8 Reasons pre-screening employees is just smart business

Matthew-Bauer

I spend my workday helping Sinclair clients manage risk, avoid hidden pitfalls, and implement initiatives that give them the best chance to be prosperous and successful. I do this work happily, it gives me great joy! That’s why I am such a strong advocate of making sure organizations have a structured, consistent approach to pre-screening employees.  It floors me that more than half of organizations do not conduct any kind of background check.

Hard work and strategic planning can suffer mightily in the face of bad hiring decisions. Too often employers don’t take pre-screening seriously enough, only to deal with negative consequences after the fact.

Best practices in hiring include background and drug screening and a thorough dive into references, social media, and other online sources. This isn’t about nitpicking, playing “gotcha” with someone who inflates a title or educational achievement on a resume, this is about protecting your organization from the potential for serious disruption within.

Here are eight reasons why pre-screening potential employees is not only smart risk management, but smart business:

Reduce overall liability — If your organization is one of the more than half that don’t do even basic criminal background checks, you could easily be hiring somebody with a violent past, perhaps even with a track record of altercations in the workplace. Once that person is within your fold, your staff is at risk and you’ve created a huge liability for your company.

Reduce health care and absenteeism costs — Employees that bring substance abuse problems to the workplace cost their employers big time, to the tune of $81 billion annually. In no way should sober individuals who previously had a problem be disqualified from a position, but an active alcoholic/drug abuser is another matter entirely, and one easily corrected by pre-employment screening.

Customer relations — You’ve recruited a young person for a front-line, customer facing position. He seems pleasant enough, and impressed you with his enthusiasm for working with the public. Outside of management eyes though, he can be rude, unhelpful, and catty, alienating your customer base. Had you followed up on reference checks, you would have learned that’s why he was shown the door at his last job.

Avoid poisoning the office culture — She had the right education and experience and did well in interviews. You were in a rush to fill a critical position and didn’t worry about references who didn’t call back. Turns out your new hire is a Debbie Downer who is quick to bring her personal grievances into the workplace, adding tension and dysfunction that can easily spread and grow.

Keep management from getting distracted — Once taken root, a difficult employee becomes a handful to manage, consuming an outsized portion of attention from your senior staff. It’s amazing how quickly one or two problem employees can suddenly command so much energy.

Keep flexible — Difficult employees tend to be the least flexible, the least open to management initiatives and changes in strategic direction. They may go along with the program when the boss is within earshot, but as soon as she’s out of sight, the problem employee is quick to badmouth the strategy to others, gumming up the works, sowing doubt, and making it harder to get buy-in from staff.iStock_000019568102Small

Avoid getting stuck — Despite the fact that nearly all non-union workers are “at-will,” problem employees are hard to get rid of without incurring substantial litigation risk. Plus doing so can also disrupt staff dynamics. It’s better to do everything possible to avoid the situation in the first place.

Avoid negative publicity — When it comes to bad publicity, it used to be you only had to worry about the folks who bought ink by the barrel. Now you have to worry about everyone with an internet connection…which is everyone! Disgruntled ex-employees can trash you on Facebook, Twitter, and other social media platforms. They can leave negative reviews on sites like Glassdoor and a host of others that exist just for that purpose (and have very good SEO).

In short, your problem employee is not going to go quietly, so the best approach is to try as best you can to avoid hiring them in the first place.

Not sure how to implement a best-practice pre-screening program at your organization? Contact me today to see if Sinclair can help.

Matt Bauer                                                                                                                     President,Sinclair Risk & Financial Management                                                            mbauer@srfm.com

Do you have the right controls in place to help prevent a data breach?

_JBK5366The news on hacking, data breaches, and the state of cyber security is largely gloomy. Consider that a record number of companies dealt with significant data breaches last year and that the cost per compromised customer record keeps going up.

Indeed, research by the Ponemon Institute reflects a reality of data breaches that borders on inevitability. But all hope is not lost! Getting a flu shot isn’t absolute protection against the flu, but it’s still a smart preventative measure that can help even if the worst happens. Having the right controls in place to ward off a data breach is similarly wise.

Train your staff — The hacker stereotype of shady foreigner or maladjusted teenager may be true in some cases, but increasingly, data breaches are occurring because well-meaning, untrained staff inadvertently take simple actions that cause complex problems. Clicking a link in a phishing email that appears to be from a vendor or colleague can expose your systems to viruses and or worse. Train new AND current staff in email protocol and password best practices. Reinforce the training with quarterly refresher sessions and encourage staff to be vigilant about anything digital that seems even slightly unusual. Use the concept of “if you see something, say something” to create a culture where it becomes everyone’s job to help prevent a data breach. Your IT department can’t do it alone.

Get expert advice — Cyber security is a field that changes rapidly, with new threats  data-breachemerging in almost real time. Most organizations need to supplement their in-house tech staff with outside expertise. This doesn’t have to mean hiring high-priced consultants. For example, Chubb offers customers its eRisk Hub, which contains a wealth of best practices on network security and data breach prevention.

Make sure you’re covered — When you’re caught in the rain, it’s much better to have an umbrella, but you’re quite likely to survive either way. In a data breach storm however, having comprehensive cyber liability protection can mean the difference between a company’s life and death. These policies help manage cyber risk by providing liability coverage against third-party (hackers) and first-party (insiders) data breaches. Depending on the breadth of your policy, they will cover your legal liability, income lost from business interruption, and help with other expenses such as public relations fees. Data breach costs are substantial, an average of $145 per record last year, up 9% from 2013.  

Some cyber liability policies will also provide you with a network security risk assessment that can help you find and fix vulnerabilities before a peril occurs.

As with the flu, sometimes no matter what you do, you find yourself stricken with a data breach. But having controls and sound risk management in place will help take away the sting and quickly get your company back to health.

Stephen Davis
Vice President
sdavis@srfm.com

Contractors – The fine print on Waivers of Subrogation

Jonathan-BelekYour firm gets tapped to build a brand new office building in a promising location. The budget is high and the timeline reasonable. You can’t wait to sign the contract and get started. That “Waiver of Subrogation” it includes? You’ve seen it before and haven’t thought too much about it, as it seems to be becoming standard boilerplate. But just how important is it? Super important.

Waivers of subrogation are pretty much a must-have in today’s contracting world, and they create a significant condition that bears understanding in full. The basics on what exactly is subrogation and why would one agree to waive it are as follows:

A building is destroyed because of the negligence of an electrician working on it. This is a standard “covered peril” and per the owner’s insurance policy, the owner’s insurer is obligated to make the owner whole and pay a claim to cover the loss. The legal principle of “subrogation” then allows the insurer to literally step into the legal shoes of the owner and pursue the electrician (more likely, the electrician’s insurer) to recover the funds it paid Contractual Risk Managementout to the owner.

But if the owner and electrician had agreed to a “waiver of subrogation” as part of their contract for service, the owner’s insurer would not be able to pursue the electrician for damages and would instead carry the full risk exposure.

Naturally, waivers of subrogation often mean higher premiums, especially if a carrier is forced to pay a claim and cannot pursue a negligent third-party for reimbursement.

Sometimes contractors working on a particular job all agree to waive subrogation to avoid the uncertainty, hassle, and cost of litigation, and to collectively place the risk on the insurance carrier whose party suffered the loss, regardless of who caused it. Some would argue that minimizing the possibility of legal action and placing risk squarely in the lap of the insurers promotes better business relationships and keeps costs lower…(assuming of course, that nothing happens and premiums don’t skyrocket after a claim).

But waiving subrogation also means waiving your own right to sue. After all, when an insurance carrier subrogates, they are acting as a legal stand-in for the insured, assuming his or her rights. But a waiver is a surrender of rights to sue someone who causes you injury.

Feeling squeamish about giving up your right (and by proxy, the right of your carrier) to sue to recover damages? That’s totally understandable. But the reality in today’s construction marketplace is waivers are becoming standard. Don’t like it and don’t want to agree to it? In many cases you won’t get the job.

If you agree to a waiver of subrogation, what happens when the job is complete? That’s not always clear in some contracts, which can create the risk of unexpected future liability.

Once a project is complete, the owner’s insurance company may still try to pursue architects and contractors to recover damages if issues arise after the fact, even from fire, flood, and other natural disasters.

Obviously at this point, it’s in the interest of those third-parties for the waiver of subrogation to survive project completion. The clearest way to make sure that’s the case is to include a “completed project insurance clause” that specifies that a waiver of subrogation survives.

Looking for further guidance on the complicated topic of subrogation? Get in touch with me today.

Jon Belek
Sinclair Risk & Financial Management

jbelek@srfm.com

Senate Passes ACA Small Group Market Rule Repeal

Matthew-Bauer

On Oct. 1, 2015, the U.S. Senate passed legislation repealing the Affordable Care Act (ACA) requirement that the small group market in every state be expanded to include businesses with 51-100 employees.  

The Protecting Affordable Coverage for Employees (PACE) Act was passed by the U.S. House of Representatives earlier in the week. It has been reported that President Obama will sign the Act into law, although some sources previously indicated that he might veto it.

Small Group Market Expansion

Most states have historically defined “small employers” as those with 50 or fewer employees for purposes of defining their small group health insurance market.

Effective for 2016 plan years, the ACA expanded the definition of a “small employer” to include those that employed an average of between one and 100 employees.

The PACE Act eliminates the ACA’s new definition and gives states the option of expanding their small group markets to include businesses with up to 100 employees.

Impact on Employers

The expansion of the small group market was expected to have a significant effect on mid-size businesses. These businesses would have been required to buy coverage for employees in the small group market, which is more heavily regulated than the large group market.

This change was expected to increase premiums costs for employers and employees and reduce flexibility in plan design due to added small group market requirements.

Some states have already amended their state laws to adopt the expanded small group market definition. These states will have to take action to undo those changes.

Most states are taking already taking advantage of a transition rule provided by the Dept. of Health and Human Services (HHS). HHS has said it will not enforce small group market regulations for mid-size businesses if their policies are renewed by Oct. 1, 2016.

This means that many employers have already been able to delay moving from the large group to the small group market. The PACE Act will make this relief permanent.

Not sure how this affects your organization? Contact me today to see if Sinclair can help.

Matt Bauer
President
Sinclair Risk & Financial Management

mbauer@srfm.com

How shopping for a cell phone can lead to identity theft

_JBK5366We all know that acquiring the latest and greatest iPhone or Samsung Galaxy S comes with a price, but in the case of 15 million consumers, it also came with the now real threat of serious identity theft.

The New York Times recently reported that hackers stole data of T-Mobile customers from the credit reporting bureau Experian, one of the “big three” data conglomerates that has files on nearly all of us.

The wide-ranging breach affects customers and those who provided information but never actually became customers, from Sept. 1, 2013, to last month. Hackers stole Social Security numbers, home addresses, birthdates, and other personal information.

Now, those who innocently shopped for a cell phone two or three years ago (or even just a few weeks ago!) have to worry about things like false tax returns and loan applicationsGLobal security concept filed in their name.

Scary, and becoming all too common. Remember Target’s 40 million customer data breach in 2013?

Fittingly, October is Cyber Liability Month, which is a good time to think about how protect yourself. You can’t control the security practices of every company you do business with, but you can take steps to minimize the damage if you are one of the unfortunate few caught up in a breach.

Watch for it — Don’t ignore odd mail from financial institutions you don’t recognize. It might be a sales pitch, but it might be correspondence about “your” new loan. On the flip side, if financial mail you are supposed to receive suddenly stops, it could be a sign of a fraudulent change of address.

Know your credit — You can get a free credit report once a year from the “big three” bureaus (Experian, Equifax, Trans Union) at www.annualcreditreport.com. Continually monitor by marking your calendar to pull a report from just ONE of them every four months (Jan. 1, May 1, Sept. 1). Certain credit cards will provide you with your actual credit score for free, which is valuable if you’re loan shopping. But to guard against identity theft, you need to be proactive and check the reports themselves for fraudulent accounts. Even if the thief is paying on time, you don’t want anybody piggybacking on your good credit.

If you’re a victim — First, don’t panic. Notify the “big three” and insist a “fraud alert” warning be added to your record. Document all fraudulent activity and share with the bureaus. Get in touch with us to discuss how your homeowner’s insurance will provide coverage that will help you.

Though homeowner’s policies do include identity theft coverage, everybody’s needs are different, so talk to us today to make sure you have the right coverage in place.

Steve Davis

sdavis@srfm.com