“You’re Fired!”

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Being fired can be a traumatic experience for an employee – and also for the employer if there are repercussions from the event. The process of letting an employee go should be well thought out and the reason for termination documented as much as possible. Wrongful termination can be a costly backlash to a Firm and it is hard to defend against because the evidence is often subjective. The reason for a termination may be justified such as incompetence, bad work habits, or the person may no longer be needed. The retaliation from the employee could be in the form of alleged discrimination or even harassment. The charge of sexual harassment is most insidious since it is difficult to defend and disprove. Often these cases are settled even if the charge is bogus. Businesses can protect themselves from the allegation of wrongful termination through the purchase of Employment Practices liability Insurance. This coverage is especially important for Firms that primarily have clerical personnel and where turnover may be frequent. However, any business is vulnerable and should consider purchasing insurance. Many employment litigation cases are settled-often for high amounts and therefore the defense cost element of the insurance program is critical. My advice would be to have a competent labor attorney as an ongoing resource to help prevent any unpleasantness resulting from a firing. Early counseling on a prospective firing would be much less expensive than defending an actual employment lawsuit. Legal advice coupled with insurance protection will help take the fear out of saying “you’re fired”.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

Unwanted Interruption

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Most business owners grasp the concept of losing tangible assets through a calamity such as a fire, explosion, windstorm, water, and other unexpected and unwelcome events. Equally important is the protection and preparation for the amount of time lost from a business disruption. Purchasing “business interruption” is just as crucial as insuring buildings and personal property. During the restoration process it is essential that one keep their business going so it will still be there when all the repairs are completed. Factories and manufacturers have to wait out the process since their operations cannot be easily moved. They should purchase a limit sufficient to pay lost profits plus ongoing expenses for the maximum expected down time- to include payroll. Other businesses such as law offices and retail would purchase insurance to provide the “extra expense” to relocate either permanently or temporarily while still operating their businesses as the claim is being settled. Business Interruption for apartment houses would be lost rents. For schools it is tuition. Insurance can handle most of the financial set back but it is also wise to do some preliminary planning as well. Businesses should have a disaster plan that includes key contacts and vendors and emergency procedures. There are enterprises that are ready to provide make shift offices to a disaster victim. An effort should be made to establish mutual agreements with friendly competitors to assist if needed. Any business that fails to plan for a business interruption is planning to fail if they have one.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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