the door closed. Remember, the strategic placement of smoke alarms is just as important as keeping them powered.

The building codes that govern homes built in the last few years are significantly trying to improve residential fire safety. Most require hardwired alarms that are interconnected, meaning that all alarms will sound if one detects smoke or intense heat. Also, the new codes require the installation of smoke alarms in every bedroom of the house.

Installing the usual store-bought smoke alarm is really quite simple and will require only a drill and a screwdriver. Hardwired and interconnected alarms should be installed by a qualified electrician. Battery back-up should also be used with electrically powered alarms, as well.

Fire safety experts offer more installation advice:

  • When installing a wall-mounted alarm, locate it between six to 12 inches below the ceiling.
  • Ceiling-mounted alarms should be installed more than six inches away from any wall.
  • On sloped and vaulted ceilings, located the alarm at the highest point.
  • In open stairways, alarms should be placed near the top of the staircase.
  • In closed stairways, like basement steps, the alarm should be placed at the bottom of the staircase.
  • Do not install alarms in drafty areas of the house, such as near windows, ceiling fans, or forced-air registers.

If you have any questions about installing fire alarms, call or email your local fire department. They will be happy to help you better protect your home against fires and show you the optimal places to install your smoke detectors.

Sep 01
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MINIMIZE RISK AT YOUR SMALL BUSINESS BY GETTING INSURED

By Business Protection Bulletin

Owning a business can be a very exciting and rewarding experience, but it is crucial that you do not overlook the risks that come along with it. Having proper financial protection gives family-owned businesses peace of mind and allows them to focus on what is important — moving the business forward.

Although the government requires most businesses to provide Workers Compensation insurance to cover employees in the event of an accident or injury, there are other forms of insurance that business owners should carry to protect their investments. Property and Liability insurance should also be included in any business plan, providing complete coverage of the business’ physical assets, such as inventory and equipment, as well as Liability coverage in the event of a lawsuit.

Property Insurance. There are different ways property insurance policies are written. The policy can cover the property’s actual value, which is the replacement cost adjusted for depreciation, or it can cover the replacement value alone, without any depreciation adjustments. Policies can also be written to cover hard-to-replace items, such as artwork or other unique items. In general, small business property insurance covers damage and loss from fire, smoke, wind, and hail, and damage from auto accidents, vandalism, and civil unrest. Supplemental insurance can be purchased to cover more specific risks, such as earthquakes, hurricanes, and floods. Depending on the needs of your business, policies can be tailored to cover everything you have worked so hard for.

Before purchasing an insurance policy, be sure to conduct a full inventory of all of the business’ physical assets, in order to determine their value and which items are worth insuring. Some items might not be covered through a basic policy, so make sure your insurance protects everything you value, including such items as supplies and office furniture, in addition to the building.

Liability Insurance. Carrying Liability insurance safeguards business assets from lawsuits, both legitimate and frivolous. When your business is sued, your hard work and livelihood are at stake, but carrying Liability insurance can cover settlement costs, court fees, and the cost of your legal representation. Privately hiring a defense team is incredibly expensive and without insurance, you could stand to lose everything your business has earned. Liability insurance is like a safety net that prevents you from taking a giant loss in the event of a lawsuit.

Basic Liability insurance will not cover business owners from certain claims, such as sexual harassment, employee discrimination, wrongful terminations, or claims against nonperformance of work. This is why it is also important to carry some form of performance insurance as a surety bond. Purchasing Employment Practices Liability insurance, or EPLI, can protect business owners from employee-based claims, such as sexual harassment or wrongful firings.

Business Owner Policies (BOP). In an effort to make things easier for business owners, insurance companies have bundled Liability and Property insurance into a single policy, known as a Business Owners Policy (BOP). Again, you are encouraged to read the fine print, because even BOP coverage might not protect everything you need it to. Additional coverage might be required, and should be purchased in addition to a BOP.

Whatever the size of your business, consulting with one of our professionals can help you decide which policies are best for your situation. Do the responsible thing and protect your future with comprehensive business owners insurance.

Sep 01
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IF YOUR BUSINESS FACES A DATA BREACH, HOW WILL YOU FARE IN COURT?

By Business Protection Bulletin

There were 325 data breach incidents and 8,320,325 people exposed to data theft from the beginning of 2010 through late June, according to the Identity Theft Resource Center. This amounts to almost two breaches every day involving two of every 100 Americans. When thieves steal personal information, the victims look for someone to blame; the target is usually the person or company who had their data to start with. Businesses that suffer data breaches involving the possible theft of others’ information can expect to receive lawsuits. Legal actions taken so far have not produced sizable awards, but they have produced some guidance from the courts.

Some plaintiffs’ actions have failed because they could not prove that a data breach actually harmed them. A federal appellate court ruled that only one of three plaintiffs in a particular case had a cause of action against a company whose computer servers were stolen. That plaintiff had suffered an identity theft; the court ruled that it was possible that the server theft caused the identity theft. Because the other two plaintiffs could not show that the server theft harmed them, the court said that they had no cause of action. Likewise, a federal court ruling on an Indiana case said that a data breach alone was not what state law defines as a “compensable injury.” In both of these cases, plaintiffs sought recovery for the cost of credit monitoring services, but the courts ruled that these costs were not compensable damages.

Plaintiffs had no more success in a class action suit against supermarket chain Hannaford following a three-month data breach that exposed millions of credit card numbers and led to 2,000 incidents of fraud. Claiming that the chain had violated an implied contract to protect their data, the plaintiffs sought compensation and an injunction ordering Hannaford to disclose the breached data and to pay for credit monitoring services. However, the court ruled that Hannaford had no implied contract with its customers and owed no compensation to those affected customers who did not have fraudulent charges on their accounts. It also ruled that customers whose credit card issuers removed fraudulent charges from their accounts were not entitled to damages. Finally, the court denied the request for the injunction because the plaintiffs had closed the affected accounts.

Banks that reimbursed customers affected by a 2005 data breach involving TJX Corp. had more success in court. The company, which operates popular retail chains, suffered the theft of 45 million customer records from its systems. The banks removed fraudulent charges from their customers credit card accounts, then filed a class action suit against the company. TJX eventually settled for more than $40 million.

Many business owners see these large-scale events as the problems of large corporations, any business that keeps records of confidential customer information, such as credit card numbers, has a serious exposure to this type of loss. Some insurance companies now offer Security Liability insurance to protect businesses against being held liable for harm resulting from a data breach. One company’s policy covers a business’ liability resulting from a failure and inability of its computer security system to prevent a computer attack or to minimize its effects. It covers only losses resulting when a source outside the organization causes a data breach.

Since virtually every organization keeps some customer information on its computer systems, every organization, regardless of size, should at least consider purchasing Security Liability insurance. Our professional insurance agents can suggest coverages appropriate for your specific exposures and identify insurance companies that can provide them at a reasonable cost. Businesses must do everything they can to protect customer data, but if things go wrong, the right insurance will help the business survive.

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