1st Quarter Insurance Risk Newsletter 2020

Portrait of Jen BishopInterview with Jen Bishop, Human Resources at ChildRoots

 ChildRoots has been a Brown & Brown Northwest employee benefits customer for just over one year.

Tell me a little about ChildRoots.
At ChildRoots, we are educators who believe in a child-led experience. We are all about empowering children and giving them the best start in life. We help children understand their own unique identities and their capacity for self-advocacy so they can develop into who they’re destined to be. In doing so, we strive to be a compassionate, caring organization not just for children, but for the educators we employ.

Because we know how important it is for our employees to feel secure and we understand how hard this work is, we strive to pay the best wages we can and to offer the best benefits we can afford.

How has COVID-19 impacted your facilities?
In the middle of March, we had to close our three schools because we didn’t immediately know how we could provide a safe experience. About a week after closing, we received approval to provide emergency care at one of our schools for children of first responders and other essential workers, which required not only guidance from Oregon’s Office of Child Care, but also the courage and commitment of a handful of employees willing to care for children in the earliest days of this pandemic.

How has COVID-19 impacted your team?
We are all dealing with something none of us have ever experienced, which has required a lot of communication and creativity, especially during our closure. We leaned into team-based check-ins. We hopped on the Zoom train and developed a virtual learning initiative for parents and students feeling a lack of connection with school.

We pride ourselves on being aware of and empathetic to what’s happening with children and employees during the ordinary school day, but with a majority of our employees suddenly isolated at home, we realized very quickly that many were feeling a lot of worry about the virus and also about our company. They were wondering, “Are we still in business? Will I get paid? Will I still have a job?” We had to find new ways to connect – not just to share information but also to engage on an emotional level and to offer reassurance that we intend to be here for them for the long term.

We also ventured into new territory in terms of employee compensation during this pandemic – we enrolled in Work Share, an Oregon Employment Department program that allows employees to receive partial unemployment benefits while working reduced hours, which has had the added benefit of giving employees the opportunity to ease back into work and adjust to all the new cleaning and safety precautions that are part of our new normal.

How has it been to work with Brown & Brown Northwest through COVID-19?
Brown & Brown Northwest feels like a small broker because of the attention we get, but having their national leverage has been extremely valuable. Things like HR support and COVID-related legal counsel are available because it’s a bigger organization, but it still feels really personal.

Throughout COVID-19, we have consistently felt that our broker team is thinking of us and wanting to help us succeed. Whether they’re sharing information and guidance on COVID-related legislation or offering webinars or just asking how we’re doing, I feel like they are truly invested in our success. I know they have our back before I even know we need back-up. I see Brown & Brown Northwest’s commitment to us every time I interact with our broker or account manager because they are so proactive and quick to reach out with suggestions, advice or questions about what we need.

I also feel a real genuineness in their offerings of support. I was hesitant about going with Brown & Brown Northwest because it’s part of a big, national organization, and I was concerned that it would feel like we were being sold to all the time, but I never do. When we ask for help or support from other business service providers, it can seem like they’re seeing it as an opportunity to sell us on things that aren’t in our best interest, but I never feel that way with Brown & Brown Northwest. They always listen thoroughly and carefully and respond with helpful solutions to our actual problems.

Anything else you’d like to share?
I am proud that we work with Brown & Brown Northwest. Every experience I have had with them, from the very first person who reached out to ask if we were interested in changing brokers, has been exceptionally professional and personal. Brown & Brown Northwest has a real, personal connection to our business and we have shared values. I feel that way about every person I’ve talked with at Brown & Brown Northwest – they believe in what we do and want us to be successful, not just because it’s good for their business, but because it’s good for everyone. They want to be part of what we do – not just the people who sell us insurance.

People signing contracts on tableWhat’s New in the Market: Understanding Management Liability and COVID-19

Management liability (also called “executive liability insurance”) has long been a persistent threat for corporations, large and small. In addition to potentially huge litigation damages, expenses and distractions, exposure fears can inhibit decision-making and result in the loss of significant corporate opportunities. All of these concerns have only been amplified by the impacts of COVID-19.

Despite federal legislation aimed at relieving financial burdens on workers and their employers, many businesses face difficult choices – and more complicated record keeping. In addition, times of crisis historically make directors and officers (D&O) more frequent targets of litigation, as plaintiffs scrutinize organizations’ decisions. Generally, D&O allegations tend to fall into three categories: disclosures, particularly for public companies, mismanagement and insolvency. Even when a lawsuit is found to have no merit, organizations still must defend it and those expenses can quickly mount.

D&O liability is not the only management liability coverage being affected by the pandemic.  Several employment practices liability (EPL) risks for businesses can arise from the current coronavirus outbreak. These include: 1) Wage and hour issues, 2) Wrongful termination, 3) Americans with Disabilities Act (ADA) issues, and 4) Third party discrimination.

The marketplace is changing as insurers assess their exposure to COVID-19 claims. Some insurers are adding exclusions relating to pandemics in new and renewal policies, while others have ceased underwriting new business temporarily until the pandemic resolves.

Stressed employees who were laid off due to COVIDRisk Management: Employment Practices Claims Arising Out of COVID-19

As COVID-19 continues to spread throughout the United States, there has been a massive upheaval of the American workplace. Employers have found themselves drafting and implementing policies and procedures addressing a wide array of issues including remote work, layoffs, furloughs, pay cuts and workplace conditions. Not surprisingly, the uncertainty wrought by COVID-19 has left employers at an increased risk of exposure to employment-related claims alleging wrongful termination, discrimination, retaliation and many others.

This article will serve as a guide to the most common potential causes of action related to COVID-19 that may lead to employment-related litigation. As is the case with all inherently legal issues, employers are strongly recommended to seek the guidance of legal counsel when faced with any of the claims discussed herein.

Workplace Health and Safety
There have already been a multitude of safety violation claims filed under the Occupational Safety and Health Act (OSHA) and state equivalents. These safety violations typically allege that an unsafe workplace has caused sickness and/or death due to COVID-19, or that an employer failed to take appropriate measures to reduce COVID-19 exposure and spread within the workplace. Such ‘appropriate measures’ might include failure to provide hand-washing stations, sanitizers, masks or adequate protective gear on location. Other claims have alleged that employees have been unable to practice social distancing due to the nature of their jobs.

Leave Claims (FMLA and FFCRA)
In addition to traditional paid and sick leave, COVID-19 spurred the passing of the Families First Coronavirus Response Act (FFCRA), which includes the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act. The FFCRA requires employers with 500 or fewer employees to give employees expanded paid family and medical leave, and emergency paid sick leave.

Without analyzing the unique provisions of the FFCRA, it must be noted that the Act expressly incorporates existing Family and Medical Leave Act (FMLA) and Fair Labor Standards Act (FLSA) remedies provisions. This means that an employee who is wrongfully denied expanded leave or not paid during the leave will have a cause of action to recover damages (lost wages, salary, benefits and other compensation) or actual monetary losses resulting from the denial of leave (e.g., the costs of child care), with interest. Likewise, employers that fail to comply with the Expanded Paid Sick Leave Act will be made liable to remedy provisions under the FLSA.

To mitigate the potential for a wrongful termination claim, employers should proceed carefully upon receiving employee complaints. Employers should also maintain meticulous records of complaints, the investigation process and the ultimate reasoning behind the termination.

Disclosure of Confidential Information Claims
Because the Centers for Disease Control and Prevention (CDC) and state/local health authorities have acknowledged community spreading of COVID-19 and issued precautions, employers have been allowed to measure employees’ body temperature. However, this newly expanded testing capability exposes the employer to an array of privacy-related issues.

In order to maintain the privacy of COVID-19-related medical documents, the ADA requires that all medical information about a particular employee be stored separately from the employee’s personnel file. An employer may store all medical information related to COVID-19 in existing medical files. This includes an employee’s statement that they have the disease or suspect they have the disease, or the employer’s notes or other documentation from questioning an employee about symptoms.

These are just a few examples of the most common types of claims that may arise as a result of COVID-19. It is imperative that employers are aware of these potential issues and proceed accordingly.

Moving forward, employers should consider the following:
1.Develop a return-to-work plan that contemplates federal and local safety guidance (e.g., CDC, OSHA and state health authorities) on personal protective equipment, workspace hygiene, social distancing measures and many others. Ask your Brown & Brown contact for access to our Return to the Workplace Toolkit to assist in developing yours.
2.Consult with legal counsel when implementing/updating policies and procedures to ensure compliance. Ensure counsel is also present when undergoing recall, rehire and job offers, as this stage is the epicenter for multiple employment-related claims.
3. Ensure that those policies and procedures are implemented in a fair and equal manner.
4. Ensure proper communication to all employees, particularly the line managers who will be responsible for implementation.
5. Maintain the confidentiality of all medical-related information provided by employees in compliance with federal and state guidance.
6. Train managers and supervisors on new policies and procedures drafted in the wake of COVID-19.
7. Regularly monitor new federal, state and local guidance, as well as legislative enactments.

Employees having a video meetingEmployee Benefits: Employee Support is Critical

We understand how challenging the last few months have been for your organization and your employees. To help support your employees and their families, we have created the Brown & Brown Relief Center.

 The Relief Center consolidates discounts on a wide variety of products and services, including:

• Health & Behavioral Health Services
• Family Care & Child Learning
• Financial Wellness Center by Prudential, including financial tools and strategies to help navigate these challenging times
• And much more!

We invite you to share the website – https://bbportlandperks.benefithub.com/ – with current and former employees. They will be asked to create a username and password at the point when they click on a discount. Creating an account is required so frequent users can qualify for cash-back rewards on goods and services they were already planning to purchase.

For more information, please reach out to your BBNW account team.

Man traveling with mask onPersonal Lines: Safe Travel During COVID-19

While many people continue to shelter in place, some have started to venture out again. When looking at travel plans, it’s important to incorporate safety measures we may not be used to considering.

If you travel, the CDC recommends:

• Clean your hands often.
• Avoid touching your eyes, nose, or mouth.

• Avoid close contact with others.
• Keep 6 feet of physical distance from others.
• Wear a cloth face covering in public.
• Cover coughs and sneezes.
• Pick up food at drive-throughs, curbside restaurant service, or stores.

There’s also a heightened importance to anticipate your travel needs:

• Bring enough of your medicine to last you for the entire trip.
• Pack enough alcohol-based hand sanitizer (at least 60% alcohol) and keep it within easy to reach.
• Bring a cloth face covering to wear in public places.
• Prepare food and water for your trip. Pack non-perishable food in case restaurants and stores are closed.
• Take steps to protect yourself from COVID-19 when booking accommodations or planning an overnight stay.
• If you are considering cleaning your travel lodgings, see CDC’s guidance on how to clean and disinfect.

And don’t forget to follow state and local travel restrictions. For up-to-date information and travel guidance, check the state or local health department where you are, along your route, and at your planned destination. While you are traveling, it is possible a state or local government may put into place travel restrictions, such as stay-at-home or shelter-in-place orders, mandated quarantines upon arrival, or even state border closures. Plan to keep checking for updates as you travel.

Indemity Agreement papers on tableSurety: An Inner Monologue (Pt. 2) – Indemnity Agreements

Catch up with An Inner Monologue (Pt. 1) part one here.

Alright, surety isn’t insurance, I get that. But they sound very similar…
You’re not wrong – they are essentially cousins. The surety guarantees to the obligee that money is available to cover damages where the principal is at fault, so if there is a claim the surety will pay like insurance. But where surety differs (again) from insurance is that the principal must pay back those losses incurred by the surety. The principal is required to pay back those losses as stipulated in the Indemnity Agreement. 

What is this “magical” Indemnity Agreement?
Take notes, this is the good stuff. An indemnity agreement is a contract between the principal and the surety company. This contract shifts the risk from the surety to the principal. An indemnity agreement is required to be signed prior to the issuance of a bond so in the process of settling a possible claim, the surety can guarantee the principal is responsible for repaying money paid by the surety to the obligee.

Because the bond guarantees to the obligee that money is available, the bond acts similarly to a line of credit in that the principal does not have to set aside their own money in case of a claim. The surety will do it for them and cover the cost of a claim upfront, but the principal must then pay them back, and it is the indemnity agreement that ensures this will be done.

You said it needs to be signed. Who signs it?
This varies based off many factors, but generally:
1.  A C-suite level or owner must sign for the business itself. That means the president, CEO or anyone with the authority to indemnify the company.
2.  The sum of individuals with at least 50% ownership are required to sign individually. In other words, if there are three equal owners, at least two have to sign individually. If there are four equal owners, at least three have to sign (greater than 50%).
3.  Spouses of the individuals signing.

This list isn’t exhaustive or an every-case rule, just a general guideline.

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