Matt McClellen

As an executive, you probably spend a lot more time thinking about economics than ergonomics. But ergonomics, the applied science of maximizing productivity by reducing employee fatigue and discomfort, may be able to help your business.

“Whether you work at a desk, a factory line or you’re driving a truck, ergonomics is something that needs to be addressed across all industries,” says Jonathan Theders, president of Clark-Theders Insurance Agency Inc.

“Often it’s related just to safety, or some people look at it as a barrier to do business — a cost we must incur to get our keyboards at the right height or our piece of machinery to where we’re not bending to use it. In all actuality, any costs incurred are far outweighed by the benefits of increased productivity, worker safety and efficiency.”

Smart Business spoke with Theders about how to find ergonomic problems in your business and solve them.

Why should businesses consider ergonomics in their workplaces?

It’s about keeping people well and preventing losses. Poor ergonomic conditions are directly tied to workplace injuries. Studies show 40 to 75 percent of recordable workplace injuries happened because of poor ergonomic conditions.

Some of the most common pains people get are in their neck and lower back, shoulders, elbows, wrists and hands, especially through repetitive motions. If employees’ desks are not set up in the proper fashion, or they are regularly bending or twisting in their regular tasks, that is what leads to injury.

Once one worker gets injured, there is a heightened risk for additional injuries. The injured employee is usually replaced with someone who is asked to perform unfamiliar duties. They are tired and overworked, which makes them more susceptible to injury. Productivity suffers, too. When people work in awkward or uncomfortable positions, they are more likely to make mistakes.

Having good ergonomic programs in place can cut workers’ compensation costs 60 to 90 percent. So the ROI can be very substantial.

How can businesses find ways to improve ergonomics in the workplace?

When you manage ergonomics correctly, you are looking at overall systems and the way procedures work. What almost always happens is you have other continuous improvements or benefits that come out of it.

Look at how people exert themselves on a daily basis, like the way they reach for things in their workspace. Focus on awkward postures, tasks or objects that create force, pressure, and keep an eye on duration and frequency. Anytime you prevent or reduce exertion, or take a process and simplify it, you are ultimately going to increase efficiency.

Encourage employees to warm-up before work — to take five minutes to stretch. That stretching can be their best ward against injuries. Teach proper lifting techniques. From an ergonomic standpoint, if something in the flow of the business is causing them to twist their bodies, the increase in productivity, speed, efficiency and accuracy from preventing it will definitely outweigh any of the costs.

How can you tell if your ergonomic improvements are working?

People often forget to monitor these changes. When you implement change or a new ergonomic procedure or piece of equipment, it’s important to follow up and check if it’s working. Use the new procedure or equipment for a few weeks or a month and talk about if it is making a difference.

However, sometimes ideas don’t work and they become a nuisance. People start to avoid the new procedures and they become part of the problem. So take the time to assess the impact. You could find that it is perfect, or you may need to make tweaks or go in a completely different direction.

Jonathan Theders is president at Clark-Theders Insurance Agency Inc. Reach him at (513) 779-2800 or

Insights Business Insurance is brought to you by Clark-Theders Insurance Agency Inc.



Businesses give back to the community for many reasons: social responsibility, brand enhancement or just because it feels good. For Clark-Theders Insurance Agency, community involvement is all these things, but it’s also a key to attracting star employees and keeping them engaged.

“For me and my predecessors, doing community service as a teenager was something you usually did when you were in trouble,” says Jonathan Theders, president of Clark-Theders Insurance Agency Inc. “Now, community service hours are often part of the high school curriculum. It’s much more societal. I was just talking to a recruiter of the younger generation — Generation Y and younger, the millennials — and how a company interacts with the community and its presence on social media are the two top criteria for how they choose an employer.”

Smart Business spoke with Theders about how to set up a community outreach program.

How do you decide what kind of community service program to create?

When we started our CTIA Cares program, we looked at it from two perspectives. First, you have to determine what to give. You can give time or money, or both. Your company may be so lean that you can’t give time to your employees, so you just write the check. Other people can’t write the check, but they can give the time to their employees to volunteer once a week, or once a month or once a year.

From there, there are two ways to go. Do you want your program to have one mission, focused on one initiative like The United Way or American Cancer Society? If you put all your resources toward one initiative you can have a big financial or physical impact on that organization.

Or, do you want each employee to have the opportunity to give to something that is personal to him or her? For instance, if you love the arts, you may want to pour your energy into the arts. The person sitting next to you may want to pour his or her heart into animal rescue. You won’t have as grand an impact, but it will be a more personalized impact.

At Clark-Theders, we chose the individual route, but neither is right nor wrong. Using our example, the CTIA Cares program gives each employee 30 hours a year to donate to nonprofits of his or her choice. Then, we focus our efforts on quarterly service projects in four different service areas to help the community, in addition to the hours given individually.

How do you make that work with your business?

If they do their volunteering on the weekends, we comp them time during the week. If they do it during the week, we allow them that time off. Realizing we still have a business to run, employees must fill out a document stating how many hours they will work and when. Human Resources then has to sign off on it because our company has to be staffed appropriately, and the charity signs off that they worked the time. Also, it is a great way to gauge your community impact. For us, our only criterion is that their chosen charity organization must be a 501(c)(3) nonprofit.

What are the benefits from a business perspective?

You can gain increased revenue and customer loyalty. The company’s involvement in the community drives brand awareness. People who see you as good stewards of the community are more likely to do business with you.

There are also personal gains for your employees, from improved interpersonal skills and self-esteem to better knowledge of social issues. I have seen the positive experiences it has had on our team over the years, which has also impacted our workplace culture. Our clients, co-workers and the community are very appreciative and take notice of our program. It was a great business decision that continues to reap rewards.

Jonathan Theders is president at Clark-Theders Insurance Agency Inc. Reach him at (513) 779-2800 or Connect with him on LinkedIn at

Insights Business Insurance is brought to you by Clark-Theders Insurance Agency Inc.

Every employer is struggling with health insurance costs. How much can we afford and how much will employees share? For many people, health insurance equals peace of mind. But you have to look at the total cost of care — insurance plus cost sharing (deductible, co-pays, co-insurance).

“A lot of people are under the impression that if the doctor says you need it, the health plan should pay for it,” says Al Ertel, chief operating officer for Alliant Health Plans. “Many figure, under a worst-case scenario, they might be out a few hundred to a few thousand dollars and, overall, they think they have complete protection. Most people don’t understand their responsibility or, in numerous cases, their financial exposure.”

Smart Business spoke with Ertel about why it’s important to be aware of your financial exposure when purchasing health insurance, and how employers can pick a plan that works for their employees and their bottom line.

Why have financial exposures gotten so large?

As premiums increase, employers must look for ways to offset the cost. They can raise the employee contribution or change benefits by raising the deductible or co-pay amounts. Each time an increase occurs, it shifts the financial obligation onto the back of the employee or plan member. That seems to be the fairest way for employers to continue to offer benefits and engage the members in an ever-changing health care environment. By changing benefits there may be no increased cost on the premium itself.

How does this cost shifting impact employees?

For example, the employer increases the physician office co-pay from $25 to $40. If you are healthy and see a doctor once or twice a year, that increase may be no big deal. If you are chronically ill and need to see a doctor frequently, that change may have added $500 or more to the cost of care in the new year.

What are the dangers of not understanding your exposure?

Many decisions are made by looking at co-pays and whether your physician is ‘in-network.’ People think, ‘I’m not going to be in the hospital for a week, or have any outpatient surgeries. I’m going to pay $25 to see my doctor, $10 for my prescription (and my monthly premium).’ But that isn’t the total picture. In many plans, co-pays apply for prescriptions and physician office visits. Then there are the tests, labs, x-rays or other outpatient testing, CT scans or MRIs. What about an outpatient procedure or surgery or an extended hospital stay? The deductible and co-insurance applies, but to what and how much? Statistically, most people do not have enough claims to reach their deductible. Those that do may end up meeting their deductible and the co-insurance out-of-pocket maximum ($5,000 to $10,000.)

How can these exposures occur?

Let’s say eligible expenses from the hospital are $20,000. You immediately owe the deductible. For this example, consider a $2,000 deductible. There is 20 percent co-insurance on the next $18,000. Or $3,600 is still owed by you. You’ve paid $5,600, and it’s assumed that once out of the hospital you’re healthy and can go back to work. This is not likely as there are usually residual costs associated with rehabilitation that may require co-payments. Those costs are determined by the plan. The actual items covered are explained in the information provided by the insurance carrier or the benefit booklet from the employer in the case where the health coverage is being self-insured. The point is the information is usually available before benefits are required. Employers must continue to communicate and educate employees about the health coverage being offered.

How can employers determine what level of exposure is best for their health plan?

The higher the cost sharing or risk being moved to employees, the lower the premium you will have to pay out. What is ‘fair’? The hard part is how to strike a balance when deciding. Employers are making financial decisions for the company. Yet the new benefits will apply to them and their family. The total financial exposure has to be considered. If the benefits remain ‘rich,’ premiums increase as benefits are enhanced or added. Many employers are looking to offer a more complete program that includes employee responsibility for wellness or at least health improvement. If you practice healthy behavior, out-of-pockets or premium sharing may be reduced.

How can employers ensure they are making the right choice?

Employers struggle with this. What is the most cost-effective and best value for the company and in the best interest of my employees? In simplistic terms it is an economic decision for the company. But we want to take care of our employees and recruit for the best and brightest. One of the answers is choice. Offer a couple of benefit plans.

Employers are freezing contributions. By defining their contribution now and in the future employers are limiting their exposure. That means greater responsibility to educate and communicate available options to the employ. What does the health coverage include — deductible amount, out-of pocket maximums, co-pays, drug cards, physicians, hospitals and exclusions? Any required activities that may lower employee costs — smoking cessation or exercise? Any additional value-added programs? Employees tend to look at health coverage differently than an employer and especially if there are specific health care needs.

The right choice is the one determined by you. Each employer’s specific needs and circumstances are different. And with the unknowns created by health care reform, it’s bound to get just plain crazy.

Al Ertel is the chief operating officer with Alliant Health Plans. Reach him at (800) 664-8480, ext. 234, or

The America Invents Act, passed Sept. 16, 2011, contains reforms that will affect businesses in many ways, including how they must pursue patents. One of the goals of this legislation is to standardize U.S. law with the way the rest of the world handles patents. The change that is receiving the most attention is the switch from first-to-invent rights to first-to-file. The new system goes into effect in March of 2013.

“The U.S. has its own version of first-to-file,” says Timothy E. Nauman, partner with Fay Sharpe LLP. “But generally, it will be similar to what the rest of the world has been doing. The patent will be issued not to who first thought of the new idea, but to who filed first.”

Smart Business spoke with Nauman about what you need to know about the changes, and how they may affect your business.

Have any of the act’s reforms gone into effect already?

Yes, a few. Accused patent infringers used to be able to claim the plaintiff’s patent was invalid because it didn’t describe the ‘best mode’ of practicing the invention. ‘Best mode’ as a defense is no longer supported by the patent act.

Second, there was a provision that allowed any third party to bring a lawsuit indicating that a patent owner was mis-marking its patents. For example, a manufacturer may make a product for which the patent expired years ago. However, the mold was never changed, so the expired patent number still shows up on recently manufactured products.

Someone figured out that you didn’t have to suffer competitive injury to file a false marking lawsuit. Companies grew tired of dealing with constant lawsuits, and there was a backlash. Now, you have to actually be competitively damaged to sue.

How will the act affect patentability or patent validity claims?

There are new procedures for challenging the patentability of an invention or to challenge the granting and validity of a patent. These changes aren’t going to be enacted until September, 2012.

One of the new procedures is the post-grant review process, a nine-month period in which a patent can be challenged. This is similar to what is called an ‘opposition’ overseas. For example, this provides a way to challenge the patent at the administrative level instead of going to court. This is useful, because going to court can be an expensive proposition and time-consuming.

For businesses, this opposition process could be looked at as a hassle, but it could also be considered helpful in removing the garbage from the family of valid patents. If your patent survives the challenges provided by these new processes, it’s probably a good patent. If your invention is worthy of a patent, it would likely pass these challenges anyway.

How will the act change the way rightful patent owners are determined?

The U.S. has always used a first-to-invent system. In that system, if you came up with an idea, and I came up with the exact same idea completely independent of you, and we each file a patent application, generally, the patent is awarded to the person who is determined to have been the first-to-invent.

You and I could end up in an interference proceeding, in which the Patent Office or the Court would evaluate the evidence of first-to-invent. We have to show when we first conceived the invention, when we reduced it to practice, and how diligent we were.

Inventors keep notebooks with this information, which are signed and dated by a lab partner or someone else who works closely with them. You can also prove you came up with the invention on a particular day by showing an e-mail that describes the invention. The e-mail recipient will be able to corroborate that evidence. Without evidence, you could lose to a party that conceived or reduced the invention to practice after you.

The switch to a first-to-file system is designed to simplify the process, and will make U.S. patent laws similar to procedures in most other countries in the world.

How will the change from first-to-invent to first-to-file change the way U.S. businesses operate?

Some will tell you the change to first-to-file doesn’t mean a thing for big businesses, because multi-national companies file applications around the world anyway. They have already been dealing with a first-to-file system in other countries. The fact that first-to-file is being enacted in the U.S. won’t change how these companies pursue patents.

Others will tell you there is a bit more urgency, an added pressure to reduce the time from when an invention is conceived to the time the patent application is filed to minimize the chance of a competitor filing first on a similar invention.

Newspapers have reported that this was a friendly patent act for the little inventor. The fees may have gone down some for them, but one potential problem is that the small inventor may have to invest in filing an application a little quicker than they would have wanted. This is no small issue, especially when you consider the thousands of dollars it costs to file and pursue an application. In the past, a patent attorney may have encouraged the inventor or company to test the market for six to nine months to see if there is a demand for the product, get a business plan ready, then decide whether or not to file. Today, a patent attorney may tell them to push their timeframe up a bit to complete a patent filing.

Timothy E. Nauman is a partner with Fay Sharpe LLP. Reach him at (216) 363-9136 or

Commercial landlords have always struggled with the need to obtain security deposits and other collateral from tenants to protect themselves if tenants should default on their lease obligations.

This is particularly important with office and retail leases in which the landlord incurs large upfront costs, including the real estate broker’s commissions and the cost of the tenant’s buildout, says Philip Glick, senior vice president with ECBM Insurance Brokers and Consultants.

“If a new tenant should break the lease in the early years of the term, the landlord would be out of pocket for those upfront expenses,” says Glick. “An apartment landlord is subject to similar risks if a new tenant causes damage to the unit or breaks the lease midterm, particularly if the landlord has upgraded the unit for the tenant.”

Smart Business spoke with Glick about how to insure against tenant defaults and new solutions to address the problem.

How do landlords typically handle the risk of tenant defaults?

Traditionally, landlords manage this risk by requiring at least two months of rent up front in cash from a new apartment tenant and a cash deposit, plus, often, a letter of credit for one to two years of rent from a new retail or office tenant. Prior to the recession and real estate meltdown, landlords and tenants had to meet reasonable collateral requirements. The required letters of credit from office tenants were routinely available at a modest cost from their banks. In better economic times, apartment tenants also were able to put up required rent deposits fairly easily.

What has changed in this landlord-tenant marketplace?

Along with the recession and major problems at many banks, the cost of letters of credit has risen dramatically and they have become much more difficult to obtain.

The economy has left many solid renters short of cash. At the same time, in cities with a surplus of available apartments, landlords are feeling competitive pressures, forcing them to collect smaller rent deposits. Where they are able to get such deposits, local regulations often require them to escrow the tenant’s rent deposits in no-interest or very low-interest-bearing accounts. Local tenant protection laws also impose strict requirements for administering and returning deposits.

What deposit alternatives are available?

Over the last few years, new insurance policies have become available to landlords to insure the risks resulting from tenant lease defaults. Coverage can include a set number of lost months of rent, legal fees for eviction and attempted collection for overdue rent,  and the cost of repairing damage to the leased space due to tenant neglect. Coverage can protect up to 12 months of lost rents for retail, office and industrial properties. Coverage for three to four months of lost rents from apartment defaults is also available.

How does this coverage benefit tenants?

This new insurance would allow an apartment renter to sign and begin a new lease with no cash down. Office tenants can occupy their new space without the trouble and excessive cost of providing cash and letters of credit to secure their leases. In addition to replacing escrow or collateral deposits for new leases, provided a tenant has been current on the rent for a reasonable time on an existing lease, a landlord may be able to enroll an existing tenant in a new insurance program and return existing collateral to the tenant.

Who pays for this insurance?

The cost of this insurance can be paid for by the landlord, or optionally charged back to tenants as an additional monthly rent charge in return for waving collateral on a new lease or giving back existing collateral on a current lease. In addition to streamlining the signing of new leases, the use of this insurance can provide a strong competitive/marketing advantage to a landlord in a very competitive real estate market. Because of this advantage, many landlords will either pay for or share the cost of this insurance with their tenants.

How expensive is this insurance coverage?

The cost is comparable to the annual cost of letters of credit for an office or retail tenant. Coverage averages approximately 1 percent to 1.3 percent per month of the monthly rental payment for an apartment tenant.

When a landlord pays the premium, the net cost to the insurance can be significantly less because the insurance company may provide a dividend return back to the landlord for a portion of the premium if tenant defaults are modest.

How does the enrollment process work?

For apartment leases, the insurance company will review and approve, or require modifications in the prospective tenant application, including employment and credit checks. If the tenant meets the landlord’s preapproved enrollment guidelines, the tenant would be enrolled automatically.

For office, commercial and retail tenants, insurance companies require each proposed new business tenant to complete a brief financial questionnaire and pay for a credit check for the new lease application. The process can be done online, and approval is usually completed within 24 hours.

Are there other options for an office or retail tenant to secure its lease obligation?

Commercial tenants can apply for a tenant default bond, which can be provided to their landlord as an alternative to letters of credit. This, however, is not insurance, because a defaulting tenant will be required to immediately reimburse the surety company that provides the bond on behalf of the landlord.

Given the continuing difficult lending environment, a tenant default bond may be somewhat less expensive and easier to obtain than a bank letter of credit.

Philip Glick is a senior vice president with ECBM Insurance Brokers and Consultants. Reach him at (610) 668-7100 or

Monday, 26 October 2009 20:00

Layoff litigation

Reductions in force (RIF) have become a necessary — although unpopular — tool for companies that must cut their costs to improve profitability. Coming to grips with laying people off is stressful for any business owner, but even more traumatic is the realization that downsizing can expose your company to claims of discrimination.

“While the long-term benefits of a reduction in force may be clear, they present potential problems involving the added costs and distraction of employment litigation,” says Bruce A. Truex, senior partner at Secrest Wardle. “Taking certain steps and following certain procedures before the layoff may help a company avoid such lawsuits.”

Smart Business spoke with Truex about how to strategically plan for downsizing now to avoid litigation later.

How can layoffs prompt litigation?

Age discrimination is the most common source of layoff-related lawsuits because the highest-paid workers are often the oldest and a target for employers reducing costs. The EEOC reported a 30 percent increase in age discrimination and retaliation claims in 2008 and predicts a record number of new claims in 2009. Laid-off workers may also allege they were targeted because of race or gender.

Reduction in force for bona fide economic reasons is a termination for just cause and, therefore, a defense to a claim of discrimination. However, it does not operate as a complete defense to a discrimination claim where there is sufficient evidence for a jury to conclude that the employer unlawfully selected the employee for discharge for impermissible reasons. Because the discriminatory element needs only be proved to be a determining factor, rather than the sole or primary factor for discharge, an employer’s financial need to reduce its labor costs does not insulate the employer from liability for violating an individual’s civil rights. The employer must be able to persuasively explain the economic reason for selecting particular employees for layoffs.

How can discrimination litigation be avoided?

The employer might consider alternatives to layoffs, such as reducing benefits, eliminating overtime, reducing work hours, freezing or reducing wages, and cutting dividends. If a hiring freeze in all areas is not possible, freeze those positions that are similar or identical to the positions of employees who will be laid off. Such a freeze tends to reassure the employee that the employer is fair.

Incentives such as early retirement and buyouts can also reduce the risk of legal liability. Although these alternatives often cannot prevent layoffs, the real value is that they can minimize the argument that the employer could have avoided the reduction by other cost-cutting measures. This argument is often advanced at trial to support a claim that an RIF was a pretext for unlawful termination.

What’s the first step for an employer considering downsizing?

First, review the company’s personnel policies and employment contracts to determine whether they in any way restrict the right to implement layoffs or require the company to pay severance benefits. If such policies exist, they must be replaced with policies indicating that the employer has an absolute and unfettered right to conduct layoffs.

The employer’s severance policy should state that severance is not guaranteed. Severance is at the sole and absolute discretion of the employer, and any severance will be conditioned on the execution of a written release or waiver of all claims against the employer.

How can employers develop a strategic plan for downsizing?

The plan must explain the economic justification for the RIF. The company should document the economic problems it is experiencing, including financial losses, operating expenses and lost market share. Once the plan has been completed, the company must develop and document the basis for selecting the positions to be eliminated.

The employer must then establish the criteria for selecting which employees holding the eliminated position will be included in the layoff. The employer must be able to explain its legitimate, nondiscriminatory reasons for selecting certain employees for termination rather than others. That explanation will only be credible if there is documentation establishing that the process was objective and uniformly applied.

If a seniority-based test is used, the employer must clearly define the type of seniority used (i.e. job, company or department seniority). If the employer makes its selection decisions based on performance, it must clearly define the criteria applied and be objective in its application of that criteria to each individual.

While subjective judgments regarding performance are not illegal, per se, they will be closely scrutinized by courts and juries to assure that the judgments used were not a pretext for discrimination. Consequently, an employer should never use an economic layoff as an excuse to terminate a problem employee.

What else can an employer do to avoid typical layoff pitfalls?

The employer should select layoff decision-makers who have hired minorities, women and older employees. Where the same individual hired and fired the employee, a fact-finder may draw an inference that discrimination is not a determining factor in the downsizing decision.

Once the candidates to be laid off have been identified, a review of each individual’s circumstances should be conducted to avoid retaliation claims. Employers should determine whether the individual has a pending EEOC claim or workers’ compensation claim, has reported illegal activities under state or federal whistleblower statutes, is on leave under the Family Medical Leave Act or is involved in other legal disputes involving the company. Laying off such an individual may well be an invitation to a retaliation lawsuit.

Bruce A. Truex is senior partner with Secrest Wardle. Reach him at (248) 539-2852 or