Smart Business spoke with Phil Scott of Sequent Retirement and Benefits Group about trends for plan sponsors.
What are some areas of growing interest and focus for plan sponsors?
One area that continues to be explored is automatic contribution enrollment and automatic contribution increases as ways to boost participation.
By providing better education and communication platforms, plan sponsors are enabling employee participants to be more prepared for their retirement.
Finally, plan sponsors are continuing to keep a close watch on their administrative duties and regulatory requirements.
What are plan sponsors doing to help protect themselves and manage fiduciary risk?
They have leaned on third-party administrators, recordkeepers, investment advisors and legal counsel to identify their responsibilities to maintain plan compliance.
Companies that have embraced outsourcing elsewhere in their organizations have also outsourced segments of their retirement plans to 401(k) fiduciaries. That can be 3(38) investment advisors, who assume responsibility for monitoring, maintaining, selecting and removing investment plan options; or 3(16) advisors, who accept responsibility for plan administrative functions.
Some plan sponsors have adopted or explored the option of joining a 413(c) multiple employer plan. The multiple employer plan option provides an alternative for companies seeking relief from the burdens of independently operating and maintaining their own plan.
How do safe harbor plan designs create advantages?
One great advantage for participants is that all employer matching and non-elective contributions vest at 100 percent immediately. Also, all participants, whether they’re considered highly compensated or non-highly compensated, are allowed to maximize their elective deferral limits. Elective deferral limits, set by the IRS in 2014, are $17,500 for those age 49 or under and $23,000 for those age 50 or older.
Without safe harbor protection, highly compensated participants would only be able to defer approximately 1.5 to 2 percent more than the average contribution of the non-highly compensated group.
From a plan sponsor perspective, safe harbor plan designs are great tools for recruitment and retention of top talent. In addition, the IRS permits a safe harbor plan to be top-heavy, meaning that 60 percent or more of plan assets are attributable to key employees: an officer of the organization, whose annual compensation exceeds $170,000; any employee, who owns more than 5 percent of the company, or owns more than 1 percent and has an annual compensation exceeding $150,000.
What are the implications if a plan is deemed top-heavy?
The plan must meet minimum contribution and vesting requirements for non-key employees for each year the plan is top-heavy. The minimum contribution to bring the plan back into compliance is the lesser of 3 percent of annual compensation for all non-key employees or a percentage equal to the highest percentage contribution of any key employee. Top-heavy penalties are painful infractions, which plan sponsors are able to avoid when utilizing safe harbor as a strategy within their compensation and benefits package. ●
Phil Scott has over two decades of experience in the financial services industry. He is a registered representative with LPL Financial and investment advisor representative with Advantage Investment Management.
This information is provided as a courtesy and should not be considered specific advice or recommendations for any individual. Please consult your tax professional before taking any specific action. LPL Financial nor Advantage Investment Management are engaged in the rendering of tax or legal advice.
Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Advantage Investment Management, a Registered Investment Advisor and separate entity from LPL Financial.
Insights HR Outsourcing is brought to you by Sequent
Health care used to be one of the more scrutinized types of insurance, but that’s no longer part of the landscape.
Under the Affordable Care Act (ACA), the only criteria that determines price for small group health insurance is date of birth, zip code and whether you smoke or not — making it one of the few insurances where risk isn’t really considered, says Pete Seminaroti, vice president of the Healthcare Division at SeibertKeck Insurance Agency.
But even in the ACA era most business owners need a competitive health plan.
“Why do employers provide benefits? Not only to retain the employees they have, but also to entice a strong candidate as a new employee. Employees look beyond wages to health benefits,” Seminaroti says. “Benefits are important to retain and hire good people, and that still overshadows the other issues.”
Smart Business spoke with Seminaroti about trends in Ohio health insurance.
Who needs to buy health insurance?
Practically everyone needs to purchase insurance, either as an individual or group. If your employer doesn’t provide coverage, you need to enroll for an individual plan.
As business owners, the ACA has changed the rules for providing coverage. If you employ two to 49 full-time equivalent employees, you aren’t required to provide insurance as a small business. If you have 50 to 99 employees, you are considered a large group and need to provide insurance by 2016. Those with 100 or more employees must provide insurance by 2015. Failure to comply will result in government penalties.
What are the biggest factors to consider when purchasing health coverage?
Obviously, pricing drives most things, when we make a purchase privately or corporately.
Another large factor is the benefits structure. More than ever business owners want to ensure their network of providers, doctors, hospitals and medical facilities is strong. The insurance options have narrowed in the small group market; before, you might have had 50 to 70 choices, and now, it’s been simplified to about a dozen.
An owner also wants to go with a quality company that processes claims efficiently, with few errors. Typically the industry has done a good job of that. When you consider how many claims are processed daily, the number that go awry is minimal.
Finding the right insurance is easier when business owners can draw from their health care adviser’s knowledge. This ensures the owner has their choice of plans with the proper coverage and good network at a price within their budget.
With limited underwriting, are prices rising more than usual? Wasn’t Ohio projected to face large increases?
Over the past couple of years, there was a lot of that going around — Ohio was projected to increase anywhere from 40 to 80 percent.
In truth, some rates have gone up significantly, while other small groups have benefited from the ACA. An increase or decrease can highly depend on your small group’s makeup. In the past, if you had a group with high utilization, you were forced to stay with the same carrier for multiple years and your rates would increase. Now, that same group cannot be penalized because risk is no longer a factor.
What other tools are available to help?
In Ohio, we have a co-op that’s starting to bid out to small groups. It’s supposed to cost 10 to 15 percent less because it has eliminated the top layers of an insurance company. The co-op is run by a board of trustees comprised of the companies that have plans with that co-op. It will be interesting to see how the first year goes. If it’s successful, more co-ops may start.
There has been more interest in certain levels of self-funding. The self-funding industry came out with new structures that don’t expose employers to as much risk. It’s also a way to avoid some of the ACA taxes.
The health care insurance environment will continue to change over the next five years, and having a knowledgeable agent will be crucial in navigating the best course of action. Currently, most businesses still need to offer health insurance, and many employees, given the choice, would prefer for their employer to pick the health plan. Working with your trusted health care adviser, you can create a plan that will work for both the company and offer solutions for the employees. ●
Insights Business Insurance is brought to you by SeibertKeck
It can be more than a full-time job to keep up with technology as it evolves, and smaller and midsize entities that tend not to have dedicated technology staff can face even more acute challenges.
So many changes occur, it’s hard to know what’s available, says Paul Karlin, M. Ed., director of Education Technology & Services at Blue Technologies Smart Solutions. Also, you must train staff and invest in maintenance to keep technology from sitting around unused or broken.
At the same time, organizations need to continually budget for change.
“They’ll say, ‘OK, we’re done. We’ve got a great network and computers,’” Karlin says. “They don’t realize that it’s going to be three, four or five years, and then they have to do it all over again. It’s an ongoing need that has to be budgeted for every year.”
Smart Business spoke with Karlin, who helps schools integrate technology into classrooms and buildings, about how all entities can stay on top of technology needs.
How are schools and classrooms using technology today?
Schools like any organization use technology to conduct business — from keeping track of attendance and grades to payroll, accounts receivable, marketing and communication. And like the corporate world, the right technology maximizes efficiency and employee productivity, while reducing costs.
In addition, whether your classroom is in the educational world or corporate America, technology can improve learning. It’s a vehicle for direct instruction, such as Internet research, educational software or apps. Another use is assessment. In schools, based upon Common Core Standards, groups of states are adopting national tests given on computers, driving schools to update bandwidth.
Technology also is used as a tool to solve problems, create things and be more productive. This higher-level learning, when educating students or employees, isn’t just reading material and taking a test. For example, when learning about global warming, a science teacher challenges students to come up with energy-saving devices, using computer modeling and 3-D printers to develop prototypes. It goes beyond comprehension to becoming part of the dialog of how to make the world better.
What do you recommend as the way to best keep up with technology changes?
There are two overarching strategies. Entities can invest in their own technology staff. If they are large enough and have the resources, it’s a good way to go. But the technology field is very competitive, with IT people moving from job to job. If your key tech person puts in his or her two-week notice, it can leave you scrambling.
The other strategy is to build technology partnerships. Your technology partner can use proven business practices, which in IT includes monitoring, providing a help desk, having disaster recovery, ticketing systems to track problems, etc. You don’t have to worry about retention, and there’s no knowledge gap. You’ll get regular updates on what’s working, what’s not and what’s coming to help inform your decision-making.
Technology partners usually don’t just consult; they deliver products, and provide equipment, services and training. Their middle name has to be accountability, because if they don’t get it done, they aren’t going to be around anymore.
How can organizations prioritize updates or new technology?
The latest technology fad shouldn’t drive updates. For example, organizations are implementing one-to-one computing, where there’s a computer for every person. But if that takes too much attention away from instructors in an educational setting, it may not be a good fit. First, understand organizational goals and needs, and then match those to updates or new technologies.
Consider how to improve efficiency and reduce costs. You may save money by introducing a new technology like server virtualization — five servers function as 20, via software, to reduce support and energy costs. Also, determine if introducing a software package or process will save time or allow staff to focus on their core roles.
Whether it’s technology change or any other change, don’t jump on the bandwagon. Start with the need, problem and/or goal before you come up with solutions. Technology is not going to fix everything; it’s just a piece of the answer. ●
Insights Technology is brought to you by Blue Technologies
More Ohio employers are becoming financially stable after the Great Recession. These same business owners are earning high compensation and looking for additional ways to defer taxes. This has led to an increase in companies desiring to start a 401(k) plan.
The 401(k) plan is not only good for retention and recruiting, it’s also a great way to lower taxable income. Plans today are a good blend of benefiting both rank-and-file and highly compensated employees.
“However, when designing the plan, a big pitfall is when an employer doesn’t understand the provisions and how to operate the plan going forward — that can get plan sponsors into a lot of trouble,” says Heather Taylor, QKA, QPA, Manager, Sales and Business Consulting, at Tegrit Group. “Sponsors must stay engaged after the plan is implemented. It’s not just quickly scanning the document and signing. You really need to understand it, because the biggest risk is not operating a plan the way it’s written.”
Smart Business spoke with Taylor about what to know when setting up a 401(k) plan.
What common mistakes do you see when plan sponsors set up 401(k) plans?
Plan sponsors should consult with a third-party administrator (TPA) or consultant to identify a plan design that meets the company’s needs. Too often, providers put plan sponsors in a design that may be easy to administer but does not necessarily meet their goals and objectives. Don’t let a provider put your plan into a ‘box’ to make their job easier. If someone isn’t taking the time to sit down and talk through what you want to accomplish in detail, it’s a sign they may not implement the right plan for you.
Remember to take advantage of annual tax credits. Companies with fewer than 100 employees starting their first qualified plan are eligible to receive up to a $500 tax credit each year for the next three years to offset start-up and installation costs. Employer contributions may be deductible as well.
During the start-up process, don’t rush. Why would you want to offer a bad 401(k)? Ask lots of questions and take time to understand the plan’s limits, testing, reporting and required disclosure notices.
Be sure to give a complete picture of your organization, including discussing other entities you own or plans to acquire or merge with other companies. The more information you provide, the better. You may not think it’s important, but let the experts decide if it’s relevant. For example, controlled group and affiliated service group testing is complex. Your TPA will need to determine if employees at the holding company or other organizations you own (if you are above certain ownership percentage thresholds) must be included in the plan.
What’s key to know about employer contributions?
If you’re setting up a safe harbor plan, employer contributions are mandatory. Take a survey to see which staff will make contributions to get an idea of what your obligation is going to be. In contrast, many traditional 401(k) plans have a discretionary match or discretionary profit sharing contribution, which isn’t required every year.
Safe harbor plans are more common today. They allow highly compensated employees to put away maximum contributions without plan testing. It doesn’t bypass all testing, but is a good option if you’re concerned about discrimination.
Once the plan is set up, what’s next?
You can rely on the experts to perform the above functions, but review the plan regularly. Be aware of and adhere to:
- Not giving participants investment advice.
- Timely deposits. For plans with less than 100 participants, the employee deferral deposit time frame is seven business days from the time the payroll is effectively segregated from corporate assets.
- ERISA fidelity bond coverage. Persons handling plan funds or other plan property generally must be covered by a fidelity bond to protect the plan against loss resulting from fraud and dishonesty.
- Compliance requirements to avoid penalties and fees.
- Maintaining updated salary deferral and beneficiary designation information.
You’re also obligated to ensure employees who have satisfied eligibility requirements are given the opportunity to participate by the effective date of the elective deferral component. Failure to do so can be costly in terms of lost earnings and penalties. ●
Insights Retirement Planning Services is brought to you by Tegrit Group
The nation is officially in the midst of economic recovery, albeit without the substantial job growth we had all hoped for.
Those that stayed in business throughout the “Great Recession” likely survived by adopting lean practices and “Six-Sigma’d” their business to the ultimate in efficiency. The problem in continuing with the efficiency approach is that most companies have reached the point of diminishing returns.
So what now? Where do you grow from here?
The answer is simple: Think like a startup. Consider developing a product that addresses an unmet need. That may sound easier said than done, but 2014 may be the year for your company to think about an investment in new product development.
This approach is a true means of providing the wealth creation and job growth that your business wants and our economy needs.
As the CEO of one of the longest-running business incubators in the country, I have the privilege of working with startup companies poised to disrupt markets with innovative technology. These companies are creating jobs, changing the way we do things and are positioned for exponential growth. “Veteran” companies can do this as well, likely without the excruciating task and wealth-diluting exercise of convincing angel or venture capital groups to invest.
Spending resources, however, on anything more than incremental product improvement may be new for many businesses. Acting this way would mean spending money on a venture that may not see a return, which can be scary.
Mind of a startup
The trick to thinking like a startup is to view your new initiative through the eyes of an investor. Equity capital investors are champions of taking risks, but they are even more proficiently skilled at mitigating risk. They manage risk by thorough evaluation and diligence, and also by building a portfolio of investments that allow for some failure.
So long as their “winners” cover the less successful ventures, returns can be lucrative. Successful companies today may take the same approach by managing a portfolio of new product ventures and finding ways to wring the risk out of each.
Tips for reducing risk
Develop a compelling case for your product: Learn why your target customers are suffering without your new product. Understand how your product can offer them relief and why your product is the only option to provide that relief.
Make it real: Talk to your customers — lots of them. Confirm that the product you envision would really solve their problem. Research your competition to see if others are developing similar solutions. Find out if your customers would be willing to invest time/resources to help you develop your new product. If so, this is a good sign you are on to something.
Monetize: Create a detailed assessment of your customers’ comprehensive costs with and without your new product. Make sure the gap is a healthy multiple of what you plan to charge for your product.
Protect your idea: Make sure you have adequate barriers in place to protect your intellectual property or trade secrets.
Hedge your bets: Diversify your portfolio with two or more development efforts. Even if you are not a statistician, it is easy to see that betting on the success of one of three ventures that each has a 75 percent chance of succeeding is a smart risk.
By thinking like a startup and evaluating your ventures like a professional investor, you can build a portfolio of wealth and job creating products while smartly managing the risk. The only difference is that you don’t have to work out of your garage. ●
Anthony Margida is chief executive officer of the Akron Global Business Accelerator, a National Business Incubator Association Innovation Award winner. AGBA currently serves 38 technology-based startups and has created 640 jobs for Northeastern Ohio in the last five years. For more information, visit www.akronaccelerator.com.
Through the recent uncertain economic times, we have all had to adjust our budgets and personal spending choices. As a marketer, I can say that the mentality that has been applied to personal spending has also been present in the executive suite. Businesses are making calculated choices as they budget for marketing expenditures.
We have advised many clients to take advantage of today’s business climate by trying to steal market share from competition that has become passive and is relying on past success to fuel future business projections. In fact, now is a great time to recharge your marketing!
The world has changed and the economy is starting to move forward. Many of your competitors are still resting on their heels, reluctant to change their marketing due to a lack of funding or understanding.
It’s time to take advantage of your competition’s inability to change. Try something new that connects with your customers in a relevant, meaningful way. Get your customers involved by asking them to write reviews, send photos or videos, attend live events and advocate for your brand.
The reality is that the price to participate and implement some of these common marketing tactics is lower than it has been for years, while the cost of doing nothing will leave you further behind.
Major players like Google have shifted to a “mobile first” strategy as smartphone sales have outpaced desktop computers. Therefore, digital marketing needs to consider responsive designs that automatically adjust sizes to fit on various mobile and tablet screens.
And it’s not just the technology that has changed … consumers are rejecting the outdated transactional marketing (i.e., buy now!) in favor of a more relational form of marketing.
Traditional marketing consisted of developing messages that “spoke at” consumers. Successful marketers are embracing technologies that “speak with” customers and engage them in a way that gets them talking about a company or brand. This word-of-mouth approach is built on an understanding of what your customers are willing to do to advocate for your brand in social media.
Today you can easily engage your customers because the marketing landscape has changed dramatically over the past few years with the introduction of new technologies and media options not available or proven two or three years ago.
Social, mobile and local tools are now available to help you connect with potential customers in a more dynamic way, targeting them by geography and behaviors. More importantly, these new tools allow you to measure your message’s effectiveness and gain feedback instantly.
Adopt a strategy
That’s why every business needs a social media strategy to take advantage of new opportunities and manage reputation management risks. Even if you don’t plan to participate in social media, you at least need to actively monitor your industry and what people are saying about your brand.
In the past, digital and online may have been a small part of the budget, but not today. It should be considered first and become heavily integrated with everything you are implementing.
The economy, marketing technology options and consumer mindsets are better than ever.
Now is the time to explore and see how these new media options can factor into your existing marketing efforts. ●
Kevin Kinsley is vice president/client development for Hitchcock, Fleming and Associates Inc. The son of a custom home builder and an avid DIYer, Kinsely likes to build things. So he understands the relevance of a strong foundation when building solid client strategy, campaigns and programs. Contact him at (888) 376-7601 or firstname.lastname@example.org. For more information, visit www.teamhfa.com.
During the past 15 years as an entrepreneur, I’ve had the opportunity to meet and know people who have helped me immensely along the way. But my first opportunity for learning how to lead an organization from good to great came when I was a senior captain for Larry Kehres, the recently retired, and legendary, football coach at the University of Mount Union.
I played football at Mount Union under Kehres, known to his former players as LK, in the early years of the school’s dynasty. When LK retired as the head football coach at Mount Union, he left with the winningest record in college football history — 332-24-3 over a 27-year period. Amazingly, that’s an average of less than one loss per year during his entire career.
He won 11 national titles and has the record for most consecutive wins — 55 — in NCAA history. Even more astounding, is that prior to reeling off 55 straight wins from 2000 to 2003, his Purple Raiders won 54 straight games from 1996 to 1999. For those with a calculator handy, that’s a 109-1 record for eight seasons. His record speaks for itself, but there is no doubt in the minds of those who follow Mount Union that he is the greatest coach in college football history.
I learned a lot from LK, but in regards to entrepreneurship, he taught me the importance of discipline, persistence, focusing on the details and having a passion for greatness. As Jim Collins, the author of “Good to Great,” said, “A culture of discipline is not a principle of business, it is a principle of greatness. Get the right people on the bus, the wrong people off the bus, and the right people in the right seats. The best people don’t need to be managed. Guided, taught, led — yes. But not tightly managed.”
I saw that firsthand with LK’s leadership skills. Having great people, in the right positions, and all headed in the same direction is what gives your organization an opportunity to achieve greatness. I often say that Tom Brady is a great NFL quarterback, but would be a crummy offensive guard.
Accountability is essential
Leaders put their people in the right positions, hold them accountable and keep them headed in the same direction. LK made sure all these criteria were met with his teams. Being good was simply not good enough. You had to have the discipline to be great. As Collins put it so well, “Good is the enemy of great.” He must have interviewed LK for his book.
Collins’ Level 5 leaders differentiate themselves from other leaders in that they have a blend of personal humility and extraordinary professional will. Having great people might make your organization good, but without the right leadership you will not become great.
As Collins said, “The vast majority of organizations never become great, precisely because the vast majority become quite good — and that is the main problem.” Just like most football teams. Except for those coached by LK. ●
Michael Jarrett is the founder and president of Jarrett Logistics Systems and PackShip USA in Orrville. Both companies have won numerous growth awards multiple times, including the Weatherhead 100, Cascade Capital Growth Award, INC 500/5000, The Entrepreneurial Edge Award and the NEO Success Award. He can be reached at email@example.com. For more information, visit www.jarrettlogistics.com.
Regardless of its size or sector a company works within, all businesses have certain common threads. For instance, the need to communicate effectively and efficiently — both internally and externally — is something every business deals with. However, it’s also important to note that every business has a unique communication DNA. A phone system that works for one company might not make sense for another.
“Every business is different,” says Alex Desberg, sales and marketing director at Ohio.net. “They shouldn’t be shoehorned into an off-the-shelf phone solution.”
Smart Business spoke with Desberg about the importance of customization, and how VoIP can be tailored to serve various industries.
How can VoIP be designed to fit different markets that have different needs?
Different industry segments have characteristics that are only seen within that space. By deploying a customized VoIP system, a company can gain advantages from certain functions that are designed to fit that industry’s specific needs. It’s important to avoid trying to fit a square peg into a round hole.
How can VoIP be tailored to serve the manufacturing sector?
Manufacturing facilities typically have two different components. First is the headquarters, which serves as the hub of communications and houses accounting, sales and administrative personnel. The sales team, which generally uses headquarters as their home-base, need a phone system that can help them keep in touch with their main facility while they’re out pounding the pavement. Then there are remote manufacturing and warehouse facilities that are often spread throughout the country or world. Not only is there a need for fluid communication at the administrative level, but the remote facilities must also be able to correspond effortlessly with headquarters. A VoIP system can be tailored to meet the disparate needs of a manufacturing facility, enabling that facility to become more accessible, and ultimately, more efficient.
How can VoIP support the needs of CPAs and financial institutions?
Typically, in these types of businesses, the staff are housed in a single location. If there are multiple locations, the phone needs are often identical. Employees are usually on the phone a good part of the day and there is a need for continual customer contact. The basic administrative functions are the most important components for such businesses. Because the workforce is stationary, there is rarely a need for remote or mobile applications.
How can VoIP streamline calls for the medical sector?
Most small to midsize doctor’s offices are structured so that during the day inbound calls go through a receptionist. During the evening, medical practitioners utilize absentee services where callers are redirected through phone numbers that lead to on-call personnel or forwarded to hospitals in the case of emergencies. A VoIP system can redirect, or triage, phone calls as needed.
How can VoIP allow a virtual company to appear as if they are well grounded?
More and more companies are shedding their brick and mortar locations in favor of having their employees work remotely. By having a front-end VoIP configuration, organizations can present a unified communications system that will give the appearance of a solid business. Functions like call forwarding, voice mail and conference calling are available so employees can stay connected without being tied to an office. Also, VoIP can eliminate the need for companies to utilize traditional phone lines and equipment, so overall cost savings and service enhancements can be significant. ●
Alex Desberg is sales and marketing director at Ohio.net. Reach him at firstname.lastname@example.org.
Insights Telecommunications is brought to you by Ohio.net
In recent years there has been an increase in the number of claims filed against employers arising out of employment practice disputes. Many claims have no legal basis, but employers are still forced to defend themselves — spending time and money.
“Businesses are more likely to have an employment practices claim than a property claim,” says Shelley White, assistant vice president at SeibertKeck. “There are over 100,000 charges filed annually against employers under statutes imposed by the Equal Employment Opportunity Commission (EEOC). The majority of these claims target smaller businesses. However, no business is exempt.”
Smart Business spoke with White about understanding employment practices liability coverage.
What’s important to know about employment practice claims?
Employment law has grown at an incredible pace since passage of the Civil Rights Act of 1991 and the Age Discrimination in Employment Act, among others. Ambiguities in these laws allow the widest possible interpretation, which in turn opens the door for litigation.
The most frequent types of claims made against an employer are discrimination, sexual harassment, wrongful termination and retaliation. There’s also been an uptick in wage and hour lawsuits. Claims can come from potential hires, former and current employees, clients, suppliers or vendors.
Discrimination can be defined as the termination of an employee, demotion, refusal to hire or promote due to race, color, religion, age, sex, physical or mental disabilities or handicaps, pregnancy or national origin. Think about the times you or someone in the office told an off-color or racy joke to a new employee or client. It’s only a matter of time until this comes back as a claim.
The average claim costs an employer $50,000, and defense costs represent about two-thirds of the total settlement. Without a mechanism to transfer risk, these costs could cripple smaller businesses, or at least damage their reputation. For larger businesses, one uninsured claim can lead to potential shareholder lawsuits.
How does employment practices liability coverage mitigate this risk?
Businesses can purchase a policy that provides coverage for a wide spectrum of employment-related claims and offers risk management services to help minimize the risk of getting sued. This policy protects the corporation, directors and officers, employees (including leased and temporary), volunteers, and in some cases can be endorsed to include independent contractors (when working for the employer).
The definition of a claim includes arbitration, regulatory and administrative proceedings, and EEOC and Department of Labor investigations.
Limits can range from $500,000 up to $10 million or higher. As your business assets grow, so should your limits. Settlement costs and legal fees are typically included in the policy limits. However, some carriers will provide separate limits for these costs.
It’s important, however, to be aware of the varying contracts and differences in coverage and exclusions from one policy to another. There is no standard form. Sitting down with your trusted insurance adviser will help with this process.
Beyond buying insurance, what preventive measures lower claim risk?
Minimize the possibility of costly claims by:
- Creating an employee handbook detailing company policies and procedures.
- Educating employees on sexual harassment and discrimination, and offering sensitivity training.
- Establishing a procedure for handling employee complaints.
- Developing job descriptions with clear expectations of skills and performance.
- Conducting periodic performance reviews.
- Creating an effective record-keeping system to document employee issues, and what was done to resolve them.
- Instituting at-will employment.
- Implementing procedures for hiring, firing and disciplining employees.
Many carriers offer free risk management services. Online resources provide best practices training modules for addressing sexual harassment, discrimination, investigations and termination, while providing links to HR websites. ●
Shelley White is assistant vice president at SeibertKeck. Reach her at (330) 865-6582 or email@example.com.
Insights Business Insurance is brought to you by SeibertKeck