Risk Insider: Jack Hampton

Nobody Likes a Bully. Or Do We?

By: | June 24, 2016 • 2 min read
Jack Hampton is a Professor of Business at St. Peter’s University in New Jersey and a former Executive Director of the Risk and Insurance Management Society (RIMS). He was named a Risk Innovator in 2008 by Risk and Insurance®. He can be reached at [email protected]

When I was a kid I had to walk home from school past Kenny’s house.

I sometimes forget my wife’s name, but I never forget his. He was a bully who tortured passers-by. I frequently walked four blocks out of the way to avoid him. Even then, I was engaging in risk management.

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That was my first experience with coercive power. Subsequently, I encountered it in the workplace. Managers forcing employees to follow orders by threatening them with punishment if they did not comply.

The application of force is a big risk management issue. Employees usually can’t sue the boss if they get hurt on the job. However, they can win big judgments for bullying — discrimination, failing to pay earned wages, egregious violations of employee rights.

For the past four months, I have been intrigued by the topic of coercive power. Two people were the focus of my attention: Donald Trump and Paul Bailo.

I hardly need to report many details on Mr. Trump. It has become an evening news ritual to see which person was the target of his bullying.

That’s politics, not the workplace. Coercive power is not the concern of risk managers. Tell that to Paul Bailo.

The application of force is a big risk management issue. Employees usually can’t sue the boss if they get hurt on the job. However, they can win big judgments for bullying — discrimination, failing to pay earned wages, egregious violations of employee rights.

The newly minted Dr. Bailo defended his dissertation and received a Ph.D by writing about bullying in the workplace today. He surveyed 400 MBA candidates grouped into Generation X and Y by birthday, male and female by gender.

All of them said they do not use coercive power with their subordinates and colleagues. Thank goodness. Such behavior is not pretty and it’s risky.

Another finding was disturbing. All four groups said their bosses use it as a tool to drive subordinates to achieve goals.

Further, senior managers tolerate or encourage negative reinforcement. Senior executives seek the glory of making Fortune’s “100 Best Companies to Work For“ list. Do they know what’s going on in their own organizations?

Bailo’s research is not a big surprise to risk managers. They know we need to protect employees from retaliation when they refuse to break laws or report illegal behavior. They keep records of grievances, injuries resulting from unsafe conditions, and discrimination and harassment lawsuits. They strive to reduce bullying incidents.

I do think it’s a wake-up call for senior executives. MBA candidates, male and female, older and younger, uniformly agreed that coercive behavior is alive and well with their bosses and their bosses’ bosses. That’s big news in 2016.

Are we still in 2002 when a jury awarded almost $12 million to an employee who was retaliated against for taking time off under the Family Medical Leave Act to care for his aging parents?

I wonder if senior executives remember Ani Chopourian and all the bullying complaints she filed when she worked as a physician’s assistant.

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Would a jury agree with her employer that she was guilty of professional misconduct, the stated explanation for the reason the hospital fired her and tried to deny her unemployment benefits?

I guess not. In 2012, a jury in Sacramento awarded her $168 million in damages, possibly the largest workplace harassment judgment in U.S. history.

Mr. Trump and Dr. Bailo bring back the memory of Kenny in different ways but they send the same message.  I encourage risk managers to enhance their efforts to wipe out bullying in the workplace.

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Employment Practices

Transgender Challenges

North Carolina's dispute with the federal government over transgender use of bathrooms affects the wider issue of workplace discrimination.
By: | May 31, 2016 • 5 min read
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North Carolina’s dispute with the federal government over transgender use of public bathrooms affects the wider issue of workplace discrimination – and not just in North Carolina.

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While no federal statute expressly states workplace discrimination may be based on sexual orientation or gender identity, U.S. regulators are pushing that interpretation in North Carolina. The federal government also recently mandated that schools must permit transgender students to select the bathroom of their choice, or face the loss of federal funding.

Many state and municipal authorities have passed legislation that prohibits discrimination based on sexual orientation. Transgender protection is a relatively new issue.

“It’s going on everywhere; it’s happening.” — Brian Cafritz, partner, KPMLaw.

Charlotte, N.C. passed an ordinance earlier this year to allow transgender people to select a public bathroom based on the sex they identify with. That was overturned when the state passed a law restricting such a choice.

Employers in all states should take note of these disputes, as companies may face compliance issues as well as potential litigation, experts said.

Brian Cafritz, partner, KPMLaw

Brian Cafritz, partner, KPMLaw

“It’s going on everywhere; it’s happening,” said attorney Brian Cafritz, a partner at KPMLaw in Richmond, Va.

Studies show the transgender population experiences higher rates of discrimination than even gay, lesbian and bisexuals, he said.

It’s not just a bathroom issue. There could also be exposure if a transgender applicant is not hired, a transgender employee is not promoted or if he or she is a victim of some other type of discrimination.

On the federal level, the regulatory push centers on Title VII of the Civil Rights Act of 1964, which makes it illegal to discriminate against an employee based on race, color, religion, national origin or sex.

While Title VII does not specifically address gender identification, it has been interpreted to offer discrimination protection for lesbian, bisexual, gay and transgender (LBGT) employees.

In addition, the Occupational Safety and Health Administration requires employers to make toilet facilities available so that all employees can use them when they need to do so, and the employers cannot impose unreasonable restrictions on the use of those facilities, Cafritz said.

Staying out of Difficulty

Employers should not wait to address this issue until an employee raises a concern, said Todd A. Solomon, a partner at McDermott Will & Emery LLP in Chicago. They should consider revamping employee policies now to set clear guidelines.

Companies also must train employees never to base their decisions on their personal approval or disapproval of an individual’s appearance or beliefs, Cafritz said. All decisions should be based on valid business reasons and not from personal preferences or something unique to the individual.

“Even if your workforce doesn’t have a transgender individual, you should already have voluntary transgender guidelines in place to say, ‘Here’s how we will handle the unique issues facing transgender employees.” — Todd A. Solomon, partner, McDermott Will & Emery LLP

Solomon said that updated employee handbooks and training makes it easier for businesses to stay out of difficulty.

Todd A. Solomon, partner, McDermott Will & Emery LLP

Todd A. Solomon, partner, McDermott Will & Emery LLP

“I think the best advice is to stay ahead of the issue,” Solomon said.

“Even if your workforce doesn’t have a transgender individual, you should already have voluntary transgender guidelines in place to say, ‘Here’s how we will handle the unique issues facing transgender employees.”

It’s more than a matter of words in a handbook, however.

“You can add in ‘sexual orientation’ or ‘gender identity’ to your policy, but it is more a matter of how your existing policy is enforced,” said Carmon Harvey at LeClair Ryan in Philadelphia.

“That is the way you will better position yourself to avoid lawsuits going forward.”

It may not be necessary for employers to specifically address bathroom designations as long as they work in good faith with their employees, Harvey said. She recommended companies have an employment attorney conduct regular audits of policies and then train their human resource personnel and managers on new developments.

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“It almost seems like the politicians may be making a bigger deal of this than the employees in the workplace,” said Harvey.

“I think there’s an easy fix: Communication. When an issue relating to bathroom facilities arises, communicate with all employees to avoid surprises that might cause unease and to ensure that no other gender-identity related harassment is occurring in the workplace.”

Sometimes it’s not practical to build single-use, unisex facilities in every office. In those cases, Cafritz suggested retrofitting stalls in multi-use bathrooms with floor-to-ceiling walls and doors to increase privacy.

‘Novel Area’ of the Law

“Common sense should prevail, but I don’t know what common sense is in all cases,” said Michael Santocki, managing director at Crystal & Company.

“This is a novel area of the law and I think there’s going to be some broken eggs before they figure out how to do it.”

Just being well-intentioned may not be enough to protect employers, because in addition to valid complaints there are always disgruntled and dishonest workers who will file an opportunistic claim.

“It’s impossible to avoid the possibility of the suit,” said Santocki.

“You can’t eliminate all of the risk, even if you have all the proper laws adhered to and the nicest staff.”

There’s always going to be people who will take advantage of the system and unfortunately most cases settle because it is the cheapest resolution, he said.

Employment practices liability insurance policies “are very broad and meant to cover the full gamut of complaints,” Santocki said. And often they are not that expensive; a company with 100-plus employees can get a policy for approximately less than $10,000.

Depending on the size of the company, EPLI can be offered as an endorsement to a business owner’s policy (BOP), a general liability policy, or a specific stand-alone policy can be written in conjunction with a BOP policy.

General liability policies may also be triggered in discrimination claims, Cafritz said.

Employers need to make sure, if any discriminatory conduct occurs, they do not condone or ratify the conduct, Cafritz said. Silence can be seen as ratifying the conduct – and liability can follow ratification.

If an employer fails to take appropriate action, a jury might send a message by issuing a significant penalty based on wages going forward, plus punitive damages and attorney fees, Harvey said.

Last year, the federal government received 1,412 charges that included allegations of sex discrimination related to sexual orientation and/or gender identity/transgender status, according to the U.S. Equal Employment Opportunity Commission.

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This is an increase of about 28 percent over the 1,100 LGBT charges in 2014.  The EEOC resolved 1,135 LGBT charges in 2015, including voluntary agreements involving about $3.3 million for workers, and changes to employer policies so that discrimination would not recur.

“Five years ago, same-sex marriage wasn’t even legal in most states. Now transgender employee rights are going to be a big issue for employers over the next couple of years,” Solomon said. “Changes are happening at lightning speed and it’s interesting to think about how fast this has changed.”

Juliann Walsh is a staff writer at Risk & Insurance. She can be reached at [email protected]
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Sponsored Content by Chubb

Electronic Waste Risks Piling Up

As new electronic devices replace older ones, electronic waste is piling up. Proper e-waste disposal poses complex environmental, regulatory and reputational challenges for risk managers.
By: | July 5, 2016 • 4 min read
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The latest electronic devices today may be obsolete by tomorrow. Outdated electronics pose a rapidly growing problem for risk managers. Telecommunications equipment, computers, printers, copiers, mobile devices and other electronics often contain toxic metals such as mercury and lead. Improper disposal of this electronic waste not only harms the environment, it can lead to heavy fines and reputation-damaging publicity.

Federal and state regulators are increasingly concerned about e-waste. Settlements in improper disposal cases have reached into the millions of dollars. Fines aren’t the only risk. Sensitive data inadvertently left on discarded equipment can lead to data breaches.

To avoid potentially serious claims and legal action, risk managers need to understand the risks of e-waste and to develop a strategy for recycling and disposal that complies with local, state and federal regulations.

The Risks Are Rising

E-waste has been piling up at a rate that’s two to three times faster than any other waste stream, according to U.S Environmental Protection Agency estimates. Any product that contains electronic circuitry can eventually become e-waste, and the range of products with embedded electronics grows every day. Because of the toxic materials involved, special care must be taken in disposing of unwanted equipment. Broken devices can leach hazardous materials into the ground and water, creating health risks on the site and neighboring properties.

Despite the environmental dangers, much of our outdated electronics still end up in landfills. Only about 40 percent of consumer electronics were recycled in 2013, according to the EPA. Yet for every million cellphones that are recycled, the EPA estimates that about 35,000 pounds of copper, 772 pounds of silver, 75 pounds of gold and 33 pounds of palladium can be recovered.

While consumers may bring unwanted electronics to local collection sites, corporations must comply with stringent guidelines. The waste must be disposed of properly using vendors with the requisite expertise, certifications and permits. The risk doesn’t end when e-waste is turned over to a disposal vendor. Liabilities for contamination can extend back from the disposal site to the company that discarded the equipment.

Reuse and Recycle

To cut down on e-waste, more companies are seeking to adapt older equipment for reuse. New products feature designs that make it easier to recycle materials and to remove heavy metals for reuse. These strategies conserve valuable resources, reduce the amount of waste and lessen the amount of new equipment that must be purchased.

Effective risk management should focus on minimizing waste, reusing and recycling electronics, managing disposal and complying with regulations at all levels.

For equipment that cannot be reused, companies should work with a disposal vendor that can make sure that their data is protected and that all the applicable environmental regulations are met. Vendors should present evidence of the required permits and certifications. Companies seeking disposal vendors may want to look for two voluntary certifications: the Responsible Recycling (R2) Standard, and the e-Stewards certification.

The U.S. EPA also provides guidance and technical support for firms seeking to implement best practices for e-waste. Under EPA rules for the disposal of items such as batteries, mercury-containing equipment and lamps, e-waste waste typically falls under the category of “universal waste.”

About half the states have enacted their own e-waste laws, and companies that do business in multiple states may have to comply with varying regulations that cover a wider list of materials. Some materials may require handling as hazardous waste according to federal, state and local requirements. U.S. businesses may also be subject to international treaties.

Developing E-Waste Strategies

Companies of all sizes and in all industries should implement e-waste strategies. Effective risk management should focus on minimizing waste, reusing and recycling electronics, managing disposal and complying with regulations at all levels. That’s a complex task that requires understanding which laws and treaties apply to a particular type of waste, keeping proper records and meeting permitting requirements. As part of their insurance program, companies may want to work with an insurer that offers auditing, training and other risk management services tailored for e-waste.

Insurance is an essential part of e-waste risk management. Premises pollution liability policies can provide coverage for environmental risks on a particular site, including remediation when necessary, as well as for exposures arising from transportation of e-waste and disposal at third-party sites. Companies may want to consider policies that provide coverage for their entire business operations, whether on their own premises or at third-party locations. Firms involved in e-waste management may want to consider contractor’s pollution liability coverage for environmental risks at project sites owned by other entities.

The growing challenges of managing e-waste are not only financial but also reputational. Companies that operate in a sustainable manner lower the risks of pollution and associated liabilities, avoid negative publicity stemming from missteps, while building reputations as responsible environmental stewards. Effective electronic waste management strategies help to protect the environment and the company.

This article is an annotated version of the new Chubb advisory, “Electronic Waste: Managing the Environmental and Regulatory Challenges.” To learn more about how to manage and prioritize e-waste risks, download the full advisory on the Chubb website.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Chubb. The editorial staff of Risk & Insurance had no role in its preparation.




With operations in 54 countries, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients.
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