Tag: Employment Practice Liability

New law ends forced arbitration of sexual harassment claims

By Anita Byer, Setnor Byer Insurance & Risk

A new federal law prohibits employers from forcing employees to arbitrate sexual harassment claims. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act invalidates pre-dispute agreements that force employees to resolve claims of sexual harassment through arbitration instead of litigation. Approximately 60 million American workers are bound by forced arbitration clauses in their employment agreements. However, as of March 3, 2022, those with claims of sexual harassment can have their day in court.

The Act, which passed with broad bipartisan support, amends the Federal Arbitration Act to make pre-dispute arbitration agreements for sexual harassment disputes invalid and unenforceable. A pre-dispute arbitration agreement is any agreement to arbitrate a dispute that had not yet arisen at the time the agreement was made. This definition is broad enough to include most employment agreements that require arbitration. A sexual harassment dispute is a dispute relating to conduct that is alleged to constitute sexual harassment under applicable federal, tribal or state law.

The Act also invalidates pre-dispute joint-action waivers. These are agreements that prohibit one party (the employee) from participating in a joint, class or collective action involving a dispute that has not yet arisen at the time the agreement is made. Employees are no longer bound by these pre-dispute joint-action waivers, regardless of whether the waiver is part of the pre-dispute arbitration agreement.

Disagreements regarding the Act’s applicability to a specific claim are resolved by a court, not an arbitrator. As a result, many employers will ultimately end up where they least wanted to be. However, it’s important to note that the Act applies to pre-dispute arbitration agreements. It does not prohibit the parties from mutually agreeing to arbitration after a claim has arisen. The Act also applies at the election of the person making the claim, so employees are free to proceed pursuant to their employer’s pre-dispute arbitration agreement if they wish.

Employers must understand that the Act applies to disputes or claims that arise or accrue on or after March 3, 2022. It applies to all pre-dispute arbitration agreements, even those that predate the new law. Given the popularity of pre-dispute arbitration agreements, many employers will need to review their employment contracts and consult with counsel to determine how the new law will affect them going forward. Employers also need employment practices liability insurance (EPLI) to protect against the uncertainty that accompanies the enactment of any new law.

Please contact us to learn more about protecting your business with Employment Practices Liability Insurance.

Employment Law Landscape Expected to Change Under Biden Administration

Setnor Byer Insurance & Risk

Shortly after delivering his inaugural address, President Biden began taking steps to push his policy agenda forward. This is particularly true in the employment law context. Step 1, as expected, was to stop any pending regulatory activity initiated under the Trump administration. This president’s Chief of Staff issued a memorandum ordering an immediate regulatory freeze of all non-emergency regulatory activity pending review by the new administration.

The memorandum, which is nearly identical to the one issued on President Trump’s first day in office, specifically instructed the heads of all executive departments and agencies, including the Department of Labor, to:

  • not propose or issue any rule in any manner until a department or agency head appointed or designated by President Biden reviews and approves the rule;
  • immediately withdraw any rules that have not already been published in the Federal Register; and
  • consider postponing by 60 days the effective date of any rules issued in any manner, including those published in the Federal Register, which have yet to take effect for the purpose of reviewing any relevant questions of fact, law and policy.

The scope of this regulatory freeze is quite broad in that it applies to any:

  • regulatory actions;
  • guidance documents;
  • substantive actions by an agency, including notices of inquiry, advance notices of proposed rulemaking and notices of proposed rulemaking;
  • agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory or technical issue or an interpretation of a statutory or regulatory issue.

Its effects are already being felt. The Department of Labor’s Final Rule for determining independent contractor status under the Fair Labor Standards Act, which was set to take effect March 8, 2021, is expected to be among the more significant casualties of the regulatory freeze. Three FLSA opinion letters issued by the Wage & Hour Division on President Trump’s last full day in office have already been withdrawn by the Biden administration. Employers should expect more of the same in the coming weeks and months. Unfortunately, the uncertainty that always accompanies regulatory changes significantly increase the risk of employment-related claims and lawsuits. The confusion caused by uncertainty creates an environment where mistakes are inevitable. As a result, employers will likely need Employment Practices Liability Insurance to protect against various employment-related claims. Please contact us to learn more about EPLI coverage.

COVID-19 Update: FFCRA’s Mandatory Paid Leave Provisions Expiring December 31st; Tax Credits Extended Until March 31, 2021

Setnor Byer Insurance & Risk

On December 27, 2020, the second major coronavirus stimulus package was signed into law. The COVID-Related Tax Relief Act of 2020 includes a number of relief measures to address the health and economic impacts of the COVID-19 pandemic. But, what about the Families First Coronavirus Response Act’s mandatory paid leave requirements? Have they been extended or will they expire on the last day of the year? Congress, it seems, agreed to compromise. Although the final bill did not extend the FFCRA’s mandatory paid leave requirements, it did extend the payroll tax credit for employers opting to voluntarily provide paid COVID-19 leave until March 31, 2021.

The FFCRA’s two paid sick leave laws—the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act–generally require employers with fewer than 500 employees to provide paid leave to employees who are unable to work for qualifying reasons related to COVID-19. Eligible employees may receive up to 80 hours of paid sick leave and up to 10 weeks of paid family and medical leave. To offset the cost of providing paid COVID-19 leave, the FFCRA includes a payroll tax credit equal to 100 percent of the qualifying wages paid by employers to eligible employees.

As of January 1, 2021, the FFCRA’s paid leave provisions will be voluntary, not mandatory. Employers, however, have been given an incentive in the form of dollar-for-dollar payroll tax credits to continue providing paid leave pursuant to the FFCRA until March 31, 2021.

Employers considering this option must note that the extended tax credits are only available for paid leave that meets all the requirements of the FFCRA. Employers, for example, cannot claim tax credits for paid leave that is given for reasons other than those allowed under the FFCRA or that exceeds the limits set forth in the FFCRA (amount, duration, etc.). Additionally, the final bill does not refresh or replenish the amount of paid leave an employee can take under the FFCRA, so employers cannot claim tax credits for wages paid to an employee in excess of 80 hours or 10 weeks.

It’s unclear whether interpretive regulations will be issued in the near future. Nevertheless, employers must now decide whether to continue providing paid COVID-19 leave under the FFCRA beyond December 31, 2020. As always, employers should proceed cautiously to avoid harmful and costly errors. Employers should also have Employment Practices Liability Insurance to protect against various employment-related claims. Please contact us to learn more about EPLI coverage.

OSHA Inspections and Penalties for Coronavirus-Related Violations on the Rise

Setnor Byer Insurance & Risk

Did you know that the Occupational Safety and Health Act’s health and safety standards apply to COVID-19? Since the coronavirus pandemic began, the Occupational Safety and Health Administration (OSHA) has received approximately 12,000 complaints and conducted nearly 300 inspections related to COVID-19. These inspections have resulted in proposed penalties against employers totaling more than $3.5 million.

The most common violations cited by OSHA include failures to:

While covered employers are responsible for complying with all applicable health and safety standards, those relating to personal protective equipment (PPE), respiratory protection and sanitation may be especially relevant for preventing the workplace spread of COVID-19. Employers that are not subject to a specific OSHA standard must still comply with the OSH Act’s General Duty Clause, which requires each employer to provide a workplace that is free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees.

OSHA’s emphasis on preventing the spread of COVID-19 in the workplace should provide more than enough motivation for employers to do the same. Employers wanting to protect their business and avoid severe OSHA penalties must do their part to protect workers from COVID-19, including the implementation of appropriate preventative measures as required by applicable law or recommended by relevant public health authorities, like the Centers for Disease Control and Prevention (CDC).

Please contact us for more information about protecting your business and your workers during the COVID-19 pandemic.

Amendment 2: Florida Voters Approve Ballot Initiative to Increase Minimum Wage

Setnor Byer Insurance & Risk

It was too close to call on election day, but Florida’s minimum wage ballot initiative ultimately received enough votes to pass…barely. Florida requires a 60 percent supermajority to amend its constitution. Amendment 2 received 60.82 percent of the votes cast. Despite being razor-thin, this margin is sufficient to amend Florida’ constitutional minimum wage requirements. So, what’s changing?

Amendment 2 increases Florida’s minimum wage incrementally over a period of years until it reaches $15 per hour. The first annual increase, which will be the largest, is scheduled to occur September 30, 2021. Each September 30th thereafter, it will increase by $1.00 until it reaches $15 per hour in 2026.

January 1, 2021                 $8.65

September 30, 2021        $10.00 (+ $1.35)

September 30, 2022        $11.00

September 30, 2023        $12.00

September 30, 2024        $13.00

September 30, 2025        $14.00

September 30, 2026        $15.00

Annual adjustments for inflation, which have taken place since 2005, are scheduled to resume September 30, 2027. Florida’s constitutional minimum wage requirements remain otherwise unchanged by Amendment 2. Employers, for example, are still prohibited from discriminating or retaliating against employees for exercising their constitutional minimum wage rights. They can still be sued by employees and Florida’s Attorney General for violating these rights. These lawsuits are still expensive.

To reduce the likelihood of costly mistakes, employers should provide wage and hour training to managers and supervisors. Employers should also carry Employment Practices Liability Insurance with limited coverage for wage and hour claims. Contact us to learn more about protecting your business with Employment Practices Liability Insurance.

Is Your Business Ready for New FLSA White-Collar Overtime Rules?

Over two years ago, the possibility of new overtime rules for white-collar employees under the Fair Labor Standard Act (FLSA) first appeared on the horizon. Last year, the Department of Labor (DOL) released proposed revisions to overtime exemption regulations, including those for executive, administrative and professional employees. Today, that once looming possibility is looking more like a fast approaching reality. Fast, as in possibly by mid-July, fast.

On March 14, 2016, the DOL submitted its final version of the revised overtime exemption regulations to the White House’s Office of Management and Budget (OMB) for review. Once the OMB completes its review, the final regulations will be published. After that, it’s just a matter of time. Unfortunately, there are some details we still don’t know about the final regulations. Minor details, really, like what they are or when they will go into effect.

What will be different under the final regulations?

No one really knows. The final regulations will not be made public until the OMB completes its review, and few details have leaked or been disclosed. Many expect the final regulations to be identical or very similar to the proposed regulations issued in July 2015, including the DOL’s proposal to:

  • Increase the minimum salary requirement for white collar exemptions from $455 per week ($23,660/year) to $921 per week ($47,892/year);
  • Increase the minimum compensation requirement for the Highly Compensated Employee exemption from $100,000 to $122,148 per year; and
  • Automatically update the new minimum salary and compensation levels annually.

It’s possible that the final regulations may include additional changes, particularly the duties test used to determine eligibility under the current white-collar exemptions . In the proposed regulations, the DOL asked for comments about whether changes need to be made to the duties tests. Though the DOL specifically stated that it’s not proposing any specific regulatory changes to the duties test, we don’t know for sure.

When will the final regulations become effective?

This is also uncertain, but it may be sooner than initially expected. The Solicitor of Labor has indicated that the effective date of the final regulations will be 60 days after publication. But, before they can be published, they must be reviewed. The OMB generally has 90 days to review regulations, which would put the deadline near the middle of June. However, because of the upcoming election, the middle of May is probably the OMB’s real deadline. Here’s why.

Under the Congressional Review Act (CRA), Congress is generally given 60 days to review and disapprove a major rule, like the DOL’s new overtime exemption regulations. However, the CRA makes an exception for “midnight rules” that are issued toward the end of an administration. If a rule is issued too late, the 60-day review period essentially resets to give the next session of Congress an opportunity to review and disapprove the rule.

The current administration does not want this to happen, so the OMB must complete its review before the date on which the CRA’s reset provision is triggered. Otherwise, the new overtime exemption regulations would be at the mercy of the next Congress and a new president.

According to calculations by the Congressional Research Service, this date is estimated to be May 16, 2016.

This date was estimated using projected congressional schedules, so it may change. Nevertheless, if we assume the final regulations are published by May 16, 2016, and add 60 days, the new regulations could become effective around July 15, 2016, maybe even sooner!

Or, maybe later. On March 17, 2016, the Protecting Workplace Advancement and Opportunity Act was introduced as a bill. If passed, this law would essentially void any changes made to the white-collar overtime exemptions. Before proposing any new changes, the law would also require the DOL to undertake a comprehensive analysis of how changing overtime regulations would impact employers, including small businesses.

In the meantime, potentially significant changes to overtime pay requirements for white-collar employees may soon be here. How can employers prepare? Unfortunately, plans cannot be finalized until the final regulations are released, but employers can use the July 2015 proposed regulations as a guide to begin developing preliminary plans. In case there are any surprises, these plans should be flexible and capable of adapting to possible contingencies.

The risk of employment-related lawsuits, particularly those involving overtime under the FLSA, is nothing new for employers. But, the prospect of new rules, and their uncertainty, is expected to increase that risk significantly. Employment Practices Liability Insurance can protect against various employment-related claims, and limited coverage for wage and hour claims may also be available.

Please contact us if you would like to learn more about protecting your business with employment practices liability insurance.

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EEOC Releases 2014 Enforcement and Litigation Data

The Equal Employment Opportunity Commission (EEOC) is responsible for enforcing various federal equal employment opportunity laws. Every year the EEOC releases information about its enforcement and litigation efforts during the previous fiscal year (FY), which runs from October 1st to September 30th. This data can be used to get a better understanding of potential employment-related liability exposures that continue to pose a significant risk to most employers.

In FY 2014, the EEOC received a total of 88,778 charges of workplace discrimination, which is lower than recent fiscal years. There were 93,727 charges filed in FY 2013 and 99,412 charges filed in FY 2012. According to the EEOC, this decrease is due in part to the government shutdown during the first quarter of FY 2014.

The EEOC obtained $296.1 million in total monetary relief through its pre-litigation enforcement program in FY 2014, which is also lower than recent fiscal years. The EEOC obtained $372.1 million in FY 2013 and $365.4 million in FY 2012. Monetary relief from cases litigated in FY 2014, including settlements, totaled $22.5 million.

The total number of charges filed in FY 2014 can be broken down as follows:

  • Retaliation under all statutes: 37,955 (42.8%)
  • Race (including racial harassment): 31,073 (35%)
  • Sex (including pregnancy and sexual harassment): 26,027 (29.3%)
  • Disability: 25,369 (28.6%)
  • Age: 20,588 (23.2 percent)
  • National Origin: 9,579 (10.8%)
  • Religion: 3,549 (4.0%)
  • Color: 2,756 (3.1%)
  • Equal Pay Act: 938 (1.1%) [Note: Sex-based wage discrimination can also be charged as sex discrimination under Title VII.]
  • Genetic Information Non-Discrimination Act: 333 (0.4%)

The states with the most charges filed in FY 2014 were:

  • Texas (8,035)
  • Florida (7,528)
  • California (6,363)
  • Georgia (4,820)
  • Illinois (4,487).
  • Pennsylvania (4,045)
  • North Carolina (4,017)

It’s interesting to note that of the 88,778 charges filed, 57,376 were closed because the EEOC determined there was no reasonable cause to believe that discrimination occurred based upon evidence obtained in investigation. This means that nearly 66% of employers had to endure an EEOC investigation despite the lack of reasonable cause to support a claim of discrimination. Since even baseless EEOC investigations can be expensive, employers should consider employment practices liability insurance to help cover the costs.

Employers can avoid the EEOC’s enforcement efforts by creating and enforcing a policy against discrimination and harassment. Employees must also be trained to prevent, detect and address any unlawful behavior. Training should cover all relevant topics, such as employment liabilities, sexual harassment for managers and employees, discrimination and harassment prevention and disability discrimination.

If you would like to learn more about controlling employment-related liabilities, check out The Human Equation’s library of online courses or contact us.

The Human Equation prepares all risk management and insurance content with the professional guidance of Setnor Byer Insurance and Risk.

Office Holiday Parties: Revel without Regret

Many employers consider a company-wide holiday celebration an excellent opportunity for employees to mingle socially and get to know one another better. It’s also a chance for senior management to interact with employees they rarely see throughout the year. Though holiday parties can create a positive work environment, increase employee morale and promote teamwork, they can also expose employers to a number of potentially significant risks.

Perhaps the most significant risks involve alcohol. What happens if an employee becomes intoxicated and causes damage to something or someone? Though liability is determined on a case-by-case basis, employers may face a greater chance of being held responsible if:

  • Attendance is, or is perceived to be, mandatory (e.g., everybody knows that being seen by the Vice President will enhance one’s chances of a promotion);
  • The employer pays for or provides the alcohol; or
  • The employer conducts business during the holiday party.

Employers can take steps to reduce their potential liability, such as:

  • Collect car keys from all who drink. Toward the close of the party, assign designated drivers or call taxis for anyone who is too impaired to drive. If the party is in a hotel, reserve a block of rooms for the inebriated to spend the night.
  • Appoint someone in a position of authority to monitor alcohol consumption; including making certain that no alcohol is served to minors.
  • Serve a limited amount of alcohol, controlled through “drink coupons.” (i.e., two drinks per person). Close the bar once dinner begins.
  • Send a memo to all employees prior to the party stating clearly that a) employees who arrive inebriated will not be allowed in; b) employees cannot bring their own alcohol; c) excessive drinking will not be tolerated; and d) intoxication and inappropriate behavior at the party will be grounds for discipline.
  • Do not permit supervisors or managers to buy alcoholic beverages for employees.
  • Hold the party at an off-site location and use professional bartenders to serve and monitor alcohol consumption.

There are other risks employers should consider when planning and holding the annual office holiday party, such as:

Discrimination and Harassment: Lines are often blurred during an office party, so they are often crossed. Conduct that is inappropriate at work may be considered appropriate at a party, such as engaging in intimate conversations or acts, giving a racy gift or telling an off-color joke. Employers may be held liable for unlawful harassment or discrimination that takes place during a holiday party, even if it’s off-premises and off-the-clock. Consider redistribution of the sexual harassment policy, and remind employees that a holiday party is no excuse for inappropriate behavior, which will not be tolerated.

Premises Liability: Employees are often allowed to bring spouses and significant others to the office holiday party. Every ‘plus one’ accompanied by an employee is a potential slip-and-fall victim. Employers must make sure the workplace is safe before the party and keep it safe during the party.

Workers’ Compensation: Employees are typically covered by workers’ compensation if they are injured in the course and scope of their employment. Though getting hurt at a holiday party wouldn’t seem to be work-related, an employee may be covered by workers’ compensation if attendance at the party is explicitly or implicitly required (or ‘encouraged’). Tell employees the holiday party is purely a voluntary social event, and mean it.

Employers should review their insurance policies before the party to make sure they are covered in the event something happens during the holiday party. General liability, employment practices liability and workers’ compensation insurance may cover some of the risks created by the office holiday party. However, other risks may require additional insurance coverage, such as a policy that covers one-time events, including alcohol-related liability, which may be available for a small additional premium.

If you would like more information about how Setnor Byer Insurance & Risk can help protect your business during the holidays and year round, please contact us.

Understanding Business Insurance: What is BOP?

Many businesses take a piecemeal approach to buying insurance. One policy for property insurance, another for liability insurance, and so on. Unfortunately, this approach can be difficult and time consuming, particularly for small- and medium-sized businesses. For these businesses, a Business Owners Policy, a BOP, may be an attractive alternative.

A BOP is a pre-packaged bundle of coverages that insurance companies offer to eligible small- and medium-sized businesses. BOPs are designed to provide a number of essential insurance coverages in a convenient and cost effective manner. BOPs typically provide:

  • Property insurance to cover damage to buildings and contents;
  • Business income (business interruption) insurance to cover the loss of income resulting from a covered loss that Disrupts business operations; and
  • Liability insurance to protect against liability claims for bodily injury and property damage occurring on a business’s premises or arising out of its operations.

Depending on the insurance company, additional coverages may be included in a BOP, or added for an additional premium, such as:

  • Cyber Liability
  • Employment Practices Liability
  • Valuable Papers and Records
  • Personal and Advertising Liability
  • Liquor Liability
  • Equipment Breakdown
  • Sale and Disposal Liability coverage for self storage facilities

Though BOP eligibility requirements can vary significantly among insurance companies, BOPs are typically limited to small- and medium-sized businesses, which are generally those with fewer than 100 employees and annual revenues of less than $5 million. BOPs may also not be available to businesses operating in specific industries or those with highly specialized or high-risk operations.

Alternatively, BOPs may not be the solution for some businesses, even those that are eligible for them. For example, some businesses may require higher limits or broader coverage forms that are not available in a BOP. There are also a number of coverages that BOPs do not provide, such as workers compensation, commercial automobile and professional liability insurance. Even with a BOP, additional insurance policies may still be necessary.

Since BOPs are customized insurance products, it is important to note that coverage options and features (limits, exclusions, etc.) can vary significantly among insurers. Unfortunately, the lack of uniform eligibility requirements, coverage options and policy features makes it difficult to understand and compare the various BOP options that may be available. An experienced insurance agent should be consulted throughout the process.

If you would like to learn more about BOPs or the various options that may be available to insure your business, contact us.

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Is a Resident Manager Ideal for Your Self Storage Facility?

Resident managers are not as common as they used to be in the self storage industry. For some self storage facilities, however, a manager living on the premises may be the key to running a successful operation. Though cost is an important factor when deciding whether a self storage facility could benefit from a resident manager, other factors should be considered as well, such as:

Service: Automated facilities may not be enough to create an advantage over the competition. Depending on a self storage facility’s location or specialty, clients may want more than just an access code after signing a contract. Facilities with a resident manager can service clients in ways that others cannot. This is why the existence of a resident manager is often mentioned in promotional and marketing materials.

Security: Even with surveillance cameras and 24-hour monitoring services, it is difficult to deny that resident managers can make a self storage facility even more secure. Their presence alone will likely deter most criminals, and their response time will be quicker than even the fastest police departments.

Operations: Things can and often do go wrong after business hours. Leaking pipes and short-circuits are just two things that can cause significant damage if they are not discovered and fixed quickly. A resident manager can find and fix those problems that cannot wait.

Qualified Candidates: It’s not always easy to find and retain the right people. Providing prospective managers with a place to live may be just the perk required to hire and keep quality talent.

After evaluating all the pros and cons in the context of each facility’s own particular situation, an informed decision can be made about whether a resident manager could improve operations. However, before making a final decision, it is important to understand the ramifications of hiring a resident manager, particularly how doing so may create an unexpected relationship.

In addition to creating an employer-employee relationship, hiring a resident manager can also create a landlord-tenant relationship. While employers can often terminate employees at-will and without advance notice, the same cannot usually be done with tenants. Depending on applicable law, a self storage facility will generally be required to provide advance written notice to terminate the landlord-tenant relationship. As a result, a resident manager may be legally entitled to continue renting the property for a period of time after his or her employment has been terminated.

There are steps that can be taken to minimize the scope and impact of the landlord-tenant aspects of a resident manager’s employment relationship. For example, a self storage facility can address landlord-tenant issues in a written employment agreement or in a separate lease agreement. However, since specific legal requirements must be met, it is advisable to seek the advice of a locally licensed attorney.

As is often the case, it is necessary to understand the risks in order to control them. Since self storage facilities face unique risks, it helps to have an insurance program that is specifically designed for the self storage industry. If you would like more information about Setnor Byer Insurance & Risk’s Self Storage Insurance Program, please contact us.

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