Tuesday, September 22, 2015

Employment Practices Liability: Defusing a ticking bomb

If you are like any other organization that conducts background checks on employees before hiring them, then you are at a graverisk of workplace harassment lawsuits. Protect yourself with an Employment Practices Liability Insurance (EPLI). Want to know more?


Background Checks are necessary for any organization. According to the Justice Department’s report on Workplace Violence Statistics, between 1993 and 2009, nearly 572,000 crimes of a minor nature occurred in the American Workplace. In most cases, the offender/assailant was an employer/employee/colleague of the victim. Little wonder that most companies have a thorough recruitment procedure which checks the prospective employee’s:
  • Skills
  • Family background
  • Educational background
  • Criminal Background
  • Credit History
  • Driving Offences
  • Drug and Alcohol tests
While these are common to most organizations, several of them have additional,custom checks to be completed. As a result, hiring cycles drag out much longer in the United States than in comparison to other countries.According to leading HR Consultancy – Glassdoor; since 2009, it takes an average of 22.9 days to hire a new employee, an increase of 4 days from the previous decade.

Interestingly, while most of these checks were mandated by the Federal Government, delays in hiring, during a recessionary economy, have forced the Government to rethink these policies. The Equal Employment Opportunity Commission (EEOC) and the Obama Government have been vociferous in demanding flexibilities around these checks.

Across the country, more than 100 cities and counties have adopted a policy, popularly known as ‘ban the box’. According to this, employers must primarily focus on the candidate’s skills or qualifications, and the conviction record check is conducted much later in the hiring process. As many as 18 states have adopted the policy completely, and another 7 states - partially.

The driving force behind the policy is the perception that criminal background checks and credit rating checks have a disparate or unequal impact across ethnicities. It allegedly puts African-Americans in generaland African-American males in particular,at a severe disadvantage.The EEOC published guidelines on the use of criminal background information during recruitment, in 2012. Since then, it has been aggressively driving the ‘ban the box’ policy through legislation and litigation.

Several lawsuits have brought the policy into the limelight and caused a pushback on some of the EEOC guidelines, to make it fair to both employers and employees.

Notable among them are:
  • Freeman: The EEOC vs Freeman suit was filed in 2008 by an African-American lady who alleged that her employer discriminated against her based on her credit history. Subsequent investigations and hearings expanded the scope of the charges and EEOC alleged that the employer practiced a pattern of discrimination against African-Americans by using their credit history, and against all African-American, Hispanic and white male applicants by using their criminal history, during hiring. The employer could prove that all of these checks were clearly communicated and there was no intention to discriminate.
  • Pepsi: Pepsico was forced to pay a $3.1 million fine and modify its hiring procedures, in the light of similar allegations.
  • Dollar General: In an ongoing suit, DolgenCorp is defending its right to withdraw the job offer, if a subsequent background checks reveal criminal history.
Refining existing guidelines and creating new ones is a continuous process. But the larger reality is that business organizations are constantly at the risk of lawsuits from various aspects of their operations.

The only option for organizations then, is to have anEmployment Practices Liability Insurance (EPLI) cover. EPLI is a comprehensive policy that covers not just hiring practices but a whole lot of situations that a business organization can face in its lifetime. This includes losses and injuries to prospective employees, existing employees, clients, vendors, consultants and third-party agencies;hiring practices, malpractice coverage, workplace harassment, etc.

In short, EPLI is Health Insurance for a company.

For more details, call and speak to any of our agents.

Tuesday, September 15, 2015

Homesharing Rentals: What they don’t want you to know

Between jobs, and strapped for cash? Inundated with credit card bills that are piling up? Feeling desperate? Want to rent out your spare room to a guest, and make a quick dollar? Isn’t that what your friend Joe did recently through AirBnb?

If this is what you are thinking, think again!

AirBnb is one of those new age, ‘sharing economy’ companies. Their business operating techniques are similar to Uber’s or Lyft’s modus operandi. The comparison doesn’t end there. Like these ride-sharing companies, home-sharing companies like AirBnb do not protect the interests of the car-owner/home-owner and consequently leave them open to risks from liabilities and lawsuits.

AirBnb is all about connecting people, who have a spare room or some spare space, to strangers who want to hire them for the weekend, a few days, or a week at the most. Their website lists all such properties, and the timeframe in which they are available for hire. People seeking to hire them respond to the posting, make the necessary payments and hire the space at the desired time. The space may be anywhere: on a boat, in a tent, an igloo, a caravan, or a home. Even motels and hotels whose businesses are not doing too well, are in the fray.

AirBnb and such peer-to-peer business facilitators must show rapid growth to ensure better valuation, and this typically comes from having thousands or millions of users for their services around the world. This is how most venture-capital funded businesses work. One way of enlisting more users is by keeping the costs low.

So what? Isn’t it what every business does? 

Not really. Hang on, there is more to this than meets the eye...

1. Choice of properties: Most of these properties are old, are not in good condition which is why the owner has been having a problem finding renters. When contacted by customers and regulators, AirBnb refused to share information on its customers’ properties that have had fire tragedies, accidents, break-ins, thefts, injuries to guests, and other mishaps.  

2. Lack of regulation: Since the homesharing rental business does not work like a typical hotel or motel, there are no regulations around fire safety or cleanliness. Which means: if the previous renter was ailing from an infectious condition, and the room has not been cleaned or fumigated thoroughly, chances are you may get infected too. There are hundreds of stories around the world of AirBnb hosts/homeowners getting mugged, looted, rooms being permanently damaged, or rented out by drug addicts, criminals, hookers, etc.

Don’t believe us? Check out: http://www.therichest.com/rich-list/10-of-the-most-horrifying-airbnb-experiences

Not a problem. I have a homeowner’s Insurance policy!

Is that what you are saying?Well, your homeowner’s policy does not provide cover as your spare room is being used for commercial purposes, to generate income for you.

Well, what about the policy provided by AirBnb?

The AirBnb policy does not provide primary coverage to you, as the host/homeowner. The free $1 million liability coverage that they advertise covers tens of thousands of properties, and is not specifically aimed at your property. They only allow for ‘secondary coverage’ which means, you can cover yourself against claims from your renter through your primary homeowner’s insurance. However, that does not work, as we mentioned in the previous paragraph.

Essentially this means, you do not have any cover for your rented-out space. Guests could damage them, or sue you for injury they incurred during their stay, and you would have to pay that from your pocket. AirBnb will not pay you a cent!

This looks like a scam to me. Aren’t the authorities watching?

Well…the shared economy brings in money to hundreds of jobless or low-income American families. This takes the burden of providing jobs and boosting the economy, away from the Government. They are happy to look the other way. At-least for now...

Does this mean I should not rent out my spare room, ever, without being at risk?

Not really. A proper Homesharing Rental Insurance policy offered by mainstream Insurance companies like Allied Brokers, provides exclusive cover for such an arrangement,together withcomprehensive protection that covers different kinds of situations.

Remember, in a shared economy, only the rewards are shared. The risk still remains with the owner. Whereas, a proper Homesharing Rental Insurance policy lets you enjoy the rewards without facing any kind of risk. Isn’t that what you are looking for?

Call us and we’ll help you out.