If Your Firm Is Sued for Discrimination, Act Fast to Check EEOC Complaint

discrimination-EEOC

Employers that are hit with a discrimination complaint must act fast to compare the allegations in the lawsuit to the earlier complaint the worker filed to the Equal Employment Opportunity Commission.

If the employer can find that the allegations in the complaint filed with the EEOC do not match those in the subsequent lawsuit filed by the worker, it can quickly move to have the case dismissed, but if it waits too long, it loses the chance. That’s according to a U.S. Supreme Court ruling in June 2019.

Under procedural rules, employees filing suit under Title VII Title VII of the Civil Rights Act of 1964 must first file a complaint with the EEOC.

The decision that paved the way for this new procedural rule was a unanimous U.S. Supreme Court ruling in the case of Fort Bend County vs. Lois M. Davis.

The ruling means that employers that are sued for discrimination under Title VII have a limited amount of time to challenge the lawsuit if the allegations differ in any way from the original EEOC complaint. If they act fast, then they stand a good chance of convincing the court to throw out the complaint.

However, if an employer dawdles and waits too long to challenge the case if they find a discrepancy, they may lose the opportunity.

If the employer in this case had acted quickly, it would never have gone to the Supreme Court, legal experts say.

The case details

An IT worker in Texas had reported that her director was sexually harassing her, and after an investigation he was fired. But after that, her supervisors began retaliating by cutting back on her work responsibilities. She filed a charge with the EEOC and, while the charge was pending, she was told to report to work on a Sunday. She refused and went to church instead.

She tried to supplement her allegations and wrote the word “religion” by hand on her EEOC intake questionnaire, but she didn’t change her formal charge document by adding that word.

The case went to trial and was appealed, and then it was sent back to the local U.S. District Court to decide the remaining charge of religious discrimination. The case had been in the courts for three years at that point.

That’s when her former employer asserted that the District Court didn’t have jurisdiction of the case because she had failed to state the claim in her EEOC charge papers. That issue was taken all the way to the Supreme court, which wrote in its decision that an objection to a charge because of a discrepancy may be forfeited “if the party asserting the rule waited too long to raise the point.”

The takeaway

If your organization is the target of a discrimination lawsuit, make sure to check the original EEOC charge for any discrepancies. If there are any, you can consult with your lawyers about filing a motion to have the complaint dismissed.

How to Prepare for Possible PG&E Power Shutdowns

Business Interruption power outage

PG&E has warned California residents and businesses that it may shut down the power grid for as long as five days for large portions of the state when there are high-wind conditions during the dry fire season.

That’s because PG&E’s infrastructure was found to be the cause of several recent California wildfires.

PG&E has sent letters to residents and business in the Central Valley, Bay Area, Sacramento area, Foothills, Northern counties and beyond informing them that “if extreme fire danger conditions threaten a portion of the electric system serving your community, it will be necessary for us to turn off electricity in the interest of public safety.”

With the specter of multiple-day power outages, all businesses need to be prepared for keeping their operations going and preventing losses that may not be covered by insurance. For almost any business today, a loss of power for an extended period of time could destroy its ability to conduct operations.

Just think how difficult it would be if you lost access to your computers, which are the nervous system of any business today. If you have no power, your operations could be shuttered for all intents and purposes.

There a number of steps you can take to make sure your businesses is resilient and can keep functioning during power outages, especially if they last a few days:

Identify business processes that will be significantly affected

Since you have the luxury of knowing in advance that there could be a long-lasting power outage, you can take steps now to identify business processes that will be greatly inconvenienced by the power outage. These processes will differ from business to business, but once you put them all down on paper, it will be easier for you to make a plan to keep those functions going. 

Create a continuity plan

Once you’ve identified those processes, you should brainstorm on how you can keep them going without your typically reliable power supply.

In order to get back to normal operations swiftly, employees should know how to respond to the power outage.

Create a step-by-step list of things, with proper designation to employees in the event of an outage. Set up emergency numbers in sight for employees to call, including your electricity supplier to get an estimate on when power may be restored.

Set up a back-up power system

To make sure you can continue operating, you should consider investing in a back-up generator. With a generator, you can continue to run critical aspects of a small business during a power outage, but they must be operated safely.

Generators need to be used with adequate ventilation to avoid risk of carbon monoxide poisoning. Never plug generators directly into power outlets, as this can injure utility workers. Never use a generator under wet conditions, and always let them cool off before refueling.

Cloud storage and MiFi

If you have not done so, you should secure a means of paperless document and file storage on the cloud. If there is a power outage and an accompanying surge, you could quickly lose your data. Plan ahead with a cloud server.

You should also prepare a system of personal wireless hotspots, or MiFi devices, so that even when the internet goes down, you can finish important tasks requiring web access, such as setting up an e-mail auto-response.

Make a survival kit

Creating an inventory of supplies for times when the power is out can help protect your employees and operations. Consider having on hand:

  • Cash
  • Medical supplies
  • Extra gas
  • Portable phone batteries for devices
  • Water
  • Canned food
  • Flashlights
  • Rope and other basic items.

The kit should be kept in an easy-to-reach place, and employees should be trained on where it is and how to use it.

And invest in business insurance

The best way to minimize the financial blow is to have the proper insurance in place. A multiple-day power outage could really crimp your income stream and, if you lose money due to your inability to operate, the typical business owner’s policy won’t cover lost revenue.

But, a business interruption policy would. These policies will reimburse you for lost revenues due to a number of events, including “service interruption” due to power outages and other utility services interruptions.

The important caveat is that the interruption was not caused by any of your own faulty equipment or wiring. But if the power company is shutting down power, any losses you incur should be a valid claim.

Employee Embezzlement on the Rise – Are You Protected?

A typical organization will lose an estimated 5% of its revenues every year due to fraud, according to a study by the Association of Certified Fraud Examiners.

The median loss among organizations both large and small was $140,000 per occurrence, and more than 20% of embezzlement losses were more than $1 million, the association found.

With those staggering numbers in mind, if you have not already done so, you need to take steps to reduce the possibility of employee theft – and also make sure you are adequately covered if they do steal from you.

Small organizations are especially susceptible to losses from employee embezzlement. These problems are often seen in cash-heavy businesses, or those with large inventories, but employee embezzlement is most frequently experienced in organizations lacking owner oversight of financial processes, usually due to placing far too much trust in employees and having no internal controls.

The new study by the fraud examiners association was released as another study, this one by professional security firm Marquet International, found that arrests and indictments for embezzlements had reached a five-year high in 2012.

Embezzlers are most likely to be a company bookkeeper, accountant or treasurer, who is female, in her 40s, and without a criminal record. The reason it’s more often than not a woman is that they are typically in the three aforementioned jobs.

How do they do it?

Marquet International in its study found that the most common ways of embezzling are:

  • Bogus loan schemes, which include cases in which fraudulent loans are created or authorized by the perpetrator from which funds are taken for their own benefit.
  • Credit card/account fraud cases, which involve the fraudulent or unauthorized creation and/or use of company credit card or credit accounts.
  • Forged/unauthorized check cases, which are those in which company checks are forged or issued without authorization for the benefit of the perpetrator.
  • Fraudulent reimbursement schemes, which include expense report fraud and other cases in which a bogus submission for reimbursement is made by the perpetrator.
  • Inventory/equipment theft schemes, including those cases in which physical corporate assets were stolen and sold or used for the benefit of the employee.
  • Payroll shenanigan cases, including all forms of manipulation of the payroll systems in order for the perpetrator to draw additional income.
  • Theft/conversion of cash receipt cases, which involve the simple taking of cash or checks meant for company receipts and pocketing or converting them for one’s own benefit.
  • Unauthorized electronic funds transfers, including those cases in which wire transfers and other similar transfers of funds are the primary mode of theft.
  • Vendor fraud cases, which include those where either a bogus vendor is created by the perpetrator to misappropriate monies or a real vendor colludes with the perpetrator to siphon funds from the company.

Thwarting embezzlers

Liability insurer Camico suggests that educating employees on the detrimental effects of employee fraud on the organization can reduce the likelihood of embezzlement.

Also, if you implement a regular review of bank and credit card statements, you’ll have a better chance of catching a thief. Company owners should look at the cleared transactions to determine the legitimacy of payees, including examining actual cancelled checks.

Also, it’s easy for transactions to be changed in the accounting system after the fact. An ill-intentioned bookkeeper could use this tactic to cover up their tracks. If you feel you do not have the time or expertise to oversee you finance department, you should contract with a qualified CPA to perform these checks and balances.

There are also inexpensive physical barriers that should be used to deter criminal activity. To protect cash, you can buy a $200 drop-slot safe to securely keep the night’s deposit until it is taken to the bank.

Similarly, security cameras deter misbehavior and can be the source of valuable evidence in case an incident occurs.

Securing coverage

Finally, you should consider taking out a crime insurance policy.

Most business insurance policies either exclude or provide only nominal amounts of coverage for loss of money and securities as well as employee-dishonesty exposures.

But a crime insurance policy protects against loss of money, securities or inventory resulting from crime. Common crime insurance claims include employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud, wire-transfer fraud, and counterfeiting.

Call us to discuss whether a crime policy is right for your company.

Does Business Interruption Insurance Cover Partial Shutdown?

Interruption in the Business Life

What happens if your business suffers property damage or a supply chain disruption and is forced to stop operations either fully or partially? Will your insurance cover the work stoppage or slowdown?

It is important to understand how your insurance can protect you from the resulting financial loss. In addition to potential recovery for property damage from your property/casualty policy, you may be able to recover lost revenue from your business interruption coverage. If your operations are disrupted – completely or partially – the language of your policy will determine if, and for how long, your insurance company will cover the loss.

In the best scenario, your insurance should cover income loss not only when operations are completely shuttered, but also when your business is partially suspended.

Historically, many business interruption provisions required a “necessary suspension” of operations. The problem is that these older policies and forms did not define “suspension” or state whether a complete shutdown was necessary. Courts have wrestled with this issue, and have often come down on the side of a “complete shutdown.”

The precedent in California is the case of Buxbaum vs. AETNA Life & Cas. Co. , which held that a “necessary suspension” of operations “connotes a temporary, but complete, cessation of activity.”

In this case, the court said that business interruption coverage for a law firm was not triggered because there was no complete cessation of operations when evidence showed that its attorneys continued to bill hours following a water damage incident in its offices.

The key here is that if “suspension” is not defined in a policy, the policyholder will likely not recover lost income due to a partial cessation or slowdown of business.

The catch-22 in this type of interpretation is that the business interruption policy will usually include a clause obligating the policyholder to mitigate losses.

Slowdown coverage in new forms

In light of other states’ court decisions that were similar to the California case, the industry has developed new forms that also cover slowdowns.

One such form is the Insurance Service Office-approved “Business Income (and Extra Expense) Coverage Form.” It was updated to define “suspension” as “[t]he slowdown or cessation of your business activities.”

Fortunately, most insurance companies use forms that affirmatively state the policy “shall cover the loss resulting from complete or partial interruption of business.”

If you are renewing your business interruption policy or purchasing a new policy, ask us if the form the insurer uses includes the above language. If not, we can find an insurer that includes such wording.

That specific language can ensure that you get paid for any lost business income due to a partial shutdown of your operations.

Why Your Firm May Need Professional Liability Coverage

A majority of companies are leaving themselves exposed in one crucial area as they take on high-end professional services work.

As more companies’ work is intangible, many firms are missing a critical element of protection for their professional services.

Professional liability insurance in the past was mainly purchased by architects, accountants and lawyers, but with more work like coding, programing and other ventures spawned by technology, the need for this type of protection has grown.

In fact, a recent report by Forbes Insights and The Hanover found that 40% of small business owners believe they face professional risks, yet they have not purchased professional liability coverage as part of their overall insurance package.

Many more firms are in the business of consulting or providing hi-tech services. In addition, the rampant growth of social media has also fueled the need for this type of coverage.

Professional liability insurance, also called errors and omissions insurance (E & O insurance), protects your business if you are sued for negligently performing your services, even if you haven’t made a mistake.

Businesses that need professional services coverage include:

  • Technology and software firms
  • Health, beauty and well-being services
  • Therapists
  • Architects and engineers
  • Real estate agencies
  • Consultants
  • Marketing and advertising firms
  • Medical professionals
  • Wedding and event planners.

Coverage gaps

If you are relying solely on a general liability policy, it may not cover you in the event of a lawsuit over an issue with the services that you have rendered.

Professional liability coverage can be especially important if you have customers who sue you for non-performance of your products or services, or withhold payment due to a contract dispute.

This is especially true if you are:

  • Performing consulting work, training or other services for customers.
  • Involved in work requiring special licenses.
  • Designing, recommending, installing or testing products.
  • Designing software or apps to a client’s specifications.

What it covers

Negligence – Professional liability insurance coverage can protect you and your business against actual or alleged errors and omissions that may occur while providing your professional services.
These claims can include anything from giving incorrect advice or omitting a piece of information, to failing to deliver your service within a desired timeframe.

Legal costs – The policy includes covering your legal costs in defending against a claim. Some insurers will even appoint an attorney to represent you.

Examples

  • A marketing consultant develops a drip e-mail campaign for a retailer that doesn’t generate the number of leads expected.
  • A management consultant develops an organizational strategy to improve communications in a company, but problems persist at the client and communications don’t improve.
  • A software developer fails to develop an app to the client’s specifications.

In all of these examples, a client may sue for damages. And in every instance, a professional liability insurance policy should help protect you and your firm.