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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

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]