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INDEX
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| Watch out for bully managers |
The playground bully may have grown up to be a manager, and there's a decent chance he or she works for your company. Almost half of workers interviewed in a recent study said they have experienced workplace abuse, and almost two-thirds said there should be legal recourse for victims.
Stephen J. Hirschfeld, CEO of the Employment Law Alliance, which conducted the poll, said abusive bosses are a real problem and if companies aren't careful, workers will begin demanding, and getting, protection from the courts.
The poll addressed behavior that doesn't often show up on other studies and isn't directly covered by discrimination and harassment laws -- at least not yet. About a dozen states are considering legislation that would prohibit bullying in the workplace. Hirschfeld pointed to a law in the Canadian province of Quebec that could serve as a model in U.S. states if employers aren't careful. The law bans any "vexatious behavior" that affects an employee's "dignity or psychological or physical integrity." Such a broad standard could become problematic for employers.
Stanford Professor Robert Sutton, an expert on workplace abuse, said companies need to start taking this problem seriously. "This national survey adds to the growing mountain of evidence showing that abuse of power is a rampant problem in the American workplace. It is time for senior management to realize that this conduct damages their people and is costing them a fortune. Demeaned workers respond with a reduced commitment and loss of productivity, and they run for the exits to find more humane bosses. And these costs will keep escalating as more victims realize that they can fight back in court."
Study results:
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44% of American workers have worked for a supervisor or employer whom they consider abusive.
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40% report bosses spreading rumors or inappropriately sharing confidential information about them or a co-worker.
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11% report having a boss who physically threatened them or a co-worker.
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Southern workers (34%) are less likely to have experience with an abusive boss than are their Northeastern (56%) and Midwestern (48%) counterparts.
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| Preparing for a premium audit |
Just the word "audit" can be scary. But premium audits are a fact of life for businesses, and for savvy business owners the process can be simple and even beneficial.
A premium audit is a way for an insurer to look over a business' records to make sure the information they use to determine the premium is correct and up to date. Generally, workers compensation and liability coverage require periodic audits. The process your insurer uses may vary and usually is dependant on the size of your business. Smaller companies often have their audits done through the mail or over the phone. But larger companies are often subjected to a physical audit, either at their place of business or with an accountant.
When it's time for your audit make sure you're prepared. If you're already in the habit of keeping detailed records, the process will go much more smoothly. It also helps if there is a designated person who can talk to the auditor. This employee should be knowledgeable about all company departments, the company's payroll records and the relative rates assigned to different classes of operations.
But whether the audit is in person or not, there are some things you can do to make sure you get the most accurate -- and lowest -- premium possible.
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Make sure any overtime pay, severance packages or tips are clearly marked as such. Depending on the laws in your state, you may be able to deduct these types of compensation from your total payroll when determining your premium.
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If you use subcontractors, be sure to have proof of their insurance. It's important to show that the subcontractor and their employees are not your employees.
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If your employees do work under more than one payroll classification, it's important to break those numbers out. If it is unclear what job they do, the insurer might assign that employee to the highest classification.
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| Protecting your business from fraud |
Protecting a business from burglary is relatively straight-forward. You put a strong lock on the door, hire a security guard and stay vigilant. But the most damaging thieves don't come in the middle of the night -- they are trusted employees stealing from the company right under the boss' nose. And protecting against that kind of thief is a bit more tricky.
According to the Association of Certified Fraud Examiners, the median loss caused by occupational fraud was $159,000. And nearly one-quarter of the cases they studied caused at least $1 million in losses. They also found that the average fraud went on for a year and a half before it was discovered. These kinds of crimes can be especially devastating to a small- or medium-sized business that are unable to absorb such a large loss. Smaller businesses are also less likely to put in place systems that can prevent theft by employees. The ACFE says most theft at small businesses was detected by accident, rather than design.
But there are several things businesses can do to lessen their risk.
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Be aware of the danger: Some owners don't want to imagine that their trusted employees and managers could steal from them. But it happens, and it's important to make stealing from the company as difficult as possible.
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Don't rely too heavily on background checks: The ACFE says background checks on potential employees are important, but found the vast majority of those committing fraud had a clean record before they were caught.
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Set up tough accounting systems: Make it hard for an employee to steal. Keep detailed records of who has access to the company's money and inventory, where it is and where it went. Conduct surprise checks and do regular audits. A good system will not only help detect fraud, but also will deter employees from stealing in the first place.
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Create ways for employees to report fraud anonymously: One of the most effective weapons against workplace fraud is the anonymous tip. The ACFE said organizations that have fraud tip hotlines could expect their median fraud losses to be cut in half. And in million-dollar plus cases, they found tips were twice as effective as audits in finding the thieves.
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Train your employees: Make sure your workers know how to spot a thief and how they can report it.
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Consider employee dishonesty insurance: This type of policy will protect your company from employee fraud.
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| Litigation hitting businesses hard |
Those in the business community arguing for tort reform were given new ammunition from a recent study that showed litigation costs the U.S. economy $865 billion a year. The report from the Pacific Research Institute is one of the first studies to take into account not just the direct effects of our legal system, but indirect effects, too. The direct costs are well understood, and include things such as damage awards and defense costs. But indirect costs are in some ways more important, the study claims -- things like the effect it has on research and development spending, and the increased costs of health care.
"America's legal system doesn't just transfer wealth from companies to personal injury lawyers," said Lawrence J. McQuillan, the study's lead author. "It also changes behavior in economically unproductive ways. Any true estimate of the economic cost of our tort system must include these dynamic, negative-spillover costs."
Among some of the study's claims:
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The $865 billion annual cost of America's tort system is equivalent to the total yearly sales of the entire U.S. restaurant industry.
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Every day, the American economy takes a $2.4 billion hit to sustain the tort system.
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American companies suffer more than $367 billion per year in lost product sales because spending on litigation curtails investment in research and development.
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Lawsuits against American corporations generate an annual loss of $684 billion in shareholder value.
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| A push for terrorism insurance backstop |
With a year-end deadline approaching, Congress is inching closer to passing a permanent federal backstop for terrorism coverage. The House Financial Services Committee's Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises held a hearing in New York recently where the insurance industry continued to push for help in covering an attack on the United States. They said a backstop is needed because terrorism is too difficult to predict and could be too expensive for the insurers to cover.
In 2002 the president signed the Terrorism Risk Insurance Act, which provided a federal backstop for terrorism coverage. The law was extended in 2005, but is set to expire again this year.
If the federal role lapses, terrorism risk coverage would become inordinately expensive and probably unavailable to many businesses, the Insurance Agents & Brokers of America testified at the hearing. The association emphasized that while terrorism risk coverage is critical in cities like New York, it's not just a "big city" or "big business" problem - the economic impact would be widespread if the coverage becomes unavailable.
Even in the event of a large attack in New York, Los Angeles or Washington D.C., the economic effects would be far-reaching, just as they were after the Sept. 11, 2001 attacks. Attacks on large cities can create a ripple effect through the economy, hurting entire sectors and businesses far from the site of the attack.
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| Business briefs: Healthy tax credit |
California might soon be giving employers another reason to help keep their employees healthy and fit. A bill working its way through the California Assembly would give employers a tax credit for 10 percent of what they spend on employee fitness programs -- everything from on-site gyms to company sponsored sports teams. Employee wellness programs have become popular in recent years as a way for companies to keep health care costs down and reduce employee sick time. A substantial tax credit like this could push more companies to institute fitness programs. The measure still has a ways to go before it becomes law, but if it does, other states may follow California's lead.
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| Business briefs: Contraceptives not mandatory |
A federal appeals court has ruled that companies are not required to provide contraceptives to women if they do not provide them for men. Two women who worked at Union Pacific Railroad sued the company arguing that by not offering contraception as part of its health plan the company was discriminating against women. But the 8th Circuit Court of Appeals ruled that because the company did not provide contraceptives to men, it was not violating Title VII. The ruling is binding in the 8th Circuit, which covers Missouri, Arkansas and much of the upper Midwest, but other federal courts are often influenced by rulings in other districts and circuits.
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| Business briefs: Big hurricane season predicted |
The Tropical Meteorology Project at Colorado State University is predicting a much more destructive hurricane season this year. Researchers are now forecasting nine hurricanes -- the average in a year is 5.9. Seventeen named storms are also being forecast -- the average is 9.6 -- of which five are expected to be Category 3 or higher -- the average is 2.3. The probability of a major hurricane making landfall in the United States is estimated to be about 40 percent higher than average, they said. The study's authors, Philip J. Klotzbach and William M. Gray, say the forecast is based primarily on the rapid dissipation of El Niņo conditions, and that tropical and North Atlantic sea surface temperatures are expected to remain well above their long-period averages. Last hurricane season was unusually quiet; no hurricane reached the American mainland.
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| Business briefs: Madrid fault controversy |
Scientists have been warning Midwesterners that the Madrid Fault poses a serious risk of producing a potentially devastating earthquake in the Missouri and Tennessee area. But a professor at Northwestern University says Madrid might be a "cold, dying" fault. Seth Stein says the fault doesn't seem to be moving and that the small earthquakes now being seen seem to be aftershocks of a series of massive quakes in the early 1800s. Other scientists disagree, saying the fault seems to be primed for another large quake. Midwestern residents should play it safe and prepare for a quake, but Stein's findings should provide some comfort to those worried about a potential disaster.
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