Tag Archives: risk management

Lost Database is Not Insured

Database“If you can’t reach out and touch it, it is not insured.” That was the gist of a court’s ruling in a lawsuit brought by a company that lost a large amount of electronically stored data when an employee inadvertently pressed the “delete” key on a keyboard. The company looked to its insurer to cover the expenses for restoring the data and to recover lost income caused by the disruption. The insurer denied coverage on the basis of policy language that limited coverage to a “direct physical loss of or damage to” covered property.

The language from the policy was meant to be interpreted in its ordinary and popular sense. Thus, “physical” means “tangible” or capable of being touched. The information in a computerized database, in and of itself, has no material or tangible existence, unlike a storage medium for information, such as a disk, tape, or even papers in a file cabinet. The court concluded that when the employee sent the data into thin air with an unintended keystroke, there was no direct physical loss within the meaning of the insurance policy. (The court distinguished this case from another case in which the loss of a computer tape and the data on it were covered under a policy covering “physical injury or destruction of tangible property.”)

Recognizing that the dictionary was not on its side, the company that lost its data also argued that public policy should weigh heavily in favor of insurance coverage. After all, loss of information in the same manner as occurred in this case is common, and our economy unquestionably is highly dependent on computers and the intangible information that they contain. However, the court declined to use public policy as an “interpretive aid.” There are plenty of useful legal principles for construing insurance contracts, but using public policy to redefine the scope of coverage agreed to by parties to a contract is not one of them. The lesson: Questions of insurance coverage are to be answered solely in the language of the policies and, therefore, careful drafting of policy language is critical.

 

Small Business – Maintaining a Safe Workplace

safety-firstIn theory, and often in practice, the safety of the workplace is a top priority for any business. But while large companies may have personnel devoted exclusively to the subject, safety is but one of many responsibilities for the owners of small businesses. In some cases, the matter of keeping workers safe slips down the list of priorities. There to make sure the issue is not neglected is the federal Occupational Safety and Health Administration (OSHA).

OSHA has written very detailed standards for maintaining workers’ safety. It also has an expansive mandate to enforce those standards and the various provisions of the Occupational Safety and Health Act. Removing dangerous conditions is only common sense from any point of view, including employer-employee relations and a calculation based solely on dollars and cents.

The first step for any small employer is to be informed and educated as to workplace dangers, not all of which may be obvious. OSHA maintains an extensive website (www.osha.gov) that includes information that is especially pertinent to small businesses and guidance about specific threats to safety. Insurance companies provide another good source of information, since these companies have a vested interest in enhancing workplace safety and thereby minimizing insurance claims.

While exotic threats such as anthrax or Legionnaires’ disease may capture headlines, the leading causes of serious workplace injuries are more ordinary. They include overexertion, such as excessive lifting, pushing, pulling, holding, carrying, or throwing an object; falls on the same level (as distinct from falls from a height); and “bodily reaction,” which covers injuries from bending, climbing, slipping, or tripping without falling. Regular inspections and repairs, not to mention a vigilant workforce, can head off many such injuries.

Apart from monetary penalties that may follow an OSHA investigation, many billions of dollars each year are paid by employers in medical costs, wage payments, and insurance claims management as a result of workplace injuries. Small businesses get some breaks from OSHA, in the form of smaller monetary penalties and some exemptions from recordkeeping requirements for employers with 10 or fewer employees. Still, given their smaller financial reserves, small businesses, in particular, are well advised to live by the truism that an ounce of prevention is worth a pound of cure.

The Dangers of Employee Internet Use

IMG_1244By some accounts, a large majority of employees access the Internet on company computers for personal reasons while at work. The obvious adverse effects of this on productivity are only the tip of the iceberg with regard to the potential headaches that such activities can cause for employers. Personal Internet activity by employees can pose security risks to the company’s computer network itself, such as by exposing a network to a computer virus.

Less immediate but just as serious is the threat of legal liability of the employer to injured third parties. Some scenarios are not difficult to imagine. An employee uses his computer as a tool for sexually harassing fellow workers by visiting pornographic websites. Or, an employee embroiled in a bitter domestic dispute uses his office computer to communicate threats to his spouse, and the employer fails to take action.

In a recent case, one such nightmare scenario was all too real for an employer that had to defend itself against the alleged victims of an employee who used a workplace computer for conduct that was criminal, not just indicative of poor judgment. This case may be the first reported decision on the matter of an employer’s liability to a third party for having failed to take action to stop an employee from using a company computer in a manner that harmed the third party. It most certainly will not be the last such case.

The case involved an employee who used his company’s computer at work to visit pornographic sites, including some relating to child pornography. Over a period of time, a supervisor and some coemployees became aware of this activity and complained to management. Eventually, the offending employee was confronted and was told to stop such use of the computer, but, a few months later, he was again discovered to have accessed pornographic sites.

Eventually, the employee was arrested on child pornography charges, including allegations that he had transmitted nude pictures of his 10-year-old stepdaughter over his office computer to a child pornography site. The employee’s wife, who divorced him, sued the employer for failing to investigate and for failing to report the employee’s viewing of child pornography. The case was settled, but not until a precedent was set when the lawsuit survived attempts to have it dismissed before trial.

There are limits to what companies can or should do to prevent improper use of company computers, but it is only prudent to take at least some basic measures. It makes sense to have a written e-mail and Internet use policy that clearly informs employees of what, perhaps, they should already know–that the employer has and reserves the right to monitor employees’ use of the company’s computers and to discipline violators. In addition, there needs to be even-handed enforcement of the policy. Even the best written policy will do little to convince a jury, if it comes to that, that a company has done all it reasonably could have done, if the evidence is that the policy was toothless or rarely enforced.

ADA Protects Employees With Cancer

ID-100149683The Americans with Disabilities Act (ADA) protects disabled persons from discrimination in employment settings. When you first think of individuals with disabilities, the millions of Americans who have some history of cancer may not immediately come to mind. But, as the Equal Employment Opportunity Commission (EEOC) discusses in a recently published guide, a cancer victim may well be entitled to the protections afforded by the ADA.

Cancer as a Disability

Cancer is a “disability” within the meaning of the ADA when the cancer itself or its effects substantially limit one or more of a person’s major life activities. The limiting condition needs to be more than just temporary in nature. Just what constitutes a major life activity is difficult to succinctly describe, but an exhaustive list would be a long one. Interacting with others, sleeping, eating, and walking are but a few examples. As with other types of conditions, cancer will be treated as a disability if it does not, in fact, significantly affect a major life activity but an employer treats the individual as if it does. This reflects the ADA’s goal of attacking discriminatory stereotypes and assumptions when they motivate an employer’s decision making.

Information Gathering

During the time period before any offer of employment has been made, an employer may not ask an applicant if he or she has (or has had) cancer, or about cancer-related treatments. The employer is permitted to ask if an applicant can perform particular job requirements. If an applicant has volunteered the information that he or she has (or has had) cancer, the employer still may not question the applicant about the cancer or the applicant’s prognosis, but the employer may ask questions about whether the applicant will need an accommodation and, if so, what kind.

Once a job offer has been made, the employer may ask health-related questions and require a medical exam, as long as the employer treats all applicants for the same type of position in the same manner. The discovery that an applicant has (or has had) cancer cannot be used to withdraw a job offer if the applicant can perform safely all of a job’s fundamental duties, with or without reasonable accommodation. When an offer has been accepted, the employer can ask questions about the employee’s health or require a medical exam only when it has a legitimate reason to believe that the cancer may be affecting the employee’s ability to do the job, and to do it safely. With a few exceptions, an employer must keep confidential any medical information learned about an applicant or employee.

Reasonable Accommodations

Within reason, the ADA requires employers to make adjustments or accommodations to enable people with disabilities to enjoy equal employment opportunities. An employer is not required to subject itself to undue hardship (that is, significant expense or difficulty) in order to accommodate someone. Nor must an employer remove an essential function from a job, although it may choose to do so. As for cancer-related disabilities, some individuals may need, and are entitled to, reasonable accommodations because of the cancer itself, the effects of cancer medication and treatment, or both. A request is necessary to trigger the duty to make a reasonable accommodation, but no “magic words” are required and, in fact, the request may come from someone acting on behalf of the disabled person. The guidance is available on the EEOC’s website at http://www.eeoc.gov/laws/types/cancer.cfm.

New Options Business Services has experienced human resource consultants ready to answer your questions.  Call us today!

Does the ADA Apply to Websites?

I Can ConnectIn 2006, a federal trial court in California’s 9th Circuit became the first court to find that a commercial website must be accessible to the disabled, and to blind customers in particular, because of the prohibition against disability discrimination by places of public accommodation contained in the Americans with Disabilities Act (ADA).

The retailer argued to no avail that the demands of the ADA do not apply, because a website, since it is not really a physical place at all, is not a “place of public accommodation” within the meaning of the ADA. The court reasoned that the ADA requires full and equal enjoyment of the services “of” any place of public accommodation, not services “in” a place of public accommodation. The ADA is not only about physical access to places.

The court found that the retailer’s many brick-and-mortar stores constituted the “places” of public accommodation. The retailer’s website serves as a “gateway” to such stores, especially for blind customers. If the website is not fully accessible to them, it impedes those customers from coming through the gateway, that is, from having the “full and equal enjoyment” of the stores’ goods and services that the ADA mandates. The court drew an analogy to a case in which a telephone screening process for prospective contestants for a television game show violated the ADA by discriminating against the hearing disabled, even though the discrimination took place away from the studio where the show was produced.

Since this first ground-breaking case (National Federation of the Blind v. Target Corporation, 452 F.Supp.2d 946 (2006)), federal courts around the country have been split regarding the application of the ADA to “places of public accommodation”.  Significantly, the court in Nat’lAss’n of the Deaf v. Netflix, 869 F.Supp.2d 196 (D. Mass. 2012) held that web-streaming services offered by Netflix are subject to Title III of the ADA even without a “nexus” to a physical place of accommodation.

So what is a webmaster to do?  The Department of Justice, which is responsible for enforcing the ADA, is developing regulations pertaining to commercial websites.  Unfortunately, we won’t even see the draft until April of 2016.

In the meantime, there is useful information available.  The DOJ’s recommendations for state and local government websites is chock full of tips for upgrading a business website.  You can find the recommendations here.

The Worldwide Web Consortium, a private organization, has also drafted useful technical guidelines for complying the ADA.  You’ll find their webpage at http://www.w3.org/TR/WCAG20/.

But why go it alone?  New Options Business Services has terrific website designers and consultants ready to help you get your message to everyone.  Call us today!

The Hazards of Résumé Screening

MBTIIt is popular now for employers to use screening tests, often administered on the Internet, to weed out a large portion of applicants for job openings before making the more difficult selections from among those who survive that first cut. Such tests are supposed to measure cognitive ability, personality characteristics, or, in fewer instances, the ability to perform in a simulation of the duties that the job requires. The easily administered and scored screening tests have their appeal, especially if you are charged with filling, say, 10 positions from 100 people who have submitted résumés.

A downside to screening tests is the risk that rejected applicants may persuade a court that the tests essentially were a tool to accomplish prohibited discrimination, even though that may not have been the employer’s intent. For example, an employment test that impacts racial minorities or women disproportionately could lead to liability unless the employer can show that the test is sufficiently related to the job and is necessary to the employer’s business.

Another potential pitfall stems from the prohibition in the Americans with Disabilities Act (ADA) against medical testing of job applicants. There sometimes is a fine distinction between acceptable personality or psychological tests and prohibited medical tests. The screening of applicants also could run afoul of some state statutes that protect against invasions of privacy.

When individuals adversely affected by a personality test challenged the test in federal litigation under the ADA, an appellate court struck down the test. The test, at least in some of its 502 questions, was a prohibited examination of the applicants’ mental health. Its true or false questions went much farther than the acceptable lines of inquiry about matters such as working well in groups or in a fast-paced office. Instead, they ventured into the realm of psychiatric disorders. In this case, a prospective manager of a rent-to-own store could not be required to give true or false answers to statements such as: “I see things or animals or people around me that others do not see”; “At times I have fits of laughing and crying that I cannot control”; or “My soul sometimes leaves my body.”