Matt McClellan

New rules under the Americans with Disabilities Act Amendments Act (ADAAA) have significantly changed the workplace for dealing with individuals with disabilities.

The Amendments Act was enacted in 2008 to adopt a broader interpretation of the definition of ‘disability.’ Then, on March 25, 2011, the U.S. Equal Employment Opportunity Commission issued final regulations to the Amendments Act that expanded the definition even further.

“Employers should prepare for more ADA agency charges and complaints, as well as more complicated and costly litigation,” says Donna Geary, partner with Jackson Lewis LLP. “Employers must be ready to defend that their employment actions were legitimate and nondiscriminatory.”

Smart Business spoke with Geary about how the new regulations will affect employers and what litigation to expect in the future.

How will the changes impact ADA litigation?

The EEOC anticipates that the ADAAA, including its broader interpretation of ‘disability’ under the act, will result in an increase in the number of EEOC charges and lawsuits filed. In particular, the commission anticipates that more individuals with disabilities might file charges.

More employees are going to be covered by the Amendments Act than were previously covered by the old ADA. Before, if an employee went to human resources and said, ‘I have a back problem today,’ the HR people might think, ‘That does not sound like a disability to me.’ That was usually the end of it, because it was somewhat difficult to qualify as an individual with a disability under the ADA.

Now, it is much easier. Congress did not change the definition of disability; the definition is exactly the same. The way it is interpreted has changed.

How has the interpretation changed?

Previously, to consider if an individual was disabled, the individual was viewed in his or her corrected state. For example, if an employee has a leg amputation below the knee and has a prosthesis permitting him or her to easily walk, then that person was not substantially limited in a major life activity and was not considered disabled.

Under the amended ADA, Congress requires that the individual is now viewed in an uncorrected state. So if you take away the prosthesis, that person cannot walk and has a substantial limitation of a major life activity — walking — and is most likely considered disabled under the law.

As a result, many more employees will now be considered as disabled. Before, those people could not get past the initial part of the definition of disability. Now, most individuals with a medical, physical, or mental impairment will get past it. As a result, most claims will hinge on the ‘reasonable accommodation’ part of the ADA. Employers have to determine if there is a reasonable accommodation or job modification that permits the employee to do the job without causing the employer an undue hardship. Employers rarely got to that before, because most employees could not meet the definition of disability.

How will these regulations impact employers?

Employers should prepare for a large number of ‘reasonable accommodation’ cases, in which an employee must have an actual disability or record of a disability that substantially limits one or more major life activities.

If an employee has a doctor’s note saying he or she cannot lift heavy weight and lifting is part of the job, you might think the employee cannot do the job anymore. That is not true.

The employer needs to engage in what is termed the ‘interactive process.’ It is a legal requirement to engage in this process with the employee and the employee’s physician to determine if there is anything that can be done to modify the job so the employee can do it. If the employer cannot modify that job, are there other jobs the employee is qualified for where lifting heavy weight is not necessary?

It does not mean we have to do what the employee wants. What it means is the employer needs to review the situation and determine if there is something that can be done that does not cause the employer an ‘undue hardship.’

If employers do not engage in the interactive process, they will be found in violation of the statute. But as an employer, you do not have to lower quality or quantity standards.

For example, if a salesperson who sold 1,000 units last year only sold 500 units this year because of multiple sclerosis, and you do not want to set 500 units as the new standard, you do not have to make that accommodation. But you do have to look for a way to help that salesperson get to 1,000 units.

Where is the line between reasonable accommodations and undue hardship?

A reasonable accommodation can include changing the work schedule. If an employee has trouble coming in at 7 a.m. because he or she is groggy or stiff because of a medication, that person could come in at 9 a.m. instead. The employee still works eight hours; he or she just starts later. However, if the employee who wants to start at 9 a.m. works on a manufacturing line and wants the entire line to start at 9 a.m., that is most likely an undue hardship.

How do the final regulations impact day-to-day management of employees with injuries and illnesses?

Anyone with an impairment should be presumed to be protected by the new ADA. Every adverse employment action related to an individual’s physical or mental condition should be presumed to be a potential ADA case. As the new regulations have made it easier to qualify an employee as disabled, employers should focus their efforts on showing that they made the proper employment decisions, which will typically require that they engage in the interactive process.

Donna Geary is a partner with Jackson Lewis LLP. Reach her at (412) 232-0154 or gearyd@jacksonlewis.com.

How strong are your relationships with your customers? Many companies overlook the opportunity to get to know their customers, a process that can lead to finding new and different ways to expand their business relationship.

“Our success comes through relationships and partnerships,” says Bart Beatty, director of Sales and Business Development for Simplify Inc. “Our business allows us to solution-sell. That’s extremely important because we offer so many options and products that we have the ability to give the customer the right solution — to not be hamstrung to one product or carrier. Our solution-oriented partnering empowers them to make informed, fiscally responsible decisions that best fit their needs.”

Smart Business spoke with Beatty about the importance of developing relationships with clients.

How do relationships affect the sales process?

If a customer comes in with an idea, we strategize with them on how to achieve their goals. There’s not just one or two ways to get there. There may be five or six different options. When we enter a situation with a multi-location customer, we start by analyzing their capabilities, needs and what they are trying to do. Presenting many different options helps the customer make a more informed decision and gives them leverage.

It’s very important to be a true partner instead of just a vendor. Being a true partner creates a different kind of relationship with your customer.

What’s the difference between a partner and a vendor?

Vendors talk to their customers; partners talk with their customers.

Customers have one-sided conversations with their vendors. Customers ask vendors ‘Tell us what you can do, tell us what your products and services are and we’ll make the decision.’

True partners become part of the team and have more of a strategy session with the customer than a ‘tell me what you can do’ conversation. A true partner’s goal is not to fulfill a quota, but to understand the customer’s plans and strategize with them to help them get to where they’re going.

How can one be a true partner, not just a vendor?

Our philosophy focuses not on the quantity of customers, but on the quality and how much value we can bring them. It allows the relationship to have more of a personal touch. There are four key areas that we walk through with every client to develop that relationship.

It starts with research and analysis. We sit down with a client and analyze their current environment. As part of the research and analysis, we do an audit-like function where we break down their invoices and contracts and benchmark where they are today.

Second is strategy. Once we have done the research and know where they are, we strategize on where they may want to go. Many customers have an idea where they want to go, and others don’t. So we sit down with them and say, ‘a lot of the companies in your demographic or industry are going here.’ That can help them make the decision.

With a strategy completed, the third step is fulfillment. Once they have decided which way they want to go, we help them get there with full-time project management.

The fourth and final step is ongoing support, or lifecycle management. After the research is done, the decision is made and the implementation is complete, we continue to support them with lifecycle management. This includes performing the day-to-day tasks, essentially being an extension of their team and helping them manage their telecom business, which allows them to focus on their other projects or duties.

How do you strengthen a client’s comfort level with you?

The first step, the research, really creates that trust. We do an eight- to 12-week analysis process. That builds trust, because they see that we bring them a detailed analysis of where they are today, at no cost to them.

When we move to the next step, strategy, the client is more comfortable with us because we did all this work on the front end, without requiring any commitment from them.

How does building a relationship affect the consulting stage of the process?

Often, a customer comes in with his or her mind dead-set on a particular direction; like switching to Voice over Internet Protocol (VoIP). But after reviewing the deep dive analytics and realizing that may not be the best fit for his or her current environment, the customer’s vision may take another direction.

Having the trust of the customer is so important for a consultant, especially during the strategy phase. Normally, a telecom carrier representative doesn’t offer the breadth of products a customer may want. No matter how good that carrier rep or team is, they can only do so much. By providing a universal account team to fill in the gaps for the customer, we give them one point of contact for all their business.

When we sit down with customers, they know we aren’t just selling them one product. With that mindset, the customer knows he or she can open up and be honest because of that trust. It’s all about finding the best options for the customer.

Bart Beatty is director of Sales and Business Development for Simplify Inc. Reach him at bart.beatty@simplifycorp.com or (972) 292-7510.

Last year, companies were hit by a flood of lawsuits claiming they falsely marked patent numbers on their products. This flurry of litigation has spurred intense interest in “false marking,” in part due to the threat of excessive penalties being imposed on offending companies.

Now, the way the law is enforced is changing.

“The scare is over,” says Philip Moy, a partner with Fay Sharpe LLP. “It’s going to go away, either through court decisions or legislation. However, the suggestions as to how to avoid the problem are good practice.”

Smart Business spoke with Moy about what businesses need to know about false marking and what the future holds for this statute.

What is false marking?

Section 287 limits the damages recoverable by a patent owner who manufactures and/or sells products covered by the patent in suit. It provides a strong incentive for a patent owner to mark its patented products with the numbers of all patents covering the product, because it then can recover infringement damages from the time marking began irrespective of when the infringer might have received notice of the patent in suit.

Section 292, the false patent marking statute, imposes penalties on a company that marks a patent number on either a product or advertising for a product when that patent does not cover the product and when such marking is done ‘for the purpose of deceiving the public.’ A patent marking is considered ‘false’ when either (a) no claim of the patent covers the product or (b) when the marking continues on a product actually covered by a patent after the patent has expired.

Why is proper marking important?

Proper patent marking has always been important (at least since 1952, when the current patent statute was enacted) to provide the constructive notice benefit of Section 287.  Without proper patent marking, a plaintiff in a patent infringement action might not be able to recover damages for infringements that occurred before the infringing defendant had actual notice of the infringement allegations.

Improper patent marking, primarily in the form of continuing to mark products after the applicable patent expired, became important after Dec. 28, 2009, when the U.S. Court of Appeals for the Federal Circuit decided The Forest Group, Inc. v. Bon Tool Company. Section 292 is a qui tam statute that allows anyone to sue another party for false patent marking on behalf of the United States. The statute provides that anyone who engages in false patent marking ‘[s]hall be fined not more than $500 for every such offense’ and that any person bringing suit may retain one-half of the fine, the other half going to the United States.

Prior to Forest Group, courts had interpreted ‘every such offense’ to mean the decision to mark articles with the patent number. Therefore, marking one million widgets with the number of an expired patent was a single offense subject to a fine of no more than $500.  In Forest Group, however, the Federal Circuit held that each article falsely marked and sold was a separate offense. This decision opened the flood gates for false patent marking litigation beginning in 2010, frequently brought by patent law firms or by business entities newly formed by patent attorneys.

What are some examples of false marking?

The two primary examples of false patent marking are marking a product with the number of (a) a patent whose claims do not cover the product and (b) a patent that has expired. In either situation, the product is ‘unpatented’ insofar as the marked patent number is concerned.

How can a company defend itself against false marking lawsuits?

First, have a policy of applying patent numbers only to those products that are covered by an issued patent. This requires consultation with in-house or outside patent counsel to make sure that the product and marked patents match up. This must be an ongoing assessment if a product undergoes changes, both to add new patents that might come into play and to remove patents that no longer cover a revised product.

Second, have a policy of removing from such products the numbers of patents that expire within an economically reasonable time. This does not mean that large sums of money need to be spent to change production tooling as soon as a patent expires. It does mean, however, that some thought should be given to re-ordering packaging or labeling that contains a patent number. As the time approaches for the expiration of a patent marked on packaging, a company should not be ordering several years’ worth of the marked packaging.

The Federal Circuit decision in Pequignot v. Solo Cup Company provides useful insight into one company’s policies for removing patent numbers from tooling. Because the product tooling containing the patent numbers would have been expensive to modify during its useful life, the court found it reasonable for the manufacturer to wait until a particular tool wore out before the numbers of expired patents were removed. Of course, if the tooling at issue is readily modifiable to change markings made on the product, then expired patent numbers should be removed more quickly.

What is the future for false patent marking lawsuits?

Recent case law and pending litigation have taken some of the steam out of the false patent marking movement.

The courts have acknowledged that Section 292 is a criminal statute and recently began applying more rigorous requirements to the parties bringing such actions. The complaint must satisfy pleading requirements that normally attach to allegations of fraud, so that allegations that the defendant acted ‘for the purpose of deceiving the public’ must set out with particularity the circumstances that demonstrate deceptive intent.

The ‘who, what, when, where and how’ of the alleged fraud must be set forth in the complaint. It is insufficient to allege merely that the defendant is a sophisticated company that should have known that a product was marked with the number of an expired or inapplicable patent. This presents a problem for parties bringing an action under Section 292, as they probably have no idea how to answer the ‘who, what, when, where and how’ inquiries.

Moreover, two district courts (one in Ohio and one in Pennsylvania) have found Section 292 to be unconstitutional on the basis that the government does not exercise sufficient control over the party suing on behalf of the U. S. to ensure that the president meets his constitutional obligation to ‘take care that the laws be faithfully executed.’ At least one of these cases has been appealed to the Federal Circuit.

Finally, pending legislation in Congress primarily directed to reforming substantive patent law revises Section 292 in a dramatic fashion that essentially kills the statute as it has recently been used. Under the revisions, (a) only the United States would be able to bring an action for a civil penalty; (b) individuals and companies would have no right to bring an action for false patent marking unless they have suffered a competitive injury as a result of false marking, and their remedies would be limited to damages adequate to compensate for the injury; (c) a safe harbor would be created for expired patents so that no liability would attach to marking a product with the number of an expired patent during the first three years following its expiration or to marking a product with the number of an expired patent where ‘expired’ is placed before the patent number; and (d) the revision would have retroactive effect to all actions pending on the date of enactment.

Philip J. Moy, Jr. is a partner with Fay Sharpe LLP. Reach him at (216) 363-9109 or pmoy@faysharpe.com.

Finding the necessary financing to thrive — or just survive — can be difficult for small businesses. But there are resources available to help startups and entrepreneurs compete in this market.

“SBA loans are designed for borrowers that might not qualify for conventional financing due to a number of different reasons,” says Romona J. Davis, Vice President of SBA lending with FirstMerit Bank.

Smart Business spoke with Davis about how to determine whether an SBA loan could help your business, and how to get started with the process.

What are the differences between SBA loans and conventional loans?

The main difference is that SBA loans are backed by the United States government, which provides a guarantee to the bank. SBA loans are for borrowers that might not qualify for conventional financing due to a variety of reasons, such as:

  • Insufficient collateral
  • A startup business or one that’s only been in existence for a short period of time
  • The company is looking for a longer term on its owner-occupied commercial real estate purchase
  • The borrower is in a ‘high-risk’ industry
  • The borrower only wants to inject a minimum down payment
  • Impending or current ownership changes with the business
  • Inconsistent financial performance over the past few years

How does a lender determine if an industry is high risk?

It varies by bank. Most banks consider the restaurant industry as one that has a lot of risk associated with it. Also, when the economy changed and building contractors were negatively impacted, they became high risk.

However, being part of a high-risk industry doesn’t mean a conventional loan is impossible.

What can SBA loans be used for?

SBA loans can be used to:

  • Purchase owner-occupied commercial real estate
  • Buy out a business partner
  • Buy a business
  • Purchase machinery and equipment
  • Buy a franchise
  • Construct a building (the business must occupy 60 percent of the space)
  • Cover working capital needs
  • Refinance existing business debt

What types of businesses are eligible for SBA loans?

To qualify for SBA financing, the entity must be designated ‘for-profit.’ In addition, the business must meet certain SBA size standards, demonstrate good character, have a positive payment history on previous federal debt (no prior defaults on federal debt), possess U.S. or Legal Permanent Resident status, and show reasonable expectation of repayment.

What are the required size standards?

The SBA has developed size standards for different types of industries. Companies must meet either a maximum number of employees or maximum revenue amount to qualify as a small business. For example, in the manufacturing industry a small business must have fewer than 500 employees to be considered for an SBA loan. The bank will check to make sure the company is within standards. Some industries have a revenue amount; some have a required number of employees. Rarely do we find a company that doesn’t fit, but occasionally a company is too big to be considered a small business. Also, the SBA loan limit is $5 million per borrower.

How is ‘good character’ determined?

First, the SBA looks at the company’s credit, tax liens and any prior delinquencies with the government.

Also, the SBA always wants to know if a borrower has any criminal background, has been under indictment, is currently on probation, has ever been on probation, or has ever been charged with or arrested for any criminal offense, other than a minor motor vehicle violation.

The two ways to assess character, from the SBA’s perspective, are through personal credit and personal background.

Why might a business opt for an SBA loan instead of a conventional loan?

Businesses might opt for an SBA loan versus a conventional loan if they:

  • Want a longer term on their owner-occupied commercial real estate or equipment loan
  • Want a straight term and amortization versus a balloon note
  • Prefer a lower down payment on their transaction
  • Have a collateral shortfall
  • Want to consolidate business debt into one loan that could offer a longer repayment period
  • Want to buy out their business partner with a minimum equity injection
  • Want to purchase a business but there’s insufficient collateral
  • Desire cash flow savings due to a longer term and amortization

How can businesses get started with the loan process?

If a business is interested in an SBA loan, the first step is to contact a bank that participates in the SBA Program. The banker will need to make certain that the company is eligible as indicated above. Assuming the business is eligible, the borrower would need to provide a financing package to the bank for SBA consideration.

Disclosure: All opinions expressed in this article are that of the authors or sources and do not necessarily reflect the views of FirstMerit Bank or FirstMerit Corp.

Romona J. Davis is Vice President of SBA lending for FirstMerit Bank. Reach her at (330) 996-6242 or romona.davis@firstmerit.com.

Wednesday, 06 July 2011 11:51

How to secure a patent for green technology

Green technology is an economic growth area for Ohio, while other areas of the economy are contracting or staying static. Many companies are looking to take advantage of this trend by developing technologies that reduce the use of nonrenewable resources and improve the quality of the environment, both globally and locally.

Because there is so much interest in this field, it’s important to draft a patent application that protects your invention against infringement by others. Particular attention should be paid to the claims of the application.

"As with any patent, it is up to you to find out who is infringing your claims and keep an eye on your potential competitors," says Ann Skerry, a partner with Fay Sharpe LLP.

Smart Business spoke with Skerry about how to obtain patents for green technology, and how the process works.

What sort of green technology patents are being sought?

Patents could fall into three main areas: energy generation, reduction in energy consumption, and improvements in environment quality.

In the energy generation field, there has been a lot of work done in Northeast Ohio in connection with wind turbines. There have been advances  relating to everything from the motors and blades for the turbines to the towers which carry them.

In Ohio, there are projects for large turbines as well as small-scale devices that can be used for an industrial site, or, perhaps in the future, people’s homes.

Other areas of energy generation include biomass (converting waste materials to energy),  solar cell technology, batteries, and fuel cells.

In the energy consumption category, companies are developing more efficient lighting products, and designing other devices that use less energy.

To improve environmental quality, companies are developing new products that are safer for the environment, like paints and hybrid vehicles, and ways for using recycled materials in their products.

What are the keys to developing patent claims for green technology?

As with other technologies, the goal is to draft claims for a patent that will cover not only your current idea of the product, but also  the potential designs that you may end up making when the product comes to market.

The claims should also provide enough of a barrier to prevent competitors from easily designing around your claims by making simple changes that take their product out of the claim scope.

The approach to achieving that sort of claim: know the market, see where it is going, and understand where your product is going to fit into the developing market. That, of course, is where you need your patent attorney.

When drafting a claim, how broad should it be?

Basically, the idea is to have the claims of the patent application be as broad as they can be without facing the possibility that there is something already known that will prevent you from getting those claims.

The Patent Office examiner who reviews the application typically raises rejections, based on a set of references, such as publications and patents, arguing that your claims are not patentable based on those references. Therefore, knowing the market and references that could be raised before you draft the claims is a great help when trying to determine how broadly you can claim an invention without facing a rejection.

How difficult is the process of proving your technology is, in fact, green?

It is not necessary to prove your invention is green, but the Patent Office currently provides an expedited examination process for patent applications in this area if you do.  Initially, the application had to fall into a particular one of a small number of Patent Office classes to be accepted into the program. Now, it has been made much easier because the applicant only has to show, either in the specification of the application or via a brief statement, that the invention materially enhances the quality of environment or materially contributes to the discovery or development of renewable energy sources, the more efficient utilization and conservation of energy resources, or greenhouse gas emission reduction.

Why might companies want to expedite their green technology patent application?

If you have an invention in the early stages of development, and you are not ready to go to market with it, you may decide not  to  expedite your patent application.

On the other hand, if you are ready to go to market, have someone who is ready to license the technology, or you think that other people are likely to enter this area, it could be advantageous. Small businesses working in the wind turbine field, for example, may be looking to larger companies to take over and develop their inventions. Having a patent in hand can help with that.

An expedited patent application can issue in about a year — a sizable time savings. The Patent Office is generally quite slow, and it has a large backlog of unexamined applications. It takes two years, on average, for the Patent Office to provide an initial review of your application. Then, it can take another year or more after that for the patent to issue. In these rapidly developing fields, three years is a long time.

The Patent Office does have several routes for expediting patent applications. The one that is most applicable to green technology is the Green Technology Pilot Program, which is quite liberal in its approach. Other methods for expediting applications can make the applicant jump through quite a few hoops and pay high fees for expediting. The Patent Office has worked hard to make it easier for inventors to file an application via the Green Technology Pilot Program, and the additional fee can be waived entirely.

It is only a pilot program, so it will run out at the end of 2011, but based on the positive feedback it has received, it may be continued.

Ann M. Skerry, Ph.D., is a partner with Fay Sharpe LLP in Cleveland, a law firm focused on intellectual property. Reach her at (216) 363-9000 or askerry@faysharpe.com.

End-of-life issues are, of course, intensely personal. But the personal nature of the subject does not keep it from having an impact in the workplace.

End-of-life issues affect the workplace because they impact employees, who, in increasing numbers, serve as caregivers for ailing parents, siblings, partners and even critically ill children.

“With an aging population and with people living longer, more employees are becoming caregivers for a parent or loved one,” says Karen Merrick, an account manager for LifeSolutions, an employee assistance program (EAP) and part of UPMC WorkPartners. “Many of them are providing care for someone with a terminal illness, so how to deal with end-of-life issues is certainly an issue for many workplaces.”

Smart Business spoke with Merrick about end-of-life issues and how employers are supporting employees to meet these challenges.

How do end-of-life issues affect the workplace?

End-of-life issues affect the workplace because the size and scope of the problem is greater than most people realize. It is estimated by AARP that 44 million Americans provide unpaid care to an adult relative or friend. Nearly 60 percent of those caring for someone 50 or older are working full time, which means many employees may be struggling with end-of-life issues on a daily basis.

The common misconception is that end-of-life issues are private, family matters that would only really be of interest to a company’s retired employees. This isn’t accurate. As people are delaying retirement, they are increasingly juggling the responsibilities of work and caregiving. Many employees who are caregivers are not senior citizens.

Why should an employer be concerned about end-of-life issues?

End-of-life issues impact a company’s benefits costs and employee productivity in the form of absenteeism and presenteeism. It has been estimated that American businesses lose from $17.1 billion to $33.6 billion per year in productivity for full-time employees with caregiving responsibilities.

A report by the National Alliance for Caregiving and AARP indicated that one in five caregivers has had to take a leave of absence from work. A retention study by Pitney Bowes and Tufts University noted that one in five caregivers seriously considered permanently leaving the work force to deal with health matters. Each year an estimated 630,000 working-age adults will die. So, end-of-life issues do impact the company’s bottom line.

For employers, providing support to employees makes sense because it is the right thing to do. Support that can reduce the physical/emotional stress on the employee/caregiver will result in the greater likelihood that the employee will emerge from this difficult period more resilient. That resilience will benefit the company in increased engagement and loyalty as the company has respected what matters most to the employee — their family and loved ones.

What can an employer do?

Employers can support employees in a variety of ways. Reviewing existing policies around flexible work arrangements and leave of absence, including bereavement, is one step. Finding options that work for both the company and the employee is essential.

Providing information on end-of-life planning such as palliative and hospice care and advance directives is also something employers can do. This helps employees plan ahead, before life-threatening or life-limiting situations occur for themselves and their loved ones. The information can be in the form of newsletters, webinars, seminars or online resource links. Some companies have chosen to make end-of-life education a part of employee wellness programs. Connecting end-of-life planning to wellness helps create a readiness to plan for death as a more natural part of life, like planning for retirement.

What other resources are available for employers?

The National Business Group on Health (NBGH) has developed an employer toolkit around caregiving and end-of-life issues and their impact on businesses. Also, various vendors of services to employers can offer information, which should be packaged in ways that can be easily incorporated into benefit offerings and communication vehicles.

Many organizations embrace events such as National Healthcare Decisions Day. This is designed to encourage people to have thoughtful conversations about their health care decisions and about completing reliable advance directives to make their wishes known. It’s not just about living wills; it is more important that the conversation take place.

Can an EAP help?

An employee assistance program (EAP) can be a valuable resource to both employers and employees around caregiving and end-of-life issues. An EAP supports the employer and the employee in preparing to address these issues. For the employer, the EAP can assist with policy review and links to resources. It also educates the workplace about the impact of these issues personally and in bottom-line costs to the company. Finally, EAP professionals provide consultation to leadership and managers when faced with challenging employee situations related to caregiving.

On the employee side, EAPs provide assistance and resources for employees so they can be productive at work and enjoy their personal life. The EAP’s trained professionals address the stress of caregiving, coach the employee on how to start the conversation about end-of-life planning and ultimately provide grief counseling. Some EAPs may be able to provide resources for legal consultation around end-of-life issues. An EAP is a good resource for materials/information on caregiving, palliative and hospice care, and advance directives. <<

Karen Merrick is an account manager for LifeSolutions, an employee assistance program that is part of UPMC WorkPartners. Reach her at merrickkl@upmc.edu or (412)-647-9294.

When your business is rocked by a property loss, it’s easy to get lost in the technical details of the claims process. However, there are several keys to effectively managing the claims process and getting the results you desire, says Paula Devaney, director of claims services with ECBM Insurance Brokers and Consultants.

“Engage the appropriate professionals, maintain clear communication with your insurance carrier and utilize the services of your insurance agent to maximize the benefits under your policy,” says Devaney. “It’s important for your agent to review your coverage and your losses, because he or she is trying to find every aspect of the policy that is going to apply. The agent also evaluates the loss against other insurance coverage you may have, in case those other coverages are impacted.”

Smart Business spoke with Devaney about how to manage the claims process after a loss.

How should businesses handle claims after a property loss?

First, report the claim immediately. It is not normally prudent to wait for more information to become available to report the claim. Engage the assistance of your insurance agent in reporting the claim, because the agent has the ability to notify the insurance carrier in the best light possible for the business. The insurance agent is responsible for analyzing the coverage at the outset, so that when you report the claim, all bases are covered.

In addition to reporting the claim immediately, it is necessary to make sure that the appropriate steps are taken to protect the property from further damage. That runs the gamut from requesting assistance from the agent to engaging remediation contractors or any appropriate professionals that might be necessary to help protect the property from further damage. If the property loss involves a building fire or water damage, you need to bring in a reputable general contractor or construction manager as quickly as possible to start assessing the damages.

What can businesses do to ensure they are prepared before a loss happens?

Any insured that takes the time to do a review or some disaster planning has a head start. Start to put together a list of vendors and contractors you can call upon immediately in the event of a loss. Beyond that, you should add service providers to that list. Also, have the information readily available offsite, so it’s not buried in an office that just burned down or flooded.

You should have the businesses that are essential to your operations conveniently maintained in a directory so you can call them immediately to let them know what’s happened and seek out whatever assistance is necessary. If a water damage claim wipes out all your business’s stationery and you have your stationery supplier’s information set aside, you are able to contact that vendor and get new stationery printed immediately.

You’re already under the gun. You don’t want to spend time trying to find that information. You want to get your business back up and running as quickly as you possibly can.

What are some common mistakes businesses make during this process, and how can they be avoided?

One of the mistakes I’ve seen happen is that, rather than engaging a general contractor, an insured goes out and gets an electrician, a plumber, a drywall contractor, etc. Then you’re trying to submit 15 estimates to the insurance carrier for consideration.

The easier way to handle this is to immediately engage a contractor with whom you have a working relationship. If you don’t have one, seek out references through your insurance agent. Then, get them out there to start to put together an initial assessment of the damages.

How should a business deal with the insurance company during a claim?

Because the insured knows the money is coming from the insurance company, it tends to rely very heavily on the insurance company. That’s not necessarily a mistake, but you, as an insured, are the one who knows your business best. You know what it’s going to take to put the business back together.

From the outset of a loss, to some extent, you have to think insurance doesn’t exist and do whatever is absolutely necessary. You have to keep the insurance carrier closely involved in what you’re doing, but what you don’t want is the insurance carrier calling all the shots.

Many companies sit back and wait for the insurance carrier to give them a number or give them the go-ahead to make repairs, and that’s a mistake. You have to view it as a partnership. You know your business; get your professionals out there. Let them put together the damages.

At the same time, make sure you’re talking to the professionals the insurance company has brought in. If you keep those lines of communication open throughout the entire claims process, you’re going to end up with a better result.

As soon as the initial assessment of damages is completed, ask the insurance company for money. Obviously, a property loss is not planned, so operationally, it can have a significant impact on budgeting. So you want to ask for an advance on the loss, and utilize your agent to help you do that. Insurance companies, for the most part, are going to give you seed money. If they don’t do it, it’s wrong. They should be funding the loss up to the point that the loss is completely resolved.

Also, it is better to have one particular point person with the insurance carrier. If that person is the one with the knowledge from the beginning through the end of the loss, then you don’t have competing information. It makes it easier for everyone.

Paula Devaney is director of claims services for ECBM Insurance Brokers and Consultants. Reach her at (610) 668-7100 or pdevaney@ecbm.com.

The U.S. economy has traditionally been product based, with companies increasing revenue by selling more products. However, as technology has expanded, the emphasis has shifted, says Kevin P. Kalinich, co-national managing director of Aon Risk Solutions’ financial services group.

“There has been an evolution and transformation in the economy from product based to service based, and an increasing reliance on electronic data,” says Kalinich. “These two changes apply to all companies, both product and service oriented. As a result, analysis has determined that more than 75 percent of an entity’s value is in its information assets.”

Smart Business spoke with Kalinich and with John George, account executive with Aon Risk Solutions, about how to protect your company’s valuable information from cyber threats.

What is cyber liability?

Cyber liability is the potential exposure of losing, destroying, or unauthorized disclosures of that goldmine of data. The data can be trade secrets, customer lists, or third-party data, such as customers’ personally identifiable information, credit card, Social Security or bank account numbers.

The unique exposure issue with cyber liability is that it is not based on the size of your company. If you look at directors’ and officers’, property insurance or general liability, the biggest factors are the capitalization of the company, revenue or amount of property. Analyzing these factors is how you evaluate exposure. With cyber liability, a small or medium-sized company could have catastrophic amounts of data.

What are the most common cyber threats?

The highest profile threats are hacking attacks. Third-party hacker attacks are getting the most attention now that the federal government created a cyber protection policy and is promoting an international strategy for cyber space. The larger exposure is social engineering, which is the negligence of entities in dealing with their data and mistakes people make apart from any IT security issues.

Both types of exposure can be addressed. To combat third-party hackers, entities must understand the best methods for risk mitigation. Companies can also ensure they have the best IT standards implemented.

For insider or negligence exposures, training and implementation of those practices is still important, but so is human behavioral engineering. When your HR department employees interview someone, are they trained on what they should or shouldn’t be doing? Do you have annual usage monitoring of employee computers? Do employees take an updated training course every year and click a box stating they understand the company’s data protection policy? While third-party hacking is more about IT security and encryption, there are more policies, procedures and guidelines involved in avoiding negligence.

How can employers fight these threats?

The first steps are identifying critical information and classifying the data. Critical information could involve credit card numbers for a business, patient information for a medical organization, or student information for an educational institution. You should classify critical data versus not-as-critical data, such as e-mail addresses or addresses without personal information. Once you classify that data, treat it differently. Different people might have access or there might be different protections; for example, critical data may have 100 percent encryption.

Why is it important to classify lower-priority data as less critical?

Because of cost and efficiency. You can paralyze yourself if key employees don’t have access to the data they need to do their jobs efficiently without being burdened. There is also a greater cost involved to implement more stringent IT procedures. It’s just not practical for everything to be 100 percent encrypted.

How can cyber threats hurt your company?

You can have third-party liability for the breach, in which you must pay defense costs and indemnity for individuals who have been harmed. You can have a loss of reputation. Also, there could be fines and penalties from government authorities, HIPAA, or credit card companies. Data exposures introduce a number of potential lawsuits.

How can companies determine if they need cyber liability insurance?

There are a few issues to handle before considering insurance. Most entities have outsourced information and you have to make sure that third-party vendors are in compliance with your IT security protections. You need a representation and warranty from the vendor stating that its company is up to standard and will hold harmless and indemnify you, because it has your critical data.

Contractual allocational liability is a critical component of the risk transfer, because cyber insurance is based on how much exposure the entity has versus how much is outsourced to third parties and how liability is allocated.

The next step is drafting and implementing a data breach response plan that identifies what to do in the event of a breach. The plan should identify a legal expert to assist with the breach, a forensics expert to determine the extent of the breach and how to stop it, and whether an auditing investigation or credit monitoring is necessary. Also, explore your existing insurance. Look at your general liability, property, crime and D&O policies. You may already have coverage for breaches of data, data loss and media, copyright and trademark issues.

What should companies do if they find gaps in those areas?

If you’ve identified gaps, then consider cyber insurance, which is intended to address the gaps in privacy and security exposures in current policies. Begin to address it and continually evolve. You can use data and technology as a tool to differentiate and enhance your company, instead of it being used as a weapon against you.

Kevin P. Kalinich is co-national managing director of Aon Risk Solutions’ financial services group. Reach him at kevin.kalinich@aon.com.

John George is an account executive with Aon Risk Solutions. Reach him at (248) 936-5264 or john.george@aon.com.

The U.S. economy has traditionally been product based, with companies increasing revenue by selling more products. However, as technology has expanded, the emphasis has shifted, says Kevin P. Kalinich, co-national managing director of Aon Risk Solutions’ financial services group.

“There has been an evolution and transformation in the economy from product based to service based, and an increasing reliance on electronic data,” says Kalinich. “These two changes apply to all companies, both product and service oriented. As a result, analysis has determined that more than 75 percent of an entity’s value is in its information assets.”

Smart Business spoke with Kalinich and with Chris Mower, senior vice president of Aon Risk Solutions’ financial services group, about how to protect your company’s valuable information from cyber threats.

What is cyber liability?

Cyber liability is the potential exposure of losing, destroying, or unauthorized disclosures of that goldmine of data. The data can be trade secrets, customer lists, or third-party data, such as customers’ personally identifiable information, credit card, Social Security or bank account numbers.

The unique exposure issue with cyber liability is that it is not based on the size of your company. If you look at directors’ and officers’, property insurance or general liability, the biggest factors are the capitalization of the company, revenue or amount of property. Analyzing these factors is how you evaluate exposure. With cyber liability, a small or medium-sized company could have catastrophic amounts of data.

What are the most common cyber threats?

The highest profile threats are hacking attacks. Third-party hacker attacks are getting the most attention now that the federal government created a cyber protection policy and is promoting an international strategy for cyber space. The larger exposure is social engineering, which is the negligence of entities in dealing with their data and mistakes people make apart from any IT security issues.

Both types of exposure can be addressed. To combat third-party hackers, entities must understand the best methods for risk mitigation. Companies can also ensure they have the best IT standards implemented.

For insider or negligence exposures, training and implementation of those practices is still important, but so is human behavioral engineering. When your HR department employees interview someone, are they trained on what they should or shouldn’t be doing? Do you have annual usage monitoring of employee computers? Do employees take an updated training course every year and click a box stating they understand the company’s data protection policy? While third-party hacking is more about IT security and encryption, there are more policies, procedures and guidelines involved in avoiding negligence.

How can employers fight these threats?

The first steps are identifying critical information and classifying the data. Critical information could involve credit card numbers for a business, patient information for a medical organization, or student information for an educational institution. You should classify critical data versus not-as-critical data, such as e-mail addresses or addresses without personal information. Once you classify that data, treat it differently. Different people might have access or there might be different protections; for example, critical data may have 100 percent encryption.

Why is it important to classify lower-priority data as less critical?

Because of cost and efficiency. You can paralyze yourself if key employees don’t have access to the data they need to do their jobs efficiently without being burdened. There is also a greater cost involved to implement more stringent IT procedures. It’s just not practical for everything to be 100 percent encrypted.

How can cyber threats hurt your company?

You can have third-party liability for the breach, in which you must pay defense costs and indemnity for individuals who have been harmed. You can have a loss of reputation. Also, there could be fines and penalties from government authorities, HIPAA, or credit card companies. Data exposures introduce a number of potential lawsuits.

How can companies determine if they need cyber liability insurance?

There are a few issues to handle before considering insurance. Most entities have outsourced information and you have to make sure that third-party vendors are in compliance with your IT security protections. You need a representation and warranty from the vendor stating that its company is up to standard and will hold harmless and indemnify you, because it has your critical data.

Contractual allocational liability is a critical component of the risk transfer, because cyber insurance is based on how much exposure the entity has versus how much is outsourced to third parties and how liability is allocated.

The next step is drafting and implementing a data breach response plan that identifies what to do in the event of a breach. The plan should identify a legal expert to assist with the breach, a forensics expert to determine the extent of the breach and how to stop it, and whether an auditing investigation or credit monitoring is necessary. Also, explore your existing insurance. Look at your general liability, property, crime and D&O policies. You may already have coverage for breaches of data, data loss and media, copyright and trademark issues.

What should companies do if they find gaps in those areas?

If you’ve identified gaps, then consider cyber insurance, which is intended to address the gaps in privacy and security exposures in current policies. Begin to address it and continually evolve. You can use data and technology as a tool to differentiate and enhance your company, instead of it being used as a weapon against you.

Kevin P. Kalinich is co-national managing director of Aon Risk Solutions’ financial services group. Reach him at kevin.kalinich@aon.com. Chris Mower is senior vice president of Aon Risk Solutions’ financial services group. Reach him at (314) 854-0806 or chris.mower@aon.com.

Buying or leasing real estate is a necessary pursuit, yet one fraught with risk.

“If you don’t do your due diligence with regard to those risks, you may end up locked into an asset that, instead of helping your business prosper, drains your profits,” says Jeff Roberts, associate with Kegler, Brown, Hill & Ritter Co., LPA.

“The steps you take to analyze those risks will determine whether you have an asset or a large liability on your hands.”

Smart Business spoke with Roberts about how to manage risk when buying or leasing real estate.

What risks should companies be aware of when buying or leasing real estate?

There are different risks associated with buying and leasing. On the buying side, we can break it down into business and legal risks.

From buying standpoint, the No. 1 business risk is affordability. How does this purchase fit into your business plan going forward? What is your exit strategy with this location? If you are not paying cash, what are your financing options? Obviously, if you are in retail it’s all about location, location, location.

Legal risks include obtaining clean title to the property, environmental issues, access and the permitted use of that location. Does the zoning match up with what you are trying to do?

When it comes to leasing, the first issue to consider is the length of the lease: long-term versus short-term. If you find a space you really like, you may want to look into a longer-term lease because you can get better business terms. The flip side to long-term is it locks you in for a while, so you need to try to work as much flexibility into the lease as possible. Look into expansion rights and rights of refusal, because your company may potentially need more space to accommodate growth. Also, you may want to negotiate a termination right and subleasing rights, in the event that the business has a downturn and you have to shrink the space or get rid of it altogether.

From a leasing standpoint, if you are in a long-term situation without much flexibility, you can be stuck with a real potential drain on the profitability of your company. The same risks are present if you buy and you bought too much space, or the space is highly leveraged, or it is not exactly what you wanted.

Why is flexibility important?

If you are moving into a large space with potential for growth, it is more desirable to have the potential to expand your operations or offices than to have to find a brand new space and negotiate with a new landlord. You already know what you’re dealing with at that space at that time.

Conversely, you want to negotiate a termination right, or a right to sublease in case things start to go badly — especially when you are considering a long-term lease. Because, although these termination rights come with penalty, at least you can quantify what that downside would be.

Landlords will offer better pricing if you sign a long-term lease, because they have a longer stream of cash flow that will minimize their risk. Given this longer-term commitment, you should work these outs into the lease, just in case.

How should companies deal with risk in today’s real estate market?

If you’re looking at purchasing a property, explore your potential financing sources early in the process. Financing takes longer to get approved than it used to. Exploring financing sources early in the process will allow you to know whether buying or leasing that space will be an option for you in the first place.

If you are leasing, you should be aware that the financing is coming due on many commercial spaces. Banks have been shrinking their commercial real estate portfolios. Often, they are not willing to renew on a long-term basis for some buildings. From a tenant’s perspective, you want to protect yourself and your lease in the event your landlord is foreclosed upon and the lender becomes your new landlord.

A good tactic is negotiating subordination and non-disturbance agreements in connection with your lease to protect yourself in the event that the landlord’s financing goes bad.

Also, sit down with your legal counsel and do some business planning. You may want to create a single-purpose entity like a holding company to own the real estate in order to shelter the operating business from potential liability. The last thing you want is a slip and fall in your building leading to a lawsuit targeting the operating company, rather than the owner of the property.

In addition to talking to your legal counsel, get advice from either your tax counsel or your accountant to determine whether leasing or owning real estate would be better for you. One way may benefit the operating company more than the other.

What tips would you give someone in the process of buying or leasing real estate?

Be proactive throughout the process. Stay in front of potential issues before you actually purchase or lease that space. Ask lots of questions. There are no stupid questions, especially if you’re not experienced in the area. Make sure you do your due diligence. Determine your financing capabilities. No. 1, is it available to you, and No. 2, can you afford it? Last, consider hiring a good broker who knows the market.

These are all ways to manage risk, but the combination of hiring good counsel and being proactive rather than reactive is important.

JEFF ROBERTS is an associate with Kegler, Brown, Hill & Ritter Co., LPA. Reach him at (614) 462-5465 or jroberts@keglerbrown.com.