Risk Management Bulletin

If your employees perform certain incidental work-related duties on, along, or near, navigable water, you must carry Workers Comp insurance under the U.S. Longshore & Harbor Act. (USL&H). You might have noticed the fuzzy words “work-related duties, “incidental,” and “navigable.”

Corporate officers who violate this requirement could face fines of up to $10,000 — or even face or a year in jail.

Let’s explore how the vague words in the USL&H might impact your business. A “navigable” waterway is any body of water that ultimately empties through its tributaries into the Gulf of Mexico, Atlantic or Pacific Oceans. This means that the waterway can start one mile or 1,000 miles or more from the gulf or either of the oceans.

Consider the terms “incidental” and “work-related.” Who knows how a court might interpret them? Consider these examples:

• Making deliveries to a dock
• Going onto a dock or boat to deliver or fix equipment
• Carpenter responsible for repairing boxes and barrels used in shipping
• Transporting to pier with the accident occurring on public roadway before reaching the pier
• Truck driver loading on dock
• Welder injured on public highway leaving employer’s facility
• Machinist working 2.5 miles from water past several public streets
• Waterfront security guard
• Employee injured in structural steel shop 2,000 feet from water
• Unloading fish adjacent to navigable water
• Injury on public thoroughfare administered and maintained by Port Authority of N & NJ
• Pier under construction
• Plumber, carpenter, or electrician working on or near water

If one of your employees suffers an injury near a navigable waterway, he or she can sue you or a company officer — even if the employee was near the waterway for only one hour!

Even worse, such lawsuits don’t limit employees to Workers Comp benefits. They can recover compensatory damages (for pain and suffering) as well as punitive damages — not to mention the fines and jail time mentioned above.

To help you avoid this “on or near the water” exposure, please feel free to get in touch with us.

More and more companies are restricting employee use of personal cell phone cameras at the office for fear that these ubiquitous devices might create legal headaches. Improper photos at work might lead to job-related claims, as well as compromise company trade secrets.

For example, if an employee takes inappropriate photographs of co-workers without their permission, the secret photos or videos could amount to sexual harassment or an invasion of privacy. Even if this doesn’t create a legal problem, the appearance of the photos or videos on social media could still make some employees uncomfortable or embarrass them.

Another worry relates to a soured working relationship. A disgruntled employee might want to embarrass a boss or gather evidence for filing a legal claim. All sorts of photos — from a supervisor getting upset with an employee to overall working conditions — could become fodder in an employment dispute. For companies with patented products and closely protected manufacturing processes, any information leaked to a competitor might be extremely damaging. Companies need to protect against cell phone cameras used to copy confidential documents or record other internal information.

What can an employer do? A big first step is to adopt a written policy that controls employee use of cell phone cameras at work. Determine which employees need cameras as part of their jobs. It might be a good idea, for example, if truck drivers carried cameras in case they have to photograph an accident for insurance purposes. Employees permitted to use camera phones at work should agree that the employer has the right to review all photos and videos on the camera, and can delete any work-related photos. The employer should also prohibit employees from posting work-related photos on the Internet. For those workers who don’t need to use camera phones at work, it’s okay to ban their use outright.

The easiest way to address camera phone use is to update your employee handbook. Once you’ve done this, follow up with either a company-wide memo or a discussion with employees about why you’re restricting camera phone use. The key is enforcement. Don’t develop the policy unless you’re willing to enforce it in every instance that it’s violated.

If disaster strikes, how well you protect your business against risk can make the difference between survival and extinction. Once you’ve identified the risks involved, you have three basic options:

• Reduce or eliminate them (avoidance)
• Accept them (acceptance)
• Limit the financial damage by assigning the risks to an insurance company (risk transfer — or insurance).

Unfortunately, risk management protection through insurance often fails to go beyond Commercial Liability and Property coverages. For example, Key Person Life policy(ies) on one or more key executives will reimburse your business against potential financial losses from their death. Business Interruption coverage can help keep you up and running after a disaster by covering payroll expenses and protecting against the loss of suppliers and buyers, You should also consider other types of business insurance to minimize the damage from a catastrophe.

In deciding on the policies that best fit your needs, ask yourself:

• Are your coverage amounts and deductibles appropriate?
• For what types of disasters (perils) are you insured? Which perils are excluded specifically?
• Does your insurance provide adequate protection to senior management against litigation from inadequate business continuity planning?
• Does your coverage factor in inflation, improvements, and building code changes?
• Is your coverage for “replacement cost” or “actual value” (cost less depreciation)?
• Will your Business Interruption insurance pay loss of income and payroll expenses?
• Is your documentation (serial number, date of purchase, cost, receipts, photographs, etc.) current and detailed enough for your insurance company?
• Do you have the originals of all policies secured in a fireproof cabinet, or off site, with copies readily available?
• Are you covered for loss of power or other critical services?
• What about coverage for a denial of access order issued by civil authorities?
• Does your insurance cover losses from a disruption of transportation services?
• If the Disaster Management Team makes a “disaster declaration,” will your insurance cover the costs charged by your alternate site vendor? What about the extra personnel and other costs associated with activating and operating the alternate site?
• Do you carry enough Life insurance on key executives?
• If you implement an effective Business Continuation Plan will your insurance premiums go down? Have you reviewed your coverage with your professional insurance advisor within the past year?

Our risk management professionals would be happy to help you answer these questions — and more. Just give us a call.

Thousands of workers suffer abuse at home — and, all too often, this abuse spills over into the workplace. According to the American Bar Association Commission on Domestic Violence, there are 30,000 to 40,000 incidents of on-the-job violence a year in which the victims knew their attackers intimately. More than seven in ten human resources and security personnel (71%) surveyed have seen an incident of domestic violence on company property.

A violent episode at work can easily endanger co-workers, as well as the victim. What’s more, female workers who are abused at home have higher rates of absenteeism, drug abuse, and depression that increase Health insurance costs and lower productivity — costing businesses more than $4.5 billion a year.

Federal and state law requires employers to provide a safe workplace for all employees. Failure to act on the knowledge that an incident of domestic violence could threaten workers on the job places a huge potential liability on your company.

In deciding whether an employee might be a victim of domestic violence, beware if the worker:

• Has unexplained bruises that don’t seem to fit their injuries.
• Wears inappropriate clothing that might be covering up injuries.
• Seems distracted at work.
• Has a high rate of absenteeism.
• Appears anxious, upset, or depressed.
• Receives repeated, upsetting telephone calls during the work shift.

If you notice any of these signs, talk to your employee privately, telling them what signs you noticed and expressing concern about possible abuse. Be supportive and keep this information confidential, except for individuals who need to know, such as security personnel. Offer company and community support and be flexible with the employee’s working arrangements.

According to the Family Violence Prevention Fund, supervisors are usually the first people to become aware of an employee who might be a domestic violence victim. The fund recommends that supervisors refer potential victims to your company’s Employee Assistance Program (EAP) or a community domestic violence program. The National Domestic Violence Hotline number is (800) 799-SAFE (7233).

Industry analysts estimate that telephone fraud costs American businesses and residences as much as $4 billion per year. Whether you’re installing a new phone system or just want to take full advantage of your present system, you need to protect your business against this threat.

Although hackers might break into telephone systems for thrills, other criminals make a living at it. These lawbreakers often sell their services to “retailers,” who offer stolen phone-access numbers to drug traffickers or illegal immigrants. This scam can translate into expensive calls to distant destinations in a brief time. The major long-distance carriers all offer protection packages that provide users with 24-hour toll fraud monitoring, training, and liability limits.

Experts recommend these basic proactive measures to protect your business against phone fraud:

1. Adopt a prevention program. Use the security measures your system provides; change passwords and/or access codes frequently.
2. Because most thieves are interested in making international calls, block calls to countries where you don’t do business. This means that no one — from the president on down to the cleaning crew — can make the calls. Taking this precaution means that, although hackers might call in, they won’t receive authorization to call Peru, for instance.
3. Eliminate direct inward system access (DISA) or remote access, which allows outside producers to access an outbound line with an 800 number. Issue phone credit cards instead.
4. Review call-accounting reports to identify fraudulent usage. Check for repeated failed password attempts. Look for long calls, calls after certain hours, and other suspicious activities.
5. Secure your voice mailbox and auto-answer attendant system to prevent an inbound caller from getting an outside line through these automated devices. Change passwords to access mailboxes every month or so.
6. Discuss security measures with your long-distance phone company for ways to decrease your vulnerability. The company might have informational materials for your staff.
7. Educate employees, starting with your switchboard operator, not to transfer incoming calls to an outside operator. Outside producers should make sure that no one is listening or watching when they read or key in their calling-card number. Phone companies will never call a customer for verification of a personal identification number (PIN) — which means that employees shouldn’t give it out to any caller.
8. If you have a PBX system, conduct a monthly security audit on the system, and check authorization codes.
9. Consider buying a PBX protection package, which can help you monitor potentially fraudulent activity, such as repeated searches for a dial tone, and can limit your liability for unauthorized calls. If you have this package, you might be eligible for a discount on toll-fraud insurance.
10. Consider insurance coverage for toll fraud.

In today’s world, every business needs to keep its digital information secure, available, and organized. We’ve seen an explosive growth in high-profile cyber incidents, such as computer viruses, data theft, identity theft and other cyber-crimes — and most if these incidents aren’t even reported!

What happens when you suffer a loss or breach of data? More specifically, what are the implications from an insurance standpoint?

Consider these scenarios:

• One of your employees accidently opens an e-mail that has a computer virus. The virus crashes the company’s network, but not before spreading itself to everyone in its contact list, including your customers. As a result, one of your customers gets the same virus, which wipes out his network — and leads him to sue you for damages.
• A disgruntled former employee logs into your network and blocks access to the company Web site, so that customers can’t access their accounts or do business. After two weeks, you’re still not operating normally — and you’re losing customers by the hour. What’s more, some of them are suing you.
• A virus hacks into your Web site, corrupts all of the content, and then e-mails a virus link to your customers. You rush to take the site down, but not before suffering extensive damage — not to mention the cost of rebuilding the computer network and site. Meanwhile, a number of disgruntled major customers have taken their business elsewhere.

What do these three scenarios have in common? Most Business Insurance policies wouldn’t cover the losses! The standard Building and Personal Property Form covers loss of data only up to $2,500 a year. Commercial General Liability (CGL) policies exclude both damage to data and that caused by loss of data.

According to the Cincinnati Insurance Board, most small businesses are woefully unaware of the implications of cyber threats. “Cyber losses are increasing, and the cost to recover from a data breach can be staggering,” says the Board’s EVP Ron Eveleigh. “At this time, coverage is limited for these cyber losses, but the coverage is evolving. Although some policies will provide limited coverage for broad data and privacy breaches, most CGL policies still need a specific endorsement for cyber losses.

Our risk management professionals would be happy to help craft coverage to protect your business against losses from cyber crimes.

Workplace fires and explosions kill 200 American workers and injure more than 5,000 a year, at a cost of $2.3 billion. To help keep employees safe, any business that’s required to have fire extinguishers on the premises and needs to evacuate people during a fire or other emergency must have an Emergency Action Plan (EAP) that meets specific OSHA standards. The EAP includes — but is not limited to — these required elements:

• Evacuation procedures and emergency escape route assignments.
• Procedures to be followed by employees who remain to operate critical plant operations before they evacuate.
• Procedures to account for all employees after an emergency evacuation has been completed.
• Rescue and medical duties for employees who are to perform them.
• Means of reporting fires and other emergencies.
• Names or job titles of persons to contact for further information or explanation of duties under the plan.

Businesses can also implement a workplace Fire Prevention Plan (FPP) that describes the onsite fuel sources (hazardous or other materials) that could trigger or help spread a fire, as well as the building systems, such as fixed fire extinguishing systems and alarms in place to control the ignition or spread of a fire. At a minimum, your FPP should include:

• A list of all major fire hazards, handling and storage procedures for hazardous materials, potential ignition sources, and the type of fire protection equipment needed to control them.
• Procedures to curb accumulations of flammable and combustible waste materials.
• Maintenance of safeguards on heat-producing equipment to prevent the accidental ignition of combustible materials.
• The name or job title of employees responsible for controlling fuel source hazards and maintaining equipment to prevent or control ignition or fires.

If you’re required to have an EAP or FPP, you must provide emergency preparation and response training for employees. Even if you’re not required to prepare such plans, it makes sense to develop and enforce them.

Our risk management professionals would be happy to help you develop and review your plans — just give us a call.

You want your employees to be safe on the road and avoid accidents, whether they’re driving your vehicles or their own. The safer your drivers, the better for all concern — and the lower your exposure to litigation. Make sure that your safety meetings and training sessions include these four key elements.

1. Collisions are common, especially at intersections, where it’s estimated that one in three two-car crashes occur. To reduce the risk of head-on collisions, drivers should keep alert and look down the road for possible problems, such an oncoming driver passing another vehicle. To avoid being rear-ended, drivers should signal intentions, slow gradually, and check mirrors for tailgaters. To avoid rear-ending another vehicle, they should maintain a two- to four-second distance from the vehicle ahead and watch for brake lights and turn signals.
2. Passing. Train drivers to pass only in a passing zone, check oncoming traffic to make sure no one is coming, and check their mirrors to make sure someone behind them isn’t moving out to pass. Drivers should never pass unless they can see enough clear space to do so comfortably. When being passed, they should slow down if the other vehicle needs extra room to pass safely.
3. Road/Weather Conditions. Road construction, traffic, slippery roads, bad weather, and other hazardous conditions contribute to many accidents. Under these conditions, drivers can stay safe accidents by taking precautions such as slowing down, increasing following distance, being prepared to stop, turning on headlight to be more visible, avoiding distractions, and keeping calm in heavy traffic. Drivers should also know how to handle a skid (take your foot off the break and turn in the direction you want the front of the vehicle to go).
4. DUI. You can’t overemphasize the hazards of driving under the influence of alcohol or drugs. According to one recent report, one in five motorists admits to drinking and driving. Drunk driving kills more than 20,000 Americans a year, and injures another 50,000. Drinking impairs all the faculties that prevent traffic accidents: the ability to determine distance, reaction time, judgment, and vision.

Too many businesses undervalue the benefits of workplace safety because of communication barriers between safety professionals and managers, as well as the challenge of demonstrating safety performance in financial or bottom-line terms. To turn this situation around and enhance the business value of safety programs, use these basic strategies.

Identify safety as a core business value. Obviously, profitability drives corporate value; but so do brand name, compliance risk, and worker productivity Workplace safety programs influence all of these drivers to some degree.

A few years ago, Liberty Mutual Insurance Company surveyed senior financial executives at large and medium-sized companies about their views on safety and insurance. These executives cited increased productivity and reduced costs as the top benefits of workplace safety and health. In an earlier survey, an overwhelming majority of executives believed that workplace safety had a positive impact on their companies’ financial performance. Many cited a return of investment of $3 for every $1 invested in workplace safety programs.

View safety as an investment in continuous improvement. An “investment” is a commitment to earn a financial return or gain future advantages. Safety programs correlate directly to the benefits of increased productivity and efficiency. For example, one container manufacturer reported a 20% increase in the number of boxes produced per day on an assembly line after an ergonomics consultant recommended operational changes to eliminate repetitive arm and shoulder injuries.

Combine leading and trailing indicators of safety performance. Leading indicators tell you about the future value or direction of performance. For example, your employee turnover rate can indicate future changes in productivity and/or injury rates. The number and frequency of near misses can help predict the risk of future accidents. Hours of employee safety training completed or the number of employees trained can indicate changes in productivity and safety. The number and/or frequency of completed inspections can indicate the level of compliance risk, integrity of equipment, and changes in productivity.

You can learn where you’ve been by using such trailing indicators as injury and illness reports, lost workdays, and Workers Compensation claims. Although trailing indicators can highlight past costs, they are inconsistent and often unreliable indicators of future performance.

Enhance employee involvement. It’s not effective just to tell employees what to do and judge them on how well they do it. Because they’re in the trenches, workers are more sensitive than managers to the integrity of safety and productivity data. For example, workers can see what’s really going on behind the statistics in injury and illness reports when management often can’t do so. Employee involvement should play a key role in effective safety performance evaluation.

UPS, the world’s largest package carrier, has slashed its workplace injury rate by 40% and reduced auto accidents by 33% through its Comprehensive Health and Safety Process (CHSP).

Although few companies are as large as UPS, businesses of any size can apply these CHSP principles.

The backbone of the program is the nearly 4,000 safety committees at UPS facilities around the world. A non-management employee usually leads the committee, supported by a management co-chair. These groups are responsible for finding and fixing problems. They have full power to take action, which sets them apart from traditional safety committees led by managers who often simply tell their workers to quit getting hurt. CHSP expects employees to make the changes that will keep them from getting hurt. Each committee also develops a 15-month action plan to tackle long-term safety goals.

Every day at every UPS operation, drivers gather for a three-minute communication that might address a new service or other key information they need. These mini-meetings always include a “safety share” or tip on such topics as railroad crossing risks, distracted driving, or safe lifting. Although the tip is brief, the consistency of practices underscores management’s commitment to keeping workers safe.

Five years ago, UPS introduced an innovative practice by creating “safety zones,” physically delineated areas in each facility where drivers and other workers gather. The zones might include computers for online research, information boards, and space for holding safety presentations. Some locations have even introduced light workout equipment. Carving out a dedicated space devoted to safety helps underscore its importance and makes the commitment more visible. These zones are inexpensive to create and are clearly proving their value.

UPS believes in promotion from the ranks. The company, known for employee longevity, encourages employees to grow in safety as they grow in their jobs. It’s common for a part-time loader to become a driver, then a supervisor, and then a manager, with safety responsibilities added along the way. Encouraging long-term employees to take on safety duties helps create buy-in and strengthens the safety organization.

Take a leaf from the UPS safety book!