Workplace Litigation: What s your company s risk?

Transcription

1 Insurance Private Commercial Workplace Litigation: What s your company s risk? Employment Risk Mangagement HELPLINE for Architectural and Engineering Firms

2 1 Introduction 2 Claims Scenario 1: Overtime and Use of Non-Company Telephones 3 Claims Scenario 2: Independent Contractor Misclassification 4 Claims Scenario 3: Retaliation 5 About the XL Catlin Private Commercial Team 5 About Enquiron

3 Workplace-related litigation doesn t discriminate. 1 No one ever plans on an employment-related lawsuit. But when it happens, you need to be prepared. You need an insurance carrier with the most experienced claim counsel, technical expertise and risk mitigation services to support your business. That s where we can help. Claims Expertise Our dedicated Private Commercial Claims team has over 30 years of collective experience in handling the most complex employment related claims. We provide recognized expertise in managing workplace related litigation and work hard to resolve each claim and provide the appropriate response, so that you can focus on your business. Technical Expertise and Risk Mitigation Services Through our partnership with Enquiron, a leading HR and employment law consulting firm, XL Catlin customers can access our complimentary HELPLINE for expert Human Resources advice and best practices. HELPLINE is one of the benefits of your XL Catlin policy. How HELPLINE can help your business HELPLINE can help your business make better HR-related workplace decisions and minimize and/or avoid costly litigation for all types of claims including: Overtime and Use of Non-Company Telephones Independent Contractor Misclassification Retaliation In the following claim scenarios, learn how HELPLINE could ve helped companies to make better HR-related decisions and minimize the financial impact to their businesses.

4 2 Claim Scenario 1: Overtime and Use of Non-Company Telephones E-Green Architecture is an award-winning firm in South Florida that specializes in designing green buildings. As a result of new tax breaks incentivizing green buildings, E-Green Architecture saw a dramatic upswing in client engagement for LEED certified commercial projects. However, because of lower margins on these types of projects, E-Green s employees were expected to put in significant overtime in the office to meet client demand. In addition to working extra hours, Neda, the firm s office administrator, who received a salary of $45,000 per year, began to receive reminders and requests for documents on her personal cell phone from E-Green s architects at all hours of the night. At a dinner party one evening, Neda commented about how much more work she had as a result of the growth of green building design. Another guest, a paralegal at an employment law firm, suggested that Neda speak to an attorney because she may be entitled to overtime for her out-of-office work. Neda shrugged off the suggestion at dinner, thinking that as a salaried manager she did not qualify for overtime pay. Later that evening her phone beeped with another text message containing an afterhours request from an architect. Neda had enough. The next morning she consulted with an employment attorney and filed a claim against E-Green for unpaid overtime claiming that she was entitled to pay for work outside of normal business hours as a result of these after-hours calls, s, and text messages. How HELPLINE could have helped E-Green: The HELPLIINE experts would have discussed several critical points with E-Green including: If Neda had been properly classified as non-exempt at the outset, E-Green could ve avoided the unpaid wage claim altogether. Although it appears that Neda consulted an employment attorney without bringing her concerns to E-Green first, had she raised the issue with her employer initially, E-Green could ve received advice in connection with rectifying the misclassification in a manner that minimized the employer s exposure to a subsequent claim. Other key points to talk through with E-Green: Information related to federal exemption criteria to assist the employer in ensuring proper employee classification Detailed summary of federal exemption classifications and identification of any state law distinctions, as well as references to online resources The Financial Impact: E-Green settled with Neda for more than 300 hours of overtime pay to compensate her for hours worked. Settlement amount for her overtime was only $7,000, but E-Green also had to pay her attorney s fees of $24,000. E-Green s own defense costs were $15,000. Total financial impact to E-Green was $46,000.

5 Claim Scenario 2: Independent Contractor Misclassification 3 Gerry, Paul, and Hunter have worked for more than a decade at a Dallas-based design-build firm that specializes in luxury residential projects. All three were excellent workers and had outstanding performance evaluations from both the firm s executives and site foremen. As workers, they performed a variety of tasks for the firm but never received overtime pay because they were classified as independent contractors. The group s tasks included performing manual construction labor that was payable at an hourly rate. The average number of hours worked per group member per week was more than a traditional 40 hour workweek. After noticing a billboard advertising for a plaintiff-side employment attorney, Gerry, Paul, and Hunter decided to file suit claiming that they were willfully misclassified as independent contractors and deserved overtime pay, injunctive relief, restitution for unpaid wages including benefits and bonuses, overtime compensation, liquidated damages, and attorney s fees and costs. How HELPLINE could have helped this firm: The HELPLINE attorneys would have directed the employer to additional resources to ensure that the employer properly classified the workers as either employees or independent contractors, and further could have offered the employer information related to overtime obligations if independent contractor classification was inappropriate and the employees were non-exempt. Other key points to talk through with architecture firm: Criteria for independent contractor versus employee classification Exempt versus non-exempt distinctions if independent contractor status did not apply The Financial Impact: Firm had EPLI, but no coverage for defense costs for wage and hour claims. While the suit against the architecture firm was unsuccessful, the $150,000 cost of defense plus the unexpected soft costs incurred by the firm strained it so much that the firm was nearly forced to file for bankruptcy protection at the end of the litigation.

6 4 Claim Scenario 3: Retaliation A group of ten workers tasked with surveying and inspecting the utility tunnels beneath the United States Capitol complex repeatedly complained to their employer about dangerous working conditions. After years of receiving no substantive response, the group wrote letters to three U.S. Senators and one member of the House of Representatives asking for help. Several members of the group also spoke to the press about the dangerous working conditions and repeated their views in social media such as Twitter and Facebook. In response to the group s letters and public statements, the employer demoted three of the workers and fired five workers, claiming the changes in employment were necessary because of budgetary constraints. The group filed a whistleblower complaint alleging that the employer s actions were taken in retaliation to efforts by the group to report unsafe working conditions. At trial, the evidence showed that the working conditions arguably met OSHA standards, but that the workers had been retaliated against for making good faith complaints. The Financial Impact: The group was not granted an injunction to improve working conditions, but received damages including lost wages, interest, and attorney s fees for a total of $525,000, because of the retaliation. How HELPLINE could have helped this firm: The HELPLINE attorneys would ve pointed out that some of the ten complaining employees were discharged, others were demoted, and yet still others who complained were retained without any disciplinary action. As a result, the employer faced potential exposure to unlawful discrimination claims absent a legitimate, non-discriminatory and non-retaliatory justification for the employer s different treatment among these workers. Attorneys would ve also illuminated the fact that the federal National Labor Relations Act prohibits employers from taking adverse action against employees who act in concert to contest working conditions or otherwise for their mutual aid and protection (even in non-unionized setting). Other key points to talk through with the firm: The potential risks from an employment law standpoint that the employer may have faced if it followed through with its proposed courses of action A warning that any decision to demote, fire or otherwise adversely affect the employees who reported their concerns about working conditions could arguably be construed as unlawfully retaliatory The risk of internal employee relations and morale issues associated with the fact that the employees were treated differently A potential risk of being charged with unfair labor practices (if not vulnerability to a union organizing campaign)

7 Talk to us about your employment practice liability risks. We re here to help. 5 About the XL Catlin Private Commercial Team We specialize in management liability insurance for small and mid-sized companies. Our goal is to help firms build a comprehensive risk management program that addresses both corporate and individual exposures in today s constantly changing business environment. Look to our financial strength and commitment to the market to help your business for the long term. Insurance Products Directors & Officers Management Liability (A-Side/Difference-in-Conditions available) Employment Practices Liability Fiduciary Liability Commercial Crime About Enquiron Headquartered in Boston, Massachusetts, Enquiron provides consultative business solutions to employers in all 50 states, across various industries, sectors and sizes. Since 1996, Enquiron has revolutionized the way that services impacting HR, Employment Law, Healthcare, and more are delivered to and utilized by the everyday business. Enquiron has locations across the United States and is a trusted partner to organizations who need specific answers to specific questions. The information contained herein is intended for informational purposes only. Insurance coverage in any particular case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy, and the facts of each unique situation. No representation is made that any specific insurance coverage would apply in the circumstances outlined herein. Please refer to the individual policy forms for specific coverage details. XL Catlin is the global brand used by XL Group Ltd's (re)insurance subsidiaries. In the US, the insurance companies of XL Group Ltd are: Catlin Indemnity Company, Catlin Insurance Company, Inc., Catlin Specialty Insurance Company, Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Insurance Company of New York, Inc., and XL Specialty Insurance Company. Not all of the insurers do business in all jurisdictions nor is coverage available in all jurisdictions. Information accurate as of September, 2016.

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