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Staying Ahead of Employment Practices Liability Risk

As regulatory and legislative changes continue to unfold, Nationwide's loss control services build longevity and help insureds weather new risk exposures.
By: | August 2, 2017 • 6 min read

No human resource manager wants to hear that an employee feels discriminated against or harassed. It means that workers don’t feel safe or comfortable at their job, which hurts morale and productivity. And it also means that, if not promptly addressed, a lawsuit may be on the horizon.

In the world of employment practices liability, it’s a well-known risk.

“Gender, age, race, or national origin discrimination and harassment complaints account for about 96 percent of the EPLI claims coming across a claims person’s desk,” said Joe Werner, director, Management Liability and Specialty.

Most companies know that having an employee handbook that outlines expectations and consequences for workplace behavior, as well as clear policies and procedures for handling a complaint, are the best ways to mitigate the risk of a lawsuit.

But legislative and regulatory changes could make EPLI risk more dynamic and complex.

Emerging Employment Practices Risks

Joe Werner, Director

State and local laws can vary from federal regulation – and often have higher compliance standards.

“The new medical marijuana laws are a good example of state-specific legislative changes,” Werner said. “There are currently 29 states that allow marijuana for medicinal purposes. This could potentially open the door for new discrimination claims.1

Employers in a state with legalized medical marijuana cannot discriminate against an employee with a legitimate marijuana prescription. But they also have to be wary if a worker is using marijuana on the job. The law does not yet address whether employers can or should make accommodations for employees using medicinal marijuana.

“It’s a gray area. But as more states allow marijuana for medical use, I think we’ll start to see discrimination claims coming in around this issue,” Werner said.

Disparities also exist between federal and local minimum wage laws. While the federal minimum wage is currently set at $7.25 per hour, some states and cities have set a minimum wage that exceed the federal requirements. Unaware employers are thus more exposed to wage and hour claims, which can be costly to settle or litigate.

Even if companies have all their ducks in a row regarding policies and practices to prevent the known risks of harassment and discrimination, they need to remain vigilant and monitor these regulatory changes to stay ahead of emerging issues.

Practicing Proactive Loss Control

No matter what changes come down the pike, companies have a few ways to protect themselves.

Education and training are key. Human resource managers should stay up to date on the legislative changes happening in their city and state, and determine if those changes will impact their risk exposure. Training employees thoroughly and regularly on employment law and on workplace policies regarding harassment, discrimination, and ethical behavior in general can help to prevent problems.

Managers and the HR team should also know when and how to investigate if an employee reports feeling discriminated against or harassed in any way at work.

But even those measures will occasionally fail. When that happens, companies need to know who to turn to for legal advice. Because of the variances between state and federal laws, relationships with attorneys who specialize in employment law in their specific state are critical.

Through a partnership with Littler Mendelson, Nationwide policyholders may obtain legal advice if they encounter a situation they don’t feel equipped to handle. Their legal hotline is available to insureds at no additional cost.

“Other carriers may offer a hotline to provide general guidance, but we feel it’s important to leverage Littler Mendelson’s national presence to provide actual, state-specific legal advice,” Werner said. That advice can help prevent an incident from spiraling into a claim — a benefit for both insurer and insured.

The hotline is just one of the loss control services that come standard with Nationwide’s private company package policy — Freedom 360° — which includes coverage for EPLI, directors and officers, fiduciary liability, and commercial crime.

Educational Services at Insureds’ Fingertips

Clients also have access to 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.

“These updates touch on all employment issues — not just what our policy covers — across any state or jurisdiction,” Werner said. “There is also a library for HR policies and documentation so you can download a new hire checklist, for example, or use them as a guide to build or update an employee handbook.”

A series of short videos dubbed Littler Learning Points feature two attorneys having a Q&A-style conversation about topics ranging from EEOC 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.

Using loss control services, especially when they are provided free of charge, should be a no-brainer. But they are often underutilized.

“That’s a trend we are trying to change,” Werner said.

Often, clients simply aren’t aware that such services are available. Nationwide remedies that by having its loss control providers send an introductory email to new insureds detailing their services.

Financial incentives don’t hurt either.

“Where we can, we will reduce the deductible or retention if an insured has made efforts to improve their risk,” Werner said.

“Every claim that comes in will be expensive. No one wants to shoulder those costs, or go through the process of a lawsuit. If companies use these loss control services, it’s a win/win. We want to reward our insureds for improving their risk.”

Building Dependability and Longevity

Recognizing and investing in efforts to reduce risk also goes a long way in building a long-term relationship within a market which can see some carrier turnover.

“We are able to achieve stability and dependability in the market through smart underwriting,” Werner said. “That means offering terms and conditions that are appropriate for a risk.”

“We’ve come across competition offering more favorable terms and conditions that we may not be willing to offer for a given risk,” Werner said. “That’s just not practical if the goal is to be profitable so that we can remain in this market for the long haul. Sacrificing sound underwriting for the sake of attracting clients makes an insurer more likely to exit the market because they aren’t profitable.”

The goal, Werner said, is for brokers and their clients to see Nationwide as a consistent presence in the market. Loss control services and incentives help to earn clients’ trust, build credibility, and maintain that presence.

And as regulatory and legislative changes continue to unfold, those services help insureds weather whatever new risk exposures might come their way.

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

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

1Source: National Conference of State Legislatures

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.

The Profession

Curt Gross

This director of risk management sees cyber, IP and reputation risks as evolving threats, but more formal education may make emerging risk professionals better prepared.
By: | June 1, 2018 • 4 min read

R&I: What was your first job?

My first non-professional job was working at Burger King in high school. I learned some valuable life lessons there.

R&I: How did you come to work in risk management?

After taking some accounting classes in high school, I originally thought I wanted to be an accountant. After working on a few Widgets Inc. projects in college, I figured out that wasn’t what I really wanted to do. Risk management found me. The rest is history. Looking back, I am pleased with how things worked out.

R&I: What is the risk management community doing right?

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I think we do a nice job on post graduate education. I think the ARM and CPCU designations give credibility to the profession. Plus, formal college risk management degrees are becoming more popular these days. I know The University of Akron just launched a new risk management bachelor’s program in the fall of 2017 within the business school.

R&I: What could the risk management community be doing a better job of?

I think we could do a better job with streamlining certificates of insurance or, better yet, evaluating if they are even necessary. It just seems to me that there is a significant amount of time and expense around generating certificates. There has to be a more efficient way.

R&I: What was the best location and year for the RIMS conference and why?

Selfishly, I prefer a destination with a direct flight when possible. RIMS does a nice job of selecting various locations throughout the country. It is a big job to successfully pull off a conference of that size.

Curt Gross, Director of Risk Management, Parker Hannifin Corp.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

Definitely the change in nontraditional property & casualty exposures such as intellectual property and reputational risk. Those exposures existed way back when but in different ways. As computer networks become more and more connected and news travels at a more rapid pace, it just amplifies these types of exposures. Sometimes we have to think like the perpetrator, which can be difficult to do.

R&I: What emerging commercial risk most concerns you?

I hate to sound cliché — it’s quite the buzz these days — but I would have to say cyber. It’s such a complex risk involving nontraditional players and motives. Definitely a challenging exposure to get your arms around. Unfortunately, I don’t think we’ll really know the true exposure until there is more claim development.

R&I: What insurance carrier do you have the highest opinion of?

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Our captive insurance company. I’ve been fortunate to work for several companies with a captive, each one with a different operating objective. I view a captive as an essential tool for a successful risk management program.

R&I: Who is your mentor and why?

I can’t point to just one. I have and continue to be lucky to work for really good managers throughout my career. Each one has taken the time and interest to develop me as a professional. I certainly haven’t arrived yet and welcome feedback to continue to try to be the best I can be every day.

R&I: What have you accomplished that you are proudest of?

I would like to think I have and continue to bring meaningful value to my company. However, I would have to say my family is my proudest accomplishment.

R&I: What is your favorite book or movie?

Favorite movie is definitely “Good Will Hunting.”

R&I: What’s the best restaurant you’ve ever eaten at?

Tough question to narrow down. If my wife ran a restaurant, it would be hers. We try to have dinner as a family as much as possible. If I had to pick one restaurant though, I would say Fire Food & Drink in Cleveland, Ohio. Chef Katz is a culinary genius.

R&I: What is the most unusual/interesting place you have ever visited?

The Grand Canyon. It is just so vast. A close second is Stonehenge.

R&I: What is the riskiest activity you ever engaged in?

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A few, actually. Up until a few years ago, I owned a sport bike (motorcycle). Of course, I wore the proper gear, took a safety course and read a motorcycle safety book. Also, I have taken a few laps in a NASCAR [race car] around Daytona International Speedway at 180 mph. Most recently, trying to ride my daughter’s skateboard.

R&I: If the world has a modern hero, who is it and why?

The Dalai Lama. A world full of compassion, tolerance and patience and free of discrimination, racism and violence, while perhaps idealistic, sounds like a wonderful place to me.

R&I: What about this work do you find the most fulfilling or rewarding?

I really enjoy the company I work for and my role, because I get the opportunity to work with various functions. For example, while mostly finance, I get to interact with legal, human resources, employee health and safety, to name a few.

R&I: What do your friends and family think you do?

I asked my son. He said, “Risk management and insurance.” (He’s had the benefit of bring-your-kid-to-work day.)

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]