Why Employing People with Disabilities Is a Key Tenet of Diversity and Inclusion

By: Terri Rhodes | January 8, 2020

Terri L. Rhodes is CEO of the Disability Management Employer Coalition. Terri was an Absence and Disability Management Consultant for Mercer, and also served as Director of Absence and Disability for Health Net and Corporate IDM Program Manager for Abbott Laboratories.

There is a lot of talk in the workplace today about diversity and inclusion (D&I). Many have attributed the need for D&I to the tight labor market, which, when given a closer look, isn’t as tight as it might appear.

There are varying reports about the unemployment rate, depending on where you live. The number cited most often is that it is less than 4%, but if you live in Yuma, Arizona, the unemployment rate is a staggering 22%. The result is an uneven labor market across the United States with shortages in some areas and overage in others.

The focus for D&I, therefore, shouldn’t be on the “tight” labor market, but instead it should be on why D&I is so important overall for organizations across the country.

With a diverse workforce, you have a mix of workers with varying backgrounds, skills and abilities, ethnicities, values, attitudes and genders. This type of diversity encourages employees to look at problems and solutions in new ways.

The key to diversity is to understand how different characteristics impact human behavior. In an ideal world, the term “diverse” would apply to everyone. However, the term typically applies to specific groups of people who have experienced discrimination (e.g., racial bias, disability discrimination, etc.) and when that discrimination presents an obstacle to opportunity in the workplace.

Diversity and inclusion initiatives are aimed at eliminating those obstacles and bringing people from these groups into full participation in the workforce.

Focusing In: Disability Discrimination

Let’s direct the focus for this article to disability discrimination. Hiring those with disabilities or returning employees to work from an injury or illness can be transformative for that individual.

It also changes the corporate culture and showcases where inclusion comes into the picture.

An inclusive workplace is one that treats all individuals fairly and respectfully, where individuals have equal access to opportunities and resources, and where each person can be a contributor to the organization’s success.

Like anything, diversity is also accompanied by risk. But to be clear, this risk is not the result of a more diverse workforce; rather, the risk arises from how employers manage D&I. How we treat people can introduce risk of discrimination and disparate treatment if not done properly.

The EEOC has increased its focus on workplace discrimination, especially discrimination based on disability, and private legal actions (with EPL insurance payouts) are becoming more prevalent based on how employees are treated in the workplace.

In other words, the costs of improperly managing diversity are going up.

The focus for D&I, therefore, shouldn’t be on the “tight” labor market, but instead it should be on why D&I is so important overall for organizations across the country.

Many employers still believe employees need to be 100% healed before they can resume work. That’s inaccurate in both fact and law. And this is currently a focus of EEOC investigations and charges.

Employees with a disability can return to work before they are 100% healed, and the law says employers must accommodate this. Light duty, modified work, alternative assignments and other accommodations need to be part of any effective and compliant return-to-work program, and not just for workers’ compensation programs.

There is also a gap between perceptions of disabilities versus real disabilities as defined by the law. A good example is pregnancy disability. There are still many supervisors and managers who believe women should be treated differently when they are pregnant; the law says otherwise.

The law states that if an employee is temporarily unable to perform her job due to a medical condition related to pregnancy or childbirth, an employer must treat her in the same way it treats any other temporarily disabled employee.

For example, the employer may have to provide light duty, alternative assignments, disability leave or unpaid leave to pregnant employees if it does so for other temporarily disabled employees.

To avoid risk, it’s critical that management sees disabilities as they are in fact and law, rather than according to outmoded ideas and assumptions. These ideas and assumptions need to be overcome to fully realize the opportunities of diversity and to reduce risk.

Reducing Risks that Arise in D&I

Employers can take simple proactive and preventative steps to reduce risk. These steps simultaneously help maximize performance and increase the morale of a diverse workforce, especially employees with disabilities.

1) Review Policies and Practices

Laws and their interpretation are continually changing.

Return-to-work and other policies and practices should be reviewed annually.

Some employers are surprised at how many inconsistencies turn up during these reviews. It’s easier and less expensive to identify and correct them before an employee compels a review through an EEOC/DOL action or a private lawsuit.

2) Get Legal Involved

More than at any other time in recent history, risk, human resources and absence and disability management professionals need to understand basic legal requirements.

The good news is that these professionals have resources available to gain this knowledge. The presentations by attorneys and other legal experts at DMEC’s conferences and webinars are among our most popular resources, and our FMLA/ADA Employer Compliance Conference has become one of the “go to” conferences for industry professionals.

But there’s no substitute for input from your legal department or outside legal team.

That means more than a review at the end of the process.

Legal can provide importance guidance from the beginning on how to shape compliant policies, programs, and processes. It’s important to break down the typical silos around absence, disability, leave and workers’ compensation.

3) Training

Many workplace discrimination cases originate with supervisors and other front-line managers. And most of those result from a lack of awareness of the basic requirements of the ADA, the FMLA and other relevant laws.

Training can go a long way towards addressing this shortcoming. The goal isn’t to turn supervisors into legal experts; rather, it’s to help identify when a request has been made; instruct supervisors in the most obvious actions to avoid; and train them to reach out to HR when they encounter a situation where there’s a question about how to treat an employee.

There are many short and inexpensive trainings available, including DMEC’s FMLA/ADA Training for Supervisors and Managers. Training itself is a way to demonstrate legal compliance and reduce the risk of an audit or other regulatory action.

Despite the Risks, Rewards Abound

Diversity has always helped drive innovation. Employers have an unparalleled opportunity to gain the performance and insights of a diverse and inclusive workforce.

Employers risk missing out on the innovation diversity can drive if they don’t take proactive steps to accommodate a more diverse workforce.

They also risk legal action from employees and government bodies attuned to equal and fair treatment.

With a few simple steps, employers can greatly reduce these risks and take advantage of an important source of competitive advantage. And while we still have a long way to go before there is genuine and full inclusion, the realities of global markets will continue to provide a strong motivation to move in that direction. &

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

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