Business Protection Bulletin

Did you know that theft and pilfering is four times more likely to be committed by your own employees? It only takes one individual to cause significant damage to your bottom line. Employee theft is estimated to be in the billions of dollars each year!

Theft by employees includes merchandise, cash, materials, computer equipment, tools, information and industrial espionage, administrative fraud and embezzlement.

The threat of exposure to potential employee theft will increase proportionately with the size of your company. If your company has negligible safeguards in place, it is crucial to consider implementing sound internal security procedures to protect your company’s assets.

Areas Most Vulnerable to Internal Employee Theft

Administration – What about the books? Whether you process information on a hard drive or manually, figures can be manipulated. Does your company have controls in place for the signing of checks, payroll, or inventory? If the answer is no, you can be exposed to the possibility of padded payrolls, kickback schemes with suppliers, forged or check duplication, or falsified inventories — just a few of the scams administrative personnel can perpetuate.

Merchandise and Equipment – Assets such as office furnishings, supplies, tools, assembly parts, or equipment, can be pilfered by staff, delivery drivers, or even the night time cleaning crew. If you lack the facility to monitor office supply rooms, neglect the effective supervision of staff and cleaning personnel, or have loose control over your inventory, your risk is greatly enhanced.

Shipping and Receiving – These are the most vulnerable and popular target areas where employee theft is committed. If either area has high traffic volume, infrequent or limited supervision, or minimum safeguards for the two way flow of parts and goods into and from your company, store, or warehouse, then at the very least, you are a company that is just waiting for thefts to occur.

Information – Industrial espionage is increasingly popular these days, especially in the uses and application of new product development technologies and manufacturing processes. Employers must be on guard to prevent internal procurement of sensitive or unsecured data. Password security is simply not enough. Anyone can use available hacker programs to access customer lists or new product information, all of which can be sold by one of your employees to a competitor. Theft of internal company information for resale can be very lucrative.

Monetary – The person operating your cash drawer can siphon off money and merchandise in numerous ways. Theft is as simple as voiding a sale and pocketing the cash, or working in collusion with an outside party. If you are uncertain that your till receipts reflect your actual cash sales, you better address the situation before it becomes a major problem.

Safeguards to Protect your Business Assets

All these areas can be protected and secured. Reduce the risk of employee theft by establishing strict procedures and controls over your vulnerable assets. Protective counter measures can be as simple as implementing specific policies regarding your cash register.

Other simple safeguards might include the securing of peripheral areas like windows and doors; convex mirrors to eliminate blind spots; unscheduled walk through of unsupervised areas; regularly checking outside locations such as trash bins, and employing logs to monitor the movement of goods, tools, and materials. Basic preventative measures can be administered at nominal cost. Solutions don’t have to be expensive to be effective.

Stronger security needs might require the installation of video surveillance, or securing sensitive data through software encryption or firewalls. You might consider hiring security personnel or a private investigator to act as an undercover operative. Consider constructing protective storage areas to safeguard expensive items such as parts or inventory. Keep these storage areas locked and restrict access.

A qualified security consultant can point out your company’s flaws and offer a variety of solutions. With a little imagination and research, you can implement many safeguards yourself.

Security systems might appear expensive, and a pain to implement, but they are worth your time and money in the long haul. Good security can save your company a lot of money and grief.

The owner of a commercial building might believe that Replacement Cost insurance coverage on the building is sufficient to protect them from financial loss. After all, they took the insurance agent’s advice and bought enough insurance to pay for repairing or replacing the building if it were completely destroyed. However, this might be a false sense of security, particularly if the building is an older one. Although the building might not have changed greatly over the years, local building codes undoubtedly have. Even codes in effect at the time the building was constructed could affect your insurance coverage.

Many local governments have ordinances that require the demolition of a building when more than 50% of the building has been damaged. These ordinances require the reconstruction of the building in accordance with current building codes. Zoning and land use codes might have changed over the years prohibiting the reconstruction of that type of building at the same site. This could require the owner to rebuild somewhere else or with a much different building design. Laws and codes requiring buildings to be accessible to handicapped people might affect rebuilding if the building previously lacked ramps, doors that can be opened remotely, wheelchair-accessible toilets, and other accommodations.

All of these requirements could increase the cost of rebuilding significantly. Unfortunately, standard Commercial Property insurance policies provide very little coverage for these higher costs. Most will pay either 5% of the amount of insurance on the building or $10,000, whichever is less, for the increased cost of construction resulting from a local ordinance or law. Therefore, the amount of insurance available for a building insured for $150,000 is $7,500; the amount available for a building insured for $500,000 is $10,000. The costs of demolition and rebuilding up to new codes or at a new location can quickly use up this relatively small amount.

Building owners should consider buying additional insurance to cover this possibility. Many insurance companies offer ordinance or law coverage for an additional premium. This coverage will pay for the additional costs of demolition and construction unless the costs result from failure to comply with previous ordinances or from the release of pollutants. Included are three distinct coverages for the specified building:

• Coverage A – Loss to the undamaged portion of the building
• Coverage B – Cost of demolishing the undamaged portion of the building
• Coverage C – Increased cost of construction or repairs to comply with ordinances or laws

The amount of insurance available under Coverage A equals the amount of insurance covering the entire building. Separate amounts apply to Coverages B and C. There is no coverage if the damage results from a cause that the policy excludes. For example, most policies do not cover flood damage, so the policy will not pay if the law requires the owner to demolish the building after a flood. Also, the insurance will pay only the amount necessary to meet the minimum requirements. The insurance will not pay for the cost of exceeding requirements during rebuilding.

This insurance covers the owner only for the cost of repairing or replacing the building, not for income lost during additional reconstruction time. Separate coverage is available for this exposure.

Our agents can advise you on the types, amounts, and costs of coverage you might need to meet updated codes. Whether or not you decide they need the coverage, you should give it careful consideration. The last thing you want is a surprise uninsured expense after a disaster.

The recession that began in December 2007 has been unusually severe. Through March 2009, employers shed more than five million jobs. In January 2009 alone, businesses took more than 2,000 mass layoff actions (actions affecting more than 50 workers). Some affected workers have responded by claiming that their employers illegally discriminated against them. The Equal Employment Opportunity Commission reported a 15% increase in discrimination claims in 2008, bringing the number of claims to a record level. The largest increases were in the areas of retaliation and age discrimination.

These lawsuits can cost businesses dearly. A 2008 report showed that, between 2001 and 2007, almost half of all court verdicts favoring employees exceeded $250,000, and almost a third exceeded $500,000. Half of all age discrimination verdicts exceeded $250,000, and almost a fifth exceeded $1 million. By 2007, almost two-thirds of age discrimination suits resulted in plaintiff victories. Even more dangerous for employers are retaliation claims: More than a quarter of judgments against them exceeded $500,000. Forty percent were for amounts between $100,000 and $500,000.

How can businesses lower the chances that they or their insurance companies will end up on the hook for these payouts? They can start by considering a number of factors before making job cut decisions.

• What will be the criteria for choosing affected workers? Will the decision be based on seniority with the employer? Work performance? Job function? Employment status (part-time, temporary, etc.)? Department profitability? Some combination of these? The criteria must be such that a reasonable person would not find them to be unfairly discriminatory.
• How will the employer select the workers to be let go? Will it apply the criteria strictly, or will it allow managers to use some judgment and flexibility in making selections? How will the employer ensure that all affected areas follow a consistent process? Lack of consistency could increase the employer’s vulnerability to successful discrimination suits.
• Assess the risk of adverse impact on classes of employees protected by law, such as older employees or those with disabilities. Because older employees with long tenures with a firm are likely to be highly compensated, they might be attractive targets for a layoff action. However, an action that has a disproportionate impact on these employees could leave the firm open to successful age discrimination suits.
• Early in the process, review the precedents and lessons learned from any prior workforce reductions. An ability to show that it followed precedent in making layoff decisions will give the employer a strong defense in court.
• Obtain claim waivers and general legal action releases from employees to whom the firm will pay severance. Federal law requires these releases to meet certain requirements for workers over age 40.
• Depending on the number of employees affected, the firm might have to comply with a federal law that requires advance notice of the layoff. Employers must give 60 days advance notice of a plant closing, termination of 500 or more employees or termination of fewer employees if they amount to one-third or more of the workforce. Certain employees are exempt from being counted in these figures, so employers should consult with labor attorneys to determine whether the law covers them.

In addition to risk management steps, employers should obtain Employment Practice Liability Insurance to finance those losses that do occur. One of our agents experienced in placing EPLI and other types of Professional Liability insurance can provide information and assistance in obtaining coverage. Loss control and proper insurance will help your firm survive a very difficult business decision and any challenges that occur in the aftermath.

With the recent explosion in popularity of social networking Web sites such as MySpace, Facebook, LinkedIn, Twitter and others, individuals’ personal information is more widely available than ever. People post photos of themselves and details of their lives online with almost no hesitation. Although they might intend for their families and friends to see this information, others with an interest can also see it. Chief among these are current or prospective employers. An Internet search about a job applicant can be very revealing, but is it wise for the employer to do so?

A search on a prospective employee can uncover information that is much more in-depth than that revealed on a resume, job application, or in an interview. For example, an employer could find news stories involving the candidate, articles written, critiques of their work, information about volunteer work, and more. Conversely, they might find photos, videos, audio files, or text that present a less positive image. Blog posts that include profane language, photos or videos of wild parties or intimate situations, negative comments about former employers on Web sites — any of these might influence an employer’s hiring decision.

One risk from Internet searches is that the employer might discover information that would complicate a decision to not hire the applicant. For example, an employer might learn that an applicant has children, which may lead them to conclude that they will resist putting in long hours on the job. If they were to decide not to hire the applicant, and it should come out that they did an Internet search, they would have the burden of proving that they did not base the decision on the applicant’s status as a parent. Otherwise, the applicant might be able to pursue a successful action against the employer for discrimination.

Some states prohibit employers from discriminating against workers on the basis of their legal, off-duty activities. For example, suppose an employer learns that an applicant is actively involved in political causes with which the employer does not agree. The applicant engages in these activities only during non-work hours and their political views are irrelevant to the work duties. The employer cannot deny the applicant the position based on political activities; they must be able to cite a legitimate business reason.

Federal law requires businesses that take “adverse actions” against a person because of their credit history to disclose this fact. Similarly, some states are beginning to require employers to disclose to an applicant adverse information found in public records. Not only is this costly and inconvenient, it raises concerns about the reliability of the information. It might actually pertain to another person with the same name, especially if the names are common. Also, because anyone can create a Web page in less time than it takes to eat lunch, someone with a grudge can post distorted, misleading or false information about another person with ease.

Although these might sound like arguments for not doing an Internet search, there are also risks to that approach. Should an employee someday turn violent or commit other crimes on the job, and the employer could have found information about those tendencies from an Internet search, he could become the target of lawsuits for failing to properly evaluate the employee.

The best approach for employers could be to use an Internet search as one tool among many as they consider a job applicant. Gather information from a variety of sources, including the traditional ones — references, interviews, aptitude tests, and applications. Supplement that with information found on the Internet. Evaluate the information from all credible sources and make an informed business decision based on the job requirements. The Internet can be a valuable hiring tool, if employers use it wisely.

On January 29, 2009, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009. Congress approved this law to make it easier for workers to win wage discrimination lawsuits against their employers. What does the law say, and what does it mean for employers? Will a business’s Employment Practices Liability insurance (EPLI) policy cover the suits that this law will allow to go forward?

Lilly Ledbetter was a production supervisor at a Goodyear tire plant in Alabama. Shortly before her retirement, she learned that for years the company had paid her substantially less than it had paid male employees for the same job. Because the company calculated her pension benefits based on her earnings while employed, the lower wage affected both her past and future income. Six months before her retirement in 1998, she sued the company for equal pay under the federal Civil Rights Act of 1964. This law imposes a 180-day statute of limitations for filing a discrimination lawsuit, meaning that the worker must file the suit within 180 days of when the discrimination occurred. Ledbetter argued that the company unfairly discriminated against her due to her gender, while Goodyear claimed that it based evaluations only on competence.

The trial court ruled in Ledbetter’s favor. Goodyear appealed on the grounds that the law barred all claims for discrimination occurring more than 180 days before she first inquired into it; the appellate court agreed. She appealed to the U.S. Supreme Court, but in 2007 a divided court ruled in favor of the company. Soon after, Democrats in Congress introduced a bill to overturn the ruling. It passed the House of Representatives but was unable to overcome procedural obstacles in the Senate, and the 110th Congress adjourned without further action. The new Congress quickly enacted the bill in January 2009, and it became the first law President Obama signed. It amended the Civil Rights Act to provide that the statute of limitations resets with every payment of unfairly discriminatory wages. This allows employees to file suits at the time they learn of alleged discrimination, even if the discrimination began years or decades earlier.

An EPLI policy covers an employer for a variety of acts, including discrimination, wrongful termination, harassment, retaliation, and other types of inappropriate conduct. Most policies define discrimination as including violations of federal, state and local laws that give protected status to certain individuals. Because of these provisions, EPLI policies should cover employers for damages they must pay as the result of violations of the Civil Rights Act. In addition, the policy will pay the costs of defending the organization against the claim, even if the claim is groundless.

EPLI policies cover claims made during the policy period, but only if the alleged wrongful act occurred on or after a specific date, known as the “retroactive date.” For example, a policy written for the period January 1, 2009 to January 1, 2010 and with a retroactive date of January 1, 2005 will cover a claim made on November 1, 2008 for an act that happened on July 1, 2008. It will not cover a claim made on the same date for an act that happened on July 1, 2001. There is no standard EPLI policy, so the policies will vary by company. Our agents can explain the differences among different policies.

The Lilly Ledbetter Equal Pay Act makes employers more vulnerable to successful wage discrimination suits. To avoid financial loss from this, employers should be certain that their wage practices comply with the Civil Rights Act, and they should obtain a comprehensive EPLI policy from a reputable insurance company.

Uninsured employment practices claims can devastate a company. Many organizations find Employment Practices Liability Insurance (EPL) essential to their risk management programs. Once a firm decides to buy EPL coverage, it must weigh several important coverage options.

A business can buy a stand-alone EPL policy or as an additional coverage on a Directors & Officers Liability policy. Adding it to a D&O policy might be less expensive, easier to manage, and the defense provisions for the two coverages will be consistent. However, a stand-alone policy provides additional limits, offers more flexibility in terms of defense provisions, and might offer broader coverage.

The firm also must choose the deductible amount (also called the “self-insured retention”). A relatively low deductible means lower out-of-pocket costs when a loss occurs but a higher premium. It can also mean even higher future premiums or policy non-renewal if the firm suffers frequent small losses. A higher deductible reduces the immediate premium and might help lower future costs, but can also be a strain on a firm with frequent losses or troubled finances.

Policies can either obligate the insurance company to provide defense when a loss occurs or they can relieve the company of that duty. With a “no duty to defend” policy, the firm controls the selection of legal counsel, decides which claims to contest, and manages its reputation. However, this can involve considerable upfront expense — the firm must pay for the defense and settlement first, then seek reimbursement from the company. Also, the firm might lack the expertise in claims handling that an insurance company can offer.

Some firms, such as retail stores, medical offices, and restaurants, have frequent exposure to customers. These firms might be susceptible to claims that an employee harassed customers. Standard EPL policies and Commercial General Liability policies do not provide third party coverage for claims made by people other than employees or job applicants. Therefore, firms like these might want to add this coverage to their EPL policies. This will cost an additional premium, but the additional cost might be much less than the cost of uncovered claims.

Studies have shown that courts award punitive damages in a large number of employment practices cases. These damages can run into hundreds of thousands of dollars. Although not all states permit insurance to cover punitive damages, firms in those states that do might want to consider buying it. Insurance companies may offer it subject to the regular policy limits, or only with reduced limits. The cost is normally some percentage of the standard policy premium.

EPL policies provide coverage on a “claims made” basis, meaning that they cover claims submitted to the insurance company during the policy term. The policies normally contain a “retroactive date”; they will not cover claims for incidents that occurred prior to that date. For example, a policy with a retroactive date of January 1, 2004 will cover claims submitted during the policy term if they occurred on or after January 1, 2004. The retroactive date can be the same as the policy’s inception date or some prior date. The earlier the retroactive date, the more claims the policy may potentially cover and the higher the policy premium will be. Firms buying EPL coverage for the first time or switching insurance companies might want to purchase early retroactive dates.

The correct choices for these options will vary greatly, depending on a firm’s characteristics and needs. One of our insurance agents experienced with EPL policies can provide guidance for these decisions. Because employment practices claims can be so costly, it is worth it to weigh these options carefully.

Suppose an air conditioning contractor, while installing a system for a new industrial building, has an accident. Another contractor’s employee on the job site suffers injuries when the AC contractor’s scaffolding collapses and falls on top of him. The injured worker sues the AC contractor and the project owner. The project’s contract included a requirement that the contractor assume the owner’s liability for any accidents arising out of the contractor’s work. Consequently, the contractor’s General Liability insurance company pays the injured worker for both the contractor and owner’s shares of the damages. The insurance company, however, has determined that the owner was 20% responsible for the accident. It files a claim with the owner demanding some of its money back.

The insurance company’s action is entirely legal. Many project owners and general contractors, wanting to avoid this situation, insist that their subcontractors agree to a waiver of subrogation.

Subrogation is a legal principle in which a person who has paid another’s expenses or debt assumes the other’s rights to recover from the person responsible for the expenses or debt. For example, if someone hits your car in a parking lot and causes significant damage, your insurance company will pay you for the damage (assuming you bought collision insurance,) then recover the amount of its payment (subrogate) from the other driver (or, more commonly, from the driver’s insurance company.) Subrogation holds ultimately responsible the person who should pay for the damage.

Owners and general contractors want to transfer their liability to subcontractors, to the extent that they can. Therefore, contracts often include a waiver of subrogation agreement. In such an agreement, the subcontractor promises not to pursue recovery from the other party. That agreement might bind the subcontractor’s insurance company, depending on the type of policy and its terms.

A standard Commercial General Liability policy forbids the policyholder from doing anything to impair the insurance company’s rights after the loss occurs. This implies that a waiver of subrogation agreed to before a loss binds the company. Also, the sub’s policy might protect the other party if it names him as an additional insured. Under common law, an insurance company may not subrogate against its own insured. To remove any doubt, the sub should ask the company to add an endorsement applying a waiver of subrogation to the person or organization named in it. Insurance companies vary on the amount of premium they charge for this; some make no charge at all.

The standard Business Auto insurance policy has language similar to the General Liability policy. Unlike GL insurance, there is no standard waiver of subrogation endorsement for Auto insurance. Some insurance companies might offer their own versions of such an endorsement. Again, premium charges will vary.

Workers Compensation policies require an endorsement whenever a waiver of subrogation is desired. This endorsement might apply on a blanket basis to all parties with whom the insured has written contracts requiring waivers. Alternatively, it can apply only to the party listed on its schedule. The insurance company may charge up to 2% of the policy premium for blanket coverage or 2% to 5% of the project’s premium for individual coverage.

Commercial Property and Inland Marine insurance policies vary as to whether they permit waivers of subrogation even before a loss.

In all cases, a contractor or building tenant who is required by contract to provide such a waiver should check the relevant insurance policies. Policy changes should be requested if it is unclear whether they permit pre-loss waivers. Be sure to consult with us on all insurance-related contractual matters to ensure that the proper coverage is in place.

You might not even be aware of a critical breech in your General Liability coverage. But you’re not alone. Many businesses carry little to no Intellectual Property Infringement coverage, when, in fact, they would be wise to do so.

During the past decade or so, there has been a growing trend by many insurers to reduce coverage dramatically for advertising injury in General Liability policies. In addition, newer policy forms exclude coverage for trademark and patent infringement claims altogether.

The common misconception is that this coverage applies primarily to the publishing industry. But, if your business has any involvement with media, technology, or both, you might need to conduct a risk audit to uncover exposure to potential intellectual property infringement claims.

Does your business need Intellectual Property insurance?

Businesses which might be exposed include:

• Publishing companies
• Companies which mimic a popular brand slogan or name in their own advertising
• Companies involved in e-commerce
• Any company which has a web presence
• Media companies which specialize in advertising, publishing, broadcasting, photography and similar related professions

Types of insurance

Depending on your exposure, available coverage options include:

• Intellectual Property insurance which is a more encompassing form of insurance to enforce your patents and also extends coverage to copyrights and trademarks.
• Patent insurance to protect holders of patents from patent infringement losses.
• Liability insurance for patent infringement to protect sellers, manufacturers and also users when a claim is brought against them for alleged infringement of patents.
• Specialized Media Liability insurance for any company that specializes in any media format.
• Advertising Injury insurance to cover any potential claims that stem from advertising campaigns. An advertising injury is any statement made in advertising that causes loss to another person or entity.

Types of coverage

There are generally three types of Intellectual Property insurance coverage currently available:

• Legal defense only provides coverage for the costs of legal defense but nothing for any awarded damages.
• Indemnity and legal defense pays for both legal defense costs and any awarded damages.
• Enforcement coverage to pay for any legal costs to pursue an intellectual property infringement claim against a third party.

To qualify for Intellectual Property insurance you might be required to show that you have performed an Intellectual Property Search or have registered for a patent, copyright, or trademark.

Intellectual Property is a specialized insurance coverage. Premium differences for any form of Intellectual Property Infringement coverage vastly differ so carefully examine what each policy covers and excludes. Consult with one of our insurance brokers and your legal counsel to limit your risk exposure.

Far too many employers these days are facing retaliation complaints from their employees under a variety of federal and state laws. Whether it is the Title VII of the Civil Rights Act, the Family and Medical Leave Act, provisions under some Workers Compensation state legislation, or the Americans with Disabilities Act, lawsuits against employers are definitely on the rise. Clearly, preventative action is called for here. Let’s examine a number of positive strategies that your company or organization can take to reduce these time consuming and expensive lawsuits.

Sensible Steps to Dissuade Retaliation Complaints

Taking certain basic steps can eliminate many of the causes for retaliation complaints. Consider the following:

• Develop a comprehensive anti-discriminatory and anti-retaliation policy. This may best be accomplished with the assistance and advice of an employment lawyer. The most proactive approach is to take a zero tolerance stance against any legally defined discrimination. Included in this policy should be a very clearly designed anti-retaliation section. To make this policy work, you also have to create a very specific procedure in how management will deal with both discrimination and complaints of retaliation.
• Train your supervisors and managers. Supervisors and managers need to be fully trained in how to respond to retaliation complaints and know the process they need to follow. From the attitude they present to a complainant, and in how the complaint is investigated and managed, good training is key. Keeping both neutral and responsive to the complainant is the best way to contain a potentially explosive problem at the outset so it doesn’t blossom into a litigious mess later on.
• Communicate your anti-retaliation policies to all your employees. The employee grapevine is a powerful and often under-utilized tool. A savvy employer knows how to keep their employees happy simply by keeping them included in the loop. If your workers believe you are a proactive versus a reactive employer, you stand a better chance in successfully resolving the employee’s retaliation complaint before it spirals outward into the legal system.
• Act immediately. When a retaliation compliant is made to management, the initial person receiving the complaint should automatically advise the complainant of the company’s policy and what steps will be implemented.
• Document the retaliation complaint and any action taken. Trained and designated management or human resource personnel should be utilized to obtain well documented facts and statements. These should be obtained from the complainant, the individual or department which is the recipient of the complaint, and any parties witness to the complaint. Pertinent information from work logs or diaries, and personnel files should be included. Describe what steps were initiated to address the complaint, what was discussed and any actions taken.
• Be courteous and respectful to all parties. A defensive, indifferent or hostile approach will clearly undermine the best of any anti-retaliation procedure. All parties need to be treated with respect and courtesy at all times. Alienating or antagonizing either the complainant or the accused will surely be counterproductive in resolving a complaint internally.

Retaliation complaints against employers have doubled in recent years. The law is clear. Knowing how to approach and act towards retaliation complaints can go a long way in keeping you from going to court. Even if it comes down to a legal battle, your documentation and actions can greatly reduce or positively affect what decision might be rendered.

A March 2007 study from the Pacific Research Institute titled Jackpot Justice: The True Cost of America’s Tort System, stated that lawsuits in the U.S. cost the American public an estimated $865 billion per year. Much of this litigation was needless or stemmed from nuisance lawsuits which largely could have been avoided. In these litigious times, business owners need to sit down and analyze their risk exposure.

Here are six proactive steps that every business owner can implement to reduce their liability resulting from nuisance lawsuits:

• Form an asset protection plan by designing a list of all the potential assets you stand to lose from a lawsuit. Take a hard look at your current insurance coverage. Make a point to sit down with both your insurance agent and lawyer to limit your exposure from both an insurance and legal perspective.
• Separate your personal assets from business assets by setting up a C or S corporation or else consider a Limited Liability partnership or even a Limited Liability company. Although this action does nothing to limit lawsuits, you might be able to remove your personal assets from a lawsuit settlement. Consider setting up a qualified retirement plan as federal laws offer protection from creditors for such accounts. However, remember that some states might not include IRAs so seek qualified advice.
• Purchase the right Liability insurance for your business as this can be the best investment you can make. Seriously consider buying Excess or Umbrella coverage as you can easily get an additional $1million coverage for a very inexpensive rate. Today, almost every business that has employees should consider Employment Practices Liability Coverage (EPL) This form of insurance covers current employees, past employees, potential employees, customers or clients from employment related civil actions of discrimination such as gender, age, race or disability, sexual harassment litigation, wrongful dismissal actions, breach of contract, retaliation and other claims brought against your company. Due to the significant rise in such claims, this relatively new insurance coverage has taken on significant importance for companies of any size in recent years. Be sure to contact us about these and other coverages for your company.
• Form your own risk management plan to eliminate unnecessary risk in your workplace. Be proactive in the house cleaning for your company and eliminate hazards by performing repairs or maintenance as they arise. Instill strict and enforceable policies to protect the safety of workers and the public from harmful situations that can quickly translate into a needless lawsuit.
• Specify your policies to clarify everything and anything that could result in a lawsuit. An employee handbook should be issued to all staff. Have them read the handbook before they start work and sign an appropriate form stating they have read and understand the material. Ensure any policies directed to your customers or general public are clearly visible and explicit. Incorporate your customer policies in all your promotional material. Don’t trip yourself up by making promises which can’t be kept. Train all your staff so they clearly understand any policies that apply to customers or other relevant third parties.
• Consider taping phone conversations so you have a record of what your caller is inquiring or complaining about. This also provides you with a record of how staff are responding to the caller. Remember that if you decide to take this approach, you must initiate the call with a notice that the call is being recorded. Clear this with your legal advisor first.

These are but a few simple steps that any company can take to reduce their liability exposure from a host of costly nuisance lawsuits.