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The prospect of company-destroying employment lawsuits just got much smaller, thanks to another pro-business decision by the Supreme Court. The decision in Wal-Mart v. Dukes makes it much more difficult to bring a large class-action lawsuit. A class-action lawsuit is one where a named plaintiff sues on behalf of a class of plaintiffs who have been wronged in the same manner as the named plaintiff. A typical example in the employment context would be a suit brought by one minority worker on behalf of all minority workers of the same employer alleging racial discrimination. If found liable, the employer in this example would have to pay damages not just to the employee who brought the suit, but to all the employees in the class – raising the possibility of truly massive damages. One of the requirements of a suit like this is that all the plaintiffs in the class have a common injury. Many courts have given this requirement little more than lip service, but the court in Dukes emphasized that those in the class must truly have a common injury and that courts should conduct a rigorous examination early in the case to see if they do. In Dukes, the plaintiffs wanted to bring a suit against Wal-Mart alleging gender discrimination on behalf of a class of more than a million workers. The plaintiffs had alleged that Wal-Mart had a policy of not promoting women at the same rate as men and wanted to sue on behalf of all women who had not been promoted. But the Court held that the women were simply too different to be included in one suit and had to sue individually or in smaller groups with more in common. While it may seem like a technical ruling, the implications could be huge for businesses – and not just in the realm of employment litigation. The ruling will make it significantly more difficult to bring massive lawsuits in other areas, such as products liability, thereby protecting businesses from the possibility of having to defend itself against truly massive lawsuits.
The Obama administration is cracking down on illegal immigration in a way that might make some employers nervous. According to a report in the New York Times, the administration has shifted its focus away from filing criminal charges against illegal immigrants and onto the employers who hire them. This change in policy is a sharp break with the Bush administration, which routinely charged illegal immigrants who were rounded up in workplace raids rather than on their employers. The criminal penalties for employers can be surprisingly stiff. Employers can be charged not only with crimes directly related to harboring illegal immigrants but can often also be charged with crimes such as tax fraud. The Times noted that the owners of a chain of restaurants who were charged in connection with hiring illegal immigrants could face more than 80 years in jail. Careful employers have little to fear, as criminal prosecutions are limited mostly to employers who knowingly hire illegal immigrants and cook the books to cover their tracks. But this shift in enforcement makes it all the more necessary for employers to establish careful hiring practices. One tool available to employers is the federal government's controversial E-Verify program. The online program allows employers to check the information supplied by a newly hired employee against government records. The program has been criticized for its error rate, but use of the program is mandated in several states, including Arizona, and is one of the few tools available to employers who want to check the immigration status of their hires.
Laws don't always work the way they were intended. California enacted a law in 2009 that banned texting while driving. Lawmakers had hoped that it would discourage an activity that has been shown to increase the likelihood of being in an accident. But that's not what happened. Since California's ban became effective in 2009, the percentage of drivers texting while driving has tripled, according to the Automobile Club of Southern California. The club found that 1.4 percent of drivers were using texting or using some other electronic device while driving when the ban was instituted. Now, more than two years later, the club is reporting that 4.1 percent of drivers is using an electronic device while driving. Some of this increase is, no doubt, attributable to the general increase in the use of smart-phones and other similar devices in daily life. However, this does not explain why the ban on texting has been followed by an increase in texting while a similar ban on talking on a cell phone while driving has lead to 66 percent drop in that activity. And California isn't alone in its failure to curb texting through legislation. Last year, the Highway Loss Data Institute found that collisions caused by texting in Louisiana, Washington and California went up after those states instituted bans. The institute speculated that the increase might be because drivers were moving the phones into their laps – thereby hiding their behavior while also making it more dangerous. The new data from the automobile club, however, now shows that it isn't just riskier behavior, but more of it. The club puts some of the blame for the increase on the lax penalties for texting while driving. The fines are low and the driver gets no point on his driving record.
Quick – what does your business own? More specifically, what inventory, equipment and other physical assets are sitting in your buildings? It's an important question, because in the event of a fire or other disaster or accident you would need to know exactly what was lost if you hope to be adequately compensated by your insurer. There are many ways compile a list of your stuff. There is software that will do it, or you can simply create spreadsheets, or you can use the old-fashioned paper list. But whatever method you choose, be sure to keep the list separate from the assets themselves – so that in the event of a disaster, the list survives. It can be kept at home, in a safety deposit box, or even stored in an online database, like Google's Google Docs. And making such a list isn't only helpful in preparing for a catastrophic loss, it can also help small- and medium-sized business owners determine how much insurance they need in the first place. Getting a handle on the details of what you have and what its replacement value is can go a long way to knowing just how much insurance coverage is appropriate for your business. If you have any questions, be sure to talk to your insurance representative.
Data breaches can create massive liabilities for businesses – making cyber security of one of the top five risks to watch, according to a recent report from the World Economic Forum. Large organizations and businesses such as the International Monetary Fund and Citibank have already fallen victims to such attacks. The IMF, which as been at the center of several economic bailout programs in Europe and contains potentially market-moving information, was recently hit so hard by a cyber attack that the World Bank cut the computer link that allows the two institutions to share information, The New York Times reported. This news came just days after it was revealed that a hacker attack at Citibank exposed customer account names, numbers and contact information of about 1 percent of the company's 21 million users. Increasing legislation and regulation at the federal and state levels relating to cyber attacks are now contributing to higher success rates for plaintiffs in court and, therefore, raising potential costs for companies, a Business Insurance article noted. Specialized cyber risk insurance could be something to consider to protect your business from the growing threat of cyber attacks. Talk to your insurance representative if you have any questions
How well will your city stand up to the next recession or natural disaster? Rochester, Minnesota and Washington D.C. measure up as some of the most resilient metropolitan areas while Las Vegas and Miami aren't expected to fare so well, according to new research from the University of Buffalo. These determinations were made using the Resilience Capacity Index (RCI), a tool that predicts how well a region can recover from stress based on statistics measuring that area's business environment, home ownership, coverage of health insurance and other community, economic, socio-demographic indicators. The RCI was developed by Kathryn A. Foster, director of the Regional Institute, a research and public policy center of the University at Buffalo. It recently measured more than 360 U.S. metro areas to help regional leaders identify which of their policies need to be changed to increase their “regional resilience” to any stresses from earthquakes and floods to economic decline to rapid population gains. “Conceiving of regions as capable of adapting and transforming in response to challenges allows researchers and practitioners to understand the conditions and interventions that may make one place more or less resilient and why,” said Foster. Northeastern and Midwestern regions received high scores for affordability, rates of home ownership and health-insured population, categorizing them as more resilient than regions in the South or West. Raleigh, North Carolina, was ranked as an economic leader with its technology firms, medical centers and universities, while Minneapolis-St Paul scored high for community connection because of its large numbers of participating voters. Unfortunately for Miami, its low regional affordability and income equality drops the region into place as the lowest ranking metropolitan area. While most of the factors used in this study can't be changed by individual companies, business owners can protect themselves with adequate risk management. This includes making sure they carry the required amount of business interruption and property insurance – likely including fire, flood and earthquake. Talk to your insurance representative if you have any questions or concerns.
Apparently, when your girlfriend turns down your marriage proposal and keeps the $76,000 engagement ring, your insurance company won't cover the loss. That is the lesson – likely one of many – recently learned by Dallas Cowboys receiver Roy Williams Jr. The football star sent the ring and his proposal, along with $5,000, to his girlfriend by mail. She turned him down, but kept the ring. Williams then filed a claim with his insurance company for compensation for the “loss.” The insurer tracked down the ring, which was being kept by the girlfriend's father. Williams is now suing his would-be fiancee and father-in-law to get the ring back.
For decades new safety devices in cars were largely meant to help passengers survive a crash, rather than prevent the crash in the first place. That's changing. A new report from the Highway Loss Data Institute shows that a collision avoidance system now installed in some Volvos reduce low-speed crashes by as much as 25 percent. The system automatically brakes if the car gets too close to another object. While not life threatening, these low-speed crashes account for a large percentage of insurance claims. Depending on the car model, fixing bumpers and fenders can easily cost more than a thousand dollars. "This is our first real-world look at an advanced crash avoidance technology, and the findings are encouraging," said Adrian Lund, president of the institute.
Wildfire risks remain abundant in many areas of the United States as a heat-wave brings record temperatures and dangerous drought conditions throughout the country. During the first four months of 2011 there were more than 22,000 wildfires in the U.S., affecting 46 states, and burning more than 2 million acres, the Insurance Information Institute reported. In July, 882 record high temperatures have been set or tied across the U.S. while drought is more extensive than any time since at least 2000, according to the Capital Weather Gang blog at the Washington Post.
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