What Is and Isn’t Age Discrimination

With a troubled economy and continuingly soaring healthcare costs, employers are always on the lookout for ways to limit expenses. Much as they might not want to, they often look at personnel costs, including those for healthcare. Personnel moves, however, can be a minefield for the unwary. Handled incorrectly, they can land a well-meaning employer in court, especially if they smack of possible discrimination against older workers or retirees. Several court and regulatory decisions over the past few years have weighed in on what employers can and cannot do regarding their older employees.

In February 2008, a unanimous U.S. Supreme Court declined to rule on the question of whether a court must, in an age discrimination case, accept testimony from former employees who are not parties to the lawsuit and whose accusations are against supervisors not accused in the lawsuit. Rather, they ruled that a federal appellate court was incorrect in overruling the trial court on the question. The court said that the appellate court should have sent the case back to the trial court with orders to clarify its decision. The ruling left the question about testimony from non-party employees unsettled.

In March 2005, a divided Supreme Court ruled that the Age Discrimination in Employment Act authorizes older employees to recover damages from an employer when the employer’s decision adversely impacted them because of their age. The court found that the law’s language was virtually identical to that in the Civil Rights Act of 1964, which prohibits limiting, segregating or classifying employees in a way that adversely affects their status because of race, color, religion, or other protected characteristics. While noting that the ADEA’s scope is narrower than that of the Civil Rights Act, the court nonetheless ruled that the ADEA, in principle, provides for recovery in so-called disparate impact cases.

The Supreme Court also ruled in 2004 that employers may make employment decisions that favor older employees over younger ones. In 2007, the EEOC announced an amendment to its rules implementing the court’s decision. The prior rules had forbidden such practices.

In August 2007, a federal appellate court held that defined benefit plans employing a cash balance formula do not violate the Employee Retirement Income Security Act. Older employees argued that the cash balance formula discriminated against them because younger workers who received the same employer contributions would be entitled to a retirement benefit greater than that due the older workers. The court rejected this contention, saying that the employer’s plan was legal so long as the contribution rates did not discriminate on the basis of age.

Lastly, in June 2007 a federal appellate court ruled that the Equal Employment Opportunity Commission acted within its authority when it issued rules permitting employers to reduce or eliminate employer-sponsored retiree health benefits when retirees become eligible for Medicare or comparable state-sponsored programs. The American Association of Retired People had sued the EEOC on the grounds that the ADEA prohibits these practices. The court said the rules were consistent with the law’s purposes and intent; it also said that the rules actually encourage employers to provide all retirees with the best possible health benefits.

As these decisions show, employers must be very careful when they make employment decisions that will impact groups of employees in different ways. A qualified human resources consultant can advise an employer on the legal implications of a decision. Also, employers should consider purchasing an employment practices liability insurance policy. Such a policy will cover the employer for defense of age discrimination lawsuits and for the cost of judgments against the employer. An insurance agent can give advice on the availability and cost of the most appropriate coverage.

Never Let an Intersection Be Your Crossroads to an Accident

The Insurance Research Council estimates that 81 percent of all crashes occur in urban areas of which the most dangerous locations are busy intersections. Nearly 43 percent of all auto accidents that happen in a city are intersection-related.

Even though intersections can be hazardous, that doesn’t mean you have to be a victim. Just remember these common sense rules for intersection driving:

·   Never wait until the last minute to get into the lane you need for your next turn. Always change lanes well in advance of reaching the intersection. Put your turn signal on before making any turn.

·   Avoid speeding through an intersection. You need time to react if a motorist fails to stop for a red light or stop sign. You also want to be sure you have plenty of time to brake if pedestrians cross against the light.

·   Be aware of other vehicles changing lanes. Keep out of other
drivers’ “blind spots” where they cannot see you in their rear and side

·   Stop behind the marked crosswalk. This will allow other drivers to see across the entire intersection. It will also prevent you from hitting pedestrians.

·   Don’t enter an intersection when the traffic is backed up on the
other side. You could wind up getting stuck in the middle of the
intersection if the traffic doesn’t move.

·   Watch for cars speeding through intersections after a red light. If you are waiting at a red light, don’t floor the gas pedal the moment the light turns green. Instead, quickly look both ways before proceeding through the intersection. If a motorist coming from one of the opposite directions is trying to speed through before the light turns red, you could be hit if you rush into the intersection at the instant the light turns green without looking for oncoming cars.

·   Check for cars twice before pulling into an intersection at a stop sign. It is a common occurrence to stop at a stop sign to make a left-hand turn, look both ways, and see no cars coming. Only to find that once you have begun the turn, a car has come out of nowhere and is headed straight for you. If you check twice before proceeding, you will allow enough time for the car that was hidden from your view to clearly emerge. 

Completed Operations Coverage: Vital for Contractors

A construction site is a dangerous place. Power tools, scrap wood and metal, heavy equipment – all of these can cause serious injury or property damage. Loss control efforts normally focus on prevention of accidents on job sites. However, the possibility of a loss that could drag a contractor into court does not end when the project is finished. The contractor’s work stays behind and can be the source of serious liability claims. Consider the following examples:

  • Six months after a roofing contractor finishes work at a bank, melting snow enters through the roof and ruins several network servers.
  • A railing installed by a metalworker collapses as a man leans against it. The man falls ten feet and suffers severe back injuries.
  • An overhead door malfunctions and closes on top of a new pickup truck. The owner seeks recovery from the contractor who installed the door.

Loss prevention and proper insurance are just as important after the job is done as they are while work is in progress.

Standard liability insurance policies cover a contractor’s liability for injury or damage arising out of completed operations. The insurance company considers the contractor’s work to be complete when one of these first occurs:

  • All the work required by the contract is complete;
  • All the work to be done at a job site is complete (when the contract requires work at multiple job sites); or
  • When the contractor’s work is put to its intended use by someone other than another contractor working on the same job site.

The company will provide the contractor with legal defense and pay for any settlement or judgment that results from accidents arising out of completed work. Of particular note, it will pay for the restoration, repair or replacement of any property made necessary because the contractor performed his work on it incorrectly. The company will not pay for such a loss while the job is still in progress, but it will pay after the work is completed.

For coverage to apply during a particular policy period, the injury or damage must first occur during that period. For example, assume that a siding contractor installed aluminum siding on a house. While making improvements several years later, the homeowner discovers extensive rotting of the plywood and joists inside the walls. A third party concludes that the interior damage resulted from faulty installation of the siding. Since the damage most likely began at the time of installation, the policy that was in effect at the time of the job will provide coverage. On the other hand, if a contractor builds a deck and it collapses 18 months later, injuring four people, the policy in effect at the time of the collapse will provide coverage, not the one in effect at the time of the job.

The insurance company will not pay for damage to the contractor’s own work if the damage arose out of the work. For example, if an electrical contractor’s faulty wiring fries a circuit board he installed, the insurance will not cover the damage. The insurance policy should not be confused with a warranty.

One important caveat is that a form covering a third party as an additional insured might not provide completed operations coverage for that party. The form most commonly used to add coverage for an additional insured no longer provides this coverage. A separate form has been created to address this gap in coverage. Since many construction contracts will require subcontractors to provide this coverage, subs should verify with their insurance agents that they have it.

By its nature, construction is dangerous work, and that danger continues to some extent long after the contractor has moved onto the next job. It is vital that contractors have appropriate completed operations insurance in place to protect them if something goes wrong.


Tips to Consider When Shopping for Auto Insurance

There is no mystery about buying auto insurance. If you want to save money, you need to understand what factors influence your premiums. Once you understand these factors, you can put your new knowledge to work and find the best coverage at the lowest rate.

Here are some guidelines to follow when shopping for car insurance:

·   When you file a claim, the deductible is the amount of money you pay toward the loss before your insurance company pays the claim. If you accept a higher deductible, your premiums will be proportionally lower. It is important to be sure you can afford the out-of-pocket expense of the deductible you select.

·   If your car has a Kelley Blue Book value of less than $2,000, you’ll probably pay more for collision/comprehensive coverage than you would collect on a claim. Insurance companies use their own criteria to determine fair market value for vehicles; however, the Blue Book can serve as a good indicator of whether you should maintain your collision/comprehensive insurance. You can find these values at

·   If you own a car that suffers from a high theft rate, or is expensive to repair, you’ll face higher premiums. Buy a car that’s not a thief magnet and/or doesn’t require expensive replacement parts and your rates will be significantly lower.

·   “Sunday Drivers,” meaning drivers who use less than the predetermined number of miles on their vehicles each year, may be eligible for a discount.

·   Where you live impacts the car insurance rates you pay. Premiums in rural communities are generally lower than in urban areas. The increased traffic and higher incidence of crime that are hallmarks of city life, increases the risk that you will eventually file a claim.

·   Most insurers give discounts for air bags and other safety features.

·   Some states require insurers to offer discounts for cars equipped with antilock brakes. There are also insurance companies that offer standard discounts for antilock brakes regardless of the geographic location in which you live.

·   Additional discounts you may be eligible for include: insuring more than one car, insuring your home with the same carrier, having no accidents in three years, being a driver over age 50, taking driver training courses, and using antitheft devices. 

Is the Loss Covered By General or Professional Liability Insurance? How About Neither?

A computer consultant is upgrading servers at a client’s site. While explaining a problem to one of the client’s employees, he gestures with one hand and knocks over a hot cup of coffee. The drink spills on the employee, causing a serious burn. The consultant reports the incident to his insurance agent, who submits a claim to the company providing his commercial general liability insurance. However, the company responds by denying coverage, citing a change attached to the policy. This change removes coverage for bodily injury arising out of the rendering of computer consulting services, advice or instruction by the policyholder. According to the company, the employee’s injury resulted from the computer consulting services.

The consultant’s policy contains this provision because losses “arising out of the rendering of computer consulting services” are more properly insured under a professional liability policy. The provision’s intent is to exclude coverage for losses resulting from errors in his professional judgment. However, its wording seems to support the insurance company’s contention that there is no coverage. The consultant argues that spilling a cup of coffee is something that could happen to anyone, not just someone providing professional services. What is the correct interpretation?

A commercial general liability policy insures the policyholder for bodily injury, property damage, and personal and advertising injury, caused by an occurrence taking place during the policy period, and for which the policyholder is liable. The policy takes this broad starting point and limits coverage with several provisions (called “exclusions”) that describe types of occurrences to which the insurance does not apply. The insurance company added a special exclusion to this policy so that it would not cover errors and omissions the consultant makes while acting in his professional capacity.

Unfortunately, if the consultant has purchased a professional liability policy, it may exclude coverage for losses involving bodily injury or property damage. Insurance companies write this provision into the policies in the belief that the CGL policy will cover these losses. The result is that the consultant may have no coverage under either policy for this incident. The company providing the CGL policy denies coverage because he was acting as a consultant at the time; the other company does not cover loss from injuries.

To reduce the chances of a situation like this occurring, professionals such as physicians, architects and engineers, and consultants should work closely with an insurance agent. The agent should explain any special changes to the CGL policy that eliminate coverage, such as professional liability exclusions. She will also review and explain the provisions of a professional liability policy. The consultant should ask how the two policies coordinate with each other, especially with regard to injury and property damage losses. The agent should have experience with the companies’ claim paying practices. She may know that a particular company is likely to deny injury claims under the CGL policy because of a professional liability exclusion.

The best way to avoid an uninsured loss like this is for the businessperson to become informed about exactly what he is buying with his insurance premium dollars. As an informed buyer, he can insist that the policies meet his needs. If a particular insurer cannot or will not do that, he has plenty of competitors to choose from. Liability insurance can be a significant business expense; the last thing any business wants is a surprise gap in coverage at claim time.

Maintaining Your Home’s Fire Alarm System

One of the most important household safety techniques you can implement is the purchase and proper installation of an adequate number of smoke alarms in your home. The National Fire Protection Association (NFPA) offers the following facts regarding smoke alarms and fires.

* One-half of home fire deaths occur in the 6 percent of homes without smoke alarms.

* Homes with smoke alarms typically have a death rate that is 40 to 50 percent less than the rate in homes without alarms.

* In three of every ten reported fires in homes equipped with smoke alarms, the devices were not operational.

The NFPA offers safety tips regarding smoke alarms for you to consider.

* New batteries should be installed in all smoke alarms annually or when the alarm chirps to warn that the battery is weak.

* Smoke alarms should be tested monthly.

* Smoke alarms should be placed outside each sleeping area and on each floor of the home, including the basement.

* Smoke alarms should be interconnected, so if one goes off, they all go off.

* Smoke alarms should be replaced every 10 years.

Preparing for Your Workers’ Compensation Premium Audit Can Save You Money

When your insurance company issued your workers’ compensation policy, you paid an estimated premium for the term of the policy. This rate was based on the nature of your business and your estimated payroll. However, once your policy expires, the insurance company conducts a premium audit to gather data about your actual costs for the applicable policy term. If there is any shortfall, you are responsible for the difference between the original estimate and actual premium.

Naturally, you want to keep the difference between the estimated and actual rate as low as possible. Consider the following list of tips:

·   Have all necessary records available for the auditor.

·   Break down your payroll by classification code so that the auditor doesn’t have to classify any unexplained payroll. Leaving the decision up to the auditor could result in having the payroll placed in the highest classification.

·   Separate overtime wages from regular wages. This allows the auditor to discount the overtime wages back to regular wages.

·   Exclude tips, severance pay, meal and travel advances and bonuses paid for inventions, because none of these are included in workers’ compensation premium calculations.

·   Divide uninsured subcontractor billings into material and labor costs since you are only required to pay premiums for labor. If you don’t have an actual split, figure on 50 percent for each. One important exception to this is for heavy equipment operators who are employed as subcontractors. In this case, use a third of their total billings as reportable labor costs.

·   Don’t include short- or long-term disability payments in the data given to the auditor because these are excluded from premium calculations.

·   Be sure to cap all covered officers’ payroll at the maximum for your state.

·   Exclude wages paid to employees who are on active military duty because their wages aren’t included in premium calculations.

·   Present the auditor with all Certificates of Insurance for covered subcontractors so you aren’t charged for them.

·   Classify all employees in the lower-rated payroll classifications if you aren’t sure about where they should be classified. However, you should never deliberately misclassify an employee.

·   Be sure you make the auditor aware of all employees who do only clerical work and are physically located away from the shop floor. These employees qualify to be classified in the lower rated clerical codes. If your clerical staff aren’t physically separate from the shop, you should consider changing their work location.

Keys to Switching Auto Insurance Carriers

There are many reasons to consider a change in auto insurance carriers. You may be unhappy with the service provided by your current insurer, or you may have found another insurer that offers better rates or service. If you review your coverage annually, you can be sure you continue to receive the best bang for your premium dollar.

It pays to shop around because in some states there can be a wide spread in the premium for the same coverage. That’s because insurers base premiums on the number of claims incurred from a particular coverage group. A coverage group can be drivers of the same age or who own the same type of vehicle. If the number of claims for your coverage group increases during a calendar year, your rates will also increase. If that happens, it makes sense to check with other carriers to see if better rates are available.

Canceling your old policy is usually a matter of writing your carrier and specifying the date coverage should be terminated. In some states, your new insurance agent will notify your former carrier for you. You will receive a cancellation request form that you must sign and return to your former insurer. Some companies will also request that you return the policy with the cancellation form. Be sure that you cancel your coverage in writing. Otherwise, the insurer will assume that you are still covered and when you fail to pay your premium, it will terminate coverage and report this to your state’s Motor Vehicle Department and the credit bureaus.  This can hurt your credit rating and your ability to obtain a new policy.

Before you cancel your old policy, be sure you have a replacement. Since most states require drivers to carry a minimum level of coverage, your former carrier will require you to provide proof of insurance before canceling your existing policy.

If you do plan to switch companies, the best time is when your old policy is up for renewal. In this way, you will avoid paying printing and start-up expenses associated with the renewal process. The renewal notice is typically sent out one month before the new policy period begins. Most states allow approximately one month after renewal to switch policies without penalty. However if you miss the deadline, you could be liable for a cancellation fee.

Keep in mind that standard auto insurance policies have a provision that allows you to cancel at any time. If you plan to cancel before your policy is up for renewal, the best time is at the end of a payment period. In this way, you won’t have to concern yourself with recovering the unused portion of your premium.

Employer Liability for Employee Cell Phone Use on the Rise

Employers are facing increasing liability as a direct result from their employees’ cell phone use. So why is this the next legal frontier? The number of lawsuits involving employer liability for traffic accidents caused by employee cell phone usage is steadily growing, as well as lawsuits based on health problems associated with cell phone use.

The principal of vicarious liability states that an employer is responsible for the harm caused by its employees if the employees are acting within the scope of their employment at the time an accident happened. In this situation, a company can be held accountable by a third party for auto accidents caused by an employee’s cell phone use if the company provided the phone or if the cell phone is an integral part of the employee’s job. The company can even be held liable for incidents resulting from personal calls made by employees on company-issued cell phones, or phones inside company cars.

There is also an emerging trend establishing that an employer can be found directly negligent if it allowed employees to use cell phones for business without proper training or in spite of safety issues, and an accident results.

Another exposure resulting from employee cell phone use is the rise in the number of claims brought by employees for health problems associated with their cell phones. Employees who consistently use cell phones as part of their job are filing workers’ compensation claims and lawsuits alleging that radio frequency radiation from cell phones causes brain cancer.

The scientific evidence concerning whether or not cell phone use increases the risk of cancer is inconclusive. There are two studies that are most frequently quoted, and their results are contradictory. A study conducted at the Danish Institute of Cancer Epidemiology, whose results were released in December 2006, followed the health of over 420,000 cell phone users over the course of 21 years to determine if cell phone use causes cancer. The researchers concluded that the radio frequency energy produced by cell phones did not increase the risk of contracting brain cancer. However, a April 2006 study conducted by the Swedish National Institute for Working Life, examined the cell phone usage of 905 adults who developed malignant brain tumors. They found that people with more than 2,000 hours of total talk time had 3.7 times the risk of developing brain cancer as compared with non-users. The study also found an increase for tumors specifically on the side of the head where the cell phone was used.

While there is no way to alleviate all potential liability arising from cell phones in the workplace, companies can offer employees training on the safety issues and possible health risks associated with using cell phones. Promoting a safe workplace is a simple way to reduce the number of accidents and health risks associated with cell phones.

When You Shop for a New Car, Consider Safety Ratings

Most people know that the federal government enforces certain safety standards for new cars. However, these are only the minimum standards a car manufacturer must satisfy in order to have its vehicles considered safe. Many automakers offer safety features beyond the required federal minimums. When shopping for a new car, you should look for a vehicle that offers the maximum safety features in your price range.

The following list of safety features should be considered when you are shopping:

·   Crashworthiness – This rating indicates the level of risk of death or serious injury if a crash occurs. Log on to the Insurance Institute for Highway Safety’s web site at for more information about the various models.

·   Structural design – Look for a structural design that has a strong occupant compartment. The vehicle should have front and rear ends that buckle and bend in a crash to absorb the force of the crash. This keeps the occupant compartment from collapsing. If the occupant compartment collapses, the likelihood of injury increases significantly.

·   Size and weight – Larger and heavier cars are safer than lighter and smaller models. In crashes where smaller and larger vehicles collide, the larger vehicles drive the smaller ones backwards, which increases the forces in the smaller vehicles.

·   Restraint systems – Shoulder belts, airbags and head restraints are designed to work together with a vehicle’s structure to protect people in crashes. Shoulder belts keep you in place, reducing the possibility of your body slamming into something hard or being ejected from the vehicle. Airbags reduce the risk of the head and upper body hitting some part of the vehicle’s interior. They also distribute crash forces more evenly across your body. Head restraints keep your head from being violently snapped, which would injure your neck in a rear-end crash.

·   Anti-lock brakes – Conventional brakes may cause wheels to lock if you brake too hard. This can result in skidding and possible loss of control of the car. Anti-lock brakes pump brakes automatically many times a second to prevent locking and keep you in control. While anti-lock brakes help you maintain steering control, they don’t necessarily help you stop more quickly.

·   Daytime running lights – These are usually high-beam headlights at reduced intensity or low-beam lights at full or reduced power. These lights prevent daytime accidents because they increase the contrast between the vehicle and its background, which makes the car more visible to oncoming drivers.

·   Miscellaneous factors – Other design characteristics can influence injury risk. The structure of some small utility vehicles and pickups make them more likely to roll over during a crash. High performance cars tend to have higher-than-average death rates because drivers, especially young ones, speed when they are behind the wheel. You should examine the design features of any new car you are considering to be sure that they are appropriate for everyone who will be driving the car.