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Beware Liability Pitfalls Created by Regulations

Two scenarios demonstrate how employment practices risk for most companies lies in more mundane, everyday oversights.
By: | August 29, 2017 • 7 min read

High-profile harassment and discrimination claims — like those that surfaced against Amazon, Uber, Google and other giants — recently have made headlines and brought public attention to hot-button issues like equal pay and workplace diversity.

But the real employment practices risk for most companies lies in more mundane, everyday oversights.

Seemingly innocuous conversations with employees can be fraught with liability if the employer links certain personal details which may be connected to an employee’s disability to work attendance or performance.

Even when it seems they are doing everything right, employers can easily find themselves stuck in the complex web of employment regulations, including the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA).  Disciplinary measures against employees, even when legally justified, can still spark retaliation claims.

“If employees feel they were fired as punishment for using any time off allotted to them through the ADA or FMLA, they individually can file a retaliation claim against their employer,” said Joe Werner, director, Employment Practices Liability, Nationwide.

Such cases carry a strong human element that appeals to jurors’ sense of compassion and are easier for plaintiffs to argue.

“When making a legal and justified decision to terminate someone, employers don’t typically think about how that might look to a jury that has no stake in their organization,” Werner said.

While they can’t avoid every claim, employers can take proactive steps to ensure they fulfill their regulatory obligations and build the best possible defense for themselves in the event a claim is filed.

Proactive Loss Control

Joe Werner, Director
Management Liability and Specialty
Nationwide

Loss control services provided by insurers can deliver significant value for insureds who take advantage of them.

While many carriers offer a legal hotline, most stipulate that any guidance provided through that channel does not constitute as legal advice; the purpose is more to provide a general regulatory overview and outline an employer’s obligations.

Through a partnership with the law firm Littler Mendelson, however, Nationwide provides access to actual legal advice from attorneys with EPL experience and state-specific knowledge at no additional cost to insureds. Should policyholders encounter a situation they don’t feel equipped to handle, specific guidance is only a phone call away.

“Calling the hotline costs our clients nothing, but it may help them avoid thousands in settlements and legal fees down the road,” Werner said.

Two recent scenarios demonstrate just how easily employers can incur liability — and how the legal hotline can help mitigate it.

Case Study #1: Coping with Mental Illness

Littler Mendelson’s legal hotline was contacted by a large professional service company seeking guidance on how to handle an employee with attendance issues. The employee had worked for the company for about four years with only minor performance issues. However, she had been absent from the office a great deal in the preceding four months, exhausting her accrued sick and vacation time. The employer was on the verge of terminating her.

“Counsel asked the employer if he had any idea why his worker had been absent so frequently. While he didn’t know for sure, the employer had heard a rumor that this employee suffered from depression,” Werner said.

Depression qualifies as a disability under the Americans with Disabilities Act. If this was indeed the reason for her attendance problems, the employer was advised of its legal obligation to engage with her in an interactive process to determine if they could offer her a reasonable accommodation.

After investigating, the employer discovered that the employee had indeed spoken to her manager about her depression.

“For whatever reason, either due to lack of training or simple oversight, the manager failed to pass that information along to the company’s human resources department,” Werner said. “It may have seemed to the manager that he was simply having a personal conversation, and may not have realized that this could be pertinent to potential human resource issues. Many employers don’t realize that a mental health issue is considered a disability under the ADA.”

In this case, reasonable accommodations were investigated which, it was determined, could include a leave of absence or a reduced schedule for the employee.

This scenario demonstrates how communication gaps typical of large companies with segregated management hierarchies can increase an organization’s exposure to an employment practices-related claim.

Case Study #2: Accommodating Health Conditions

In another instance, a manufacturer called the hotline for legal help with an employee in his 60s who had a knee replacement surgery earlier that year, but was still missing work due to other health conditions. He had taken all 12 weeks entitled to him under the FMLA, as well as his accrued vacation and sick time. Again, the employer was considering termination.

Littler Mendelson advised that serious health conditions may also qualify as a disability as defined by the ADA. Again, the employer was legally bound to engage the worker in the interactive process to search for a reasonable accommodation in the form of additional time off.

“The employer was so focused on the FMLA that it overlooked its obligations under the ADA, which is a common mistake,” Werner said.

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These scenarios could play out in any work environment. Simple, ordinary oversights could trigger an ADA violation that eventually leads to an Employment Practices Liability lawsuit.

“Every employer is susceptible to employment practices liability claims,” Werner said.

“Both employers had the good sense to make use of a loss control service provided by their insurer before acting, so we can surmise that they are focused on proper risk management and compliance. However, as demonstrated by these examples, even conscientious employers can overlook potential employment law requirements.”

Build Your Best Defense

It is possible that, even after engaging in the interactive process, an employer finds that there is no reasonable accommodation it can provide to an employee.  In those cases, termination could be a legally viable option, but the company still must be prepared to demonstrate that it made every reasonable effort to find an accommodation before taking that step.

In addition to its legal hotline, Nationwide provides a variety of resources and training materials through Freedom 360° HR, an online portal delivering daily news updates and human resource developments, as well as educational materials around all aspects of employment practices.

A series of short videos dubbed “Littler Learning Points” features two attorneys having a Q&A-style conversation about topics ranging from Equal Employment Opportunity Commission filing requirements to the definition of reasonable accommodation and wage and hour compliance.

Additionally, Nationwide offers employee online training modules provided by HR Classroom. The modules are designed to satisfy an employer’s legal training requirements and provide educational programs covering workplace topics, such as ethical workplace behavior, proper anti-discrimination and anti-harassment prevention and policy, workplace diversity and wage and hour issues.

“Utilizing these services will help to show that the employer took every step necessary to do right by their employee, and that’s the best defense you can build against an employment practices or retaliation claim,” Werner said.

Contact Joe Werner, director, at 212-329-6961 or [email protected] for more information

To learn about Nationwide’s Employment Practices Liability loss control services, visit www.freedom360hr.com and http://nationwide.hrcare.com.

About Nationwide

Nationwide is a Fortune 500 company with 16 million policies in force and an A.M. Best Rating of A+ XV.  We are committed to responsive problem-solving and providing flexible and customized coverage.

Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Subject to underwriting guidelines, review and approval. Products and discounts not available to all persons in all states. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds. Home Office: One Nationwide Plaza, Columbus, OH. Nationwide, the Nationwide N and Eagle and other marks displayed on this page are service marks of Nationwide Mutual Insurance Company, unless otherwise disclosed. © 2017 Nationwide Mutual Insurance Company.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Nationwide. The editorial staff of Risk & Insurance had no role in its preparation.




Nationwide, a Fortune 100 company, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s.

More from Risk & Insurance

More from Risk & Insurance

Emerging Risks

Stadium Safety

Soft targets, such as sports stadiums, must increase measures to protect lives and their business.
By: | January 10, 2018 • 8 min read

Acts of violence and terror can break out in even the unlikeliest of places.

Look at the 2013 Boston Marathon, where two bombs went off, killing three and injuring dozens of others in a terrorist attack. Or consider the Orlando Pulse nightclub, where 49 people were killed and 58 wounded. Most recently in Las Vegas, a gunman killed 58 and injured hundreds of others.

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The world is not inherently evil, but these evil acts still find a way into places like churches, schools, concerts and stadiums.

“We didn’t see these kinds of attacks 20 years ago,” said Glenn Chavious, managing director, global sports & recreation practice leader, Industria Risk & Insurance Services.

As a society, we have advanced through technology, he said. Technology’s platform has enabled the message of terror to spread further faster.

“But it’s not just with technology. Our cultures, our personal grievances, have brought people out of their comfort zones.”

Chavious said that people still had these grievances 20 years ago but were less likely to act out. Tech has linked people around the globe to other like-minded individuals, allowing for others to join in on messages of terror.

“The progression of terrorist acts over the last 10 years has very much been central to the emergence of ‘lone wolf’ actors. As was the case in both Manchester and Las Vegas, the ‘lone wolf’ dynamic presents an altogether unique set of challenges for law enforcement and event service professionals,” said John

Glenn Chavious, managing director, global sports & recreation practice leader, Industria Risk & Insurance Services

Tomlinson, senior vice president, head of entertainment, Lockton.

As more violent outbreaks take place in public spaces, risk managers learn from and better understand what attackers want. Each new event enables risk managers to see what works and what can be improved upon to better protect people and places.

But the fact remains that the nature and pattern of attacks are changing.

“Many of these actions are devised in complete obscurity and on impulse, and are carried out by individuals with little to no prior visibility, in terms of behavioral patterns or threat recognition, thus making it virtually impossible to maintain any elements of anticipation by security officials,” said Tomlinson.

With vehicles driving into crowds, active shooters and the random nature of attacks, it’s hard to gauge what might come next, said Warren Harper, global sports & events practice leader, Marsh.

Public spaces like sporting arenas are particularly vulnerable because they are considered ‘soft targets.’ They are areas where people gather in large numbers for recreation. They are welcoming to their patrons and visitors, much like a hospital, and the crowds that attend come in droves.

NFL football stadiums, for example, can hold anywhere from 25,000 to 93,000 people at maximum capacity — and that number doesn’t include workers, players or other behind-the-scenes personnel.

“Attacks are a big risk management issue,” said Chavious. “Insurance is the last resort we want to rely upon. We’d rather be preventing it to avoid such events.”

Preparing for Danger

The second half of 2017 proved a trying few months for the insurance industry, facing hurricanes, earthquakes, wildfires and — unfortunately — multiple mass shootings.

The industry was estimated to take a more than $1 billion hit from the Las Vegas massacre in October 2017. A few years back, the Boston Marathon bombings cost businesses around $333 million each day the city was shut down following the attack. Officials were on a manhunt for the suspects in question, and Boston was on lockdown.

“Many of these actions are devised in complete obscurity and on impulse, and are carried out by individuals with little to no prior visibility.” — John Tomlinson, senior vice president, head of entertainment, Lockton

“Fortunately, we have not had a complete stadium go down,” said Harper. But a mass casualty event at a stadium can lead to the death or injury of athletes, spectators and guests; psychological trauma; potential workers’ comp claims from injured employees; lawsuits; significant reputational damage; property damage and prolonged business interruption losses.

The physical damage, said Harper, might be something risk managers can gauge beforehand, but loss of life is immeasurable.

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The best practice then, said Chavious, is awareness and education.

“A lot of preparedness comes from education. [Stadiums] need a risk management plan.”

First and foremost, Chavious said, stadiums need to perform a security risk assessment. Find out where vulnerable spots are, decide where education can be improved upon and develop other safety measures over time.

Areas outside the stadium are soft targets, said Harper. The parking lot, the ticketing and access areas and even the metro transit areas where guests mingle before and after a game are targeted more often than inside.

Last year, for example, a stadium in Manchester was the target of a bomb, which detonated outside the venue as concert-goers left. In 2015, the Stade de France in Paris was the target of suicide bombers and active shooters, who struck the outside of the stadium while a soccer match was held inside.

Security, therefore, needs to be ready to react both inside and outside the vicinity. Reviewing past events and seeing what works has helped risk mangers improve safety strategies.

“A lot of places are getting into table-top exercises” to make sure their people are really trained, added Harper.

In these exercises, employees from various departments come together to brainstorm and work through a hypothetical terrorist situation.

A facilitator will propose the scenario — an active shooter has been spotted right before the game begins, someone has called in a bomb threat, a driver has fled on foot after driving into a crowd — and the stadium’s staff is asked how they should respond.

“People tend to act on assumptions, which may be wrong, but this is a great setting for them to brainstorm and learn,” said Harper.

Technology and Safety

In addition to education, stadiums are ahead of the game, implementing high-tech security cameras and closed-circuit TV monitoring, requiring game-day audiences to use clear/see-through bags when entering the arena, upping employee training on safety protocols and utilizing vapor wake dogs.

Drones are also adding a protective layer.

John Tomlinson, senior vice president, head of entertainment, Lockton

“Drones are helpful in surveying an area and can alert security to any potential threat,” said Chavious.

“Many stadiums have an area between a city’s metro and the stadium itself. If there’s a disturbance there, and you don’t have a camera in that area, you could use the drone instead of moving physical assets.”

Chavious added that “the overhead view will pick up potential crowd concentration, see if there are too many people in one crowd, or drones can fly overhead and be used to assess situations like a vehicle that’s in a place it shouldn’t be.”

But like with all new technology, drones too have their downsides. There’s the expense of owning, maintaining and operating the drone. Weather conditions can affect how and when a drone is used, so it isn’t a reliable source. And what if that drone gets hacked?

“The evolution of venue security protocols most certainly includes the increased usage of unmanned aerial systems (UAS), including drones, as the scope and territorial vastness provided by UAS, from a monitoring perspective, is much more expansive than ground-based apparatus,” said Tomlinson.

“That said,” he continued, “there have been many documented instances in which the intrusion of unauthorized drones at live events have posed major security concerns and have actually heightened the risk of injury to participants and attendees.”

Still, many experts, including Tomlinson, see drones playing a significant role in safety at stadiums moving forward.

“I believe the utilization of drones will continue to be on the forefront of risk mitigation innovation in the live event space, albeit with some very tight operating controls,” he said.

The SAFETY Act

In response to the terrorist attacks on Sept. 11, 2001, U.S. Homeland Security enacted the Support Anti-Terrorism by Fostering Effective

Warren Harper, global sports & events practice leader, Marsh

Technologies Act (SAFETY Act).

The primary purpose of the SAFETY Act was to encourage potential manufacturers or sellers of anti-terrorism technologies to continue to develop and commercialize these technologies (like video monitoring or drones).

There was a worry that the threat of liability in such an event would deter and prevent sellers from pursing these technologies, which are aimed at saving lives. Instead, the SAFETY Act provides incentive by adding a system of risk and litigation management.

“[The SAFETY Act] is geared toward claims arising out of acts of terrorism,” said Harper.

Bottom line: It’s added financial protection. Businesses both large and small can apply for the SAFETY designation — in fact, many NFL teams push for the designation. So far, four have reached SAFETY certification: Lambeau Field, MetLife Stadium, University of Phoenix Stadium and Gillette Stadium.

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To become certified, reviewers with the SAFETY Act assess stadiums for their compliance with the most up-to-date terrorism products. They look at their built-in emergency response plans, cyber security measures, hiring and training of employees, among other criteria.

The process can take over a year, but once certified, stadiums benefit because liability for an event is lessened. One thing to remember, however, is that the added SAFETY Act protection only holds weight when a catastrophic event is classified as an act of terrorism.

“Generally speaking, I think the SAFETY Act has been instrumental in paving the way for an accelerated development of anti-terrorism products and services,” said Tomlinson.

“The benefit of gaining elements of impunity from third-party liability related matters has served as a catalyst for developers to continue to push the envelope, so to speak, in terms of ideas and innovation.”

So while attackers are changing their methods and trying to stay ahead of safety protocols at stadiums, the SAFETY Act, as well as risk managers and stadium owners, keep stadiums investing in newer, more secure safety measures. &

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]