EPLI: What is Employment Practice Liability Insurance and why do I need it?

If you are a PEO client of BCN, your company is provided with employment practice liability insurance (EPLI), a benefit that may not be used every day, but is important nonetheless.

This specialized insurance is designed to protect against losses incurred in litigating and settling wrongful employment practices liability claims. It covers such things as discrimination, breach of contract and wrongful discharge suits, which usually are not covered by general business liability insurance.

In today’s business world, the threat of being sued is an everyday reality. The dangers are even more real if your company doesn’t’t have a dedicated human resources department or formal training to deal with myriad laws, rules and regulations that exist to protect employee rights.

Statistics show that in a bad economy employment lawsuits increase dramatically. One disgruntled worker can put your entire business at risk if he brings a lawsuit or discrimination charge against you — whether valid or not. The cost to defend the allegations alone could put your company out of business, not to mention the price you would pay if you lose.

Here are the top 5 reasons your company should have EPLI coverage:

  1. Employee lawsuits and discrimination charges are excluded under standard general liability policies;
  2. Every employer, large or small, can be the target of legal action from past, present, and prospective employees;
  3. Owners’, directors’ and officers’ personal assets can be at risk;
  4. Employees file more than 90,000 complaints each year with the U.S. Equal Employment Opportunity Commission;
  5. Employees can easily file lawsuits, often with no risk or cost to them.

While you are responsible for deductibles and legal costs not covered by the policy,  BCN Services has made it easier and cost efficient in 2013 to mitigate your expenses of a claim by negotiating an arrangement with our carrier to allow us to provide the initial investigative work to our clients on EPLI claims with our law firm’s oversight, saving significantly on legal expenses.  To minimize claims, BCN’s trained and certified HR professionals will help guide you through employee relations and other compliance issues thereby greatly reducing your risk.

Remember to always report any incident which could give rise to a claim immediately to the BCN Human Resource Department by phone.  For further information about EPLI,  contact us at 800-891-9911 or contact us here.

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Kate Douglass, Senior HR Generalist

Employers: Keep proper I-9 records avoid fines and penalties

Government statistics show a dramatic increase in enforcement of immigration-related workplace rules since 2009, including initiating a large number of employer audits and assessing millions of dollars in fines.

The Immigration and Customs Enforcement Agency, the enforcement arm of the U.S. Department of Homeland Security, issued audit notices to 1,000 businesses nationwide between April and November 2009, initiating almost 1,900 prosecutions against employers for I-9 violations.

This is more than three times the number of prosecutions in the same period in 2008.

In fiscal year 2012, ICE hit the following benchmarks relating to I-9 enforcement:

  • There were 520 criminal arrests tied to worksite enforcement investigations, including 240 owners, managers, supervisors, or human resources professionals facing related charges such as harboring or knowingly hiring illegal aliens;
  •  There were 3,004 I-9 Notices served in companies nationwide;
  • There were 495 Final Orders for I-9 related violations, totaling $12.47 million in civil fines.

To put this activity in perspective, in fiscal year 2007 the total number of I-9 Notices of Inspection was 250. Since January 2009, ICE has audited more than 8,000 employers and imposed more than $87 million in fines.

Based on these statistics alone, the importance of proper I-9 record keeping cannot be stressed enough. Remember that federal regulations call for employers to:

  • Verify the identity and employment authorization of each person hired after Nov. 6, 1986.
  • Complete and retain an I-9 for each employee required to complete the form.

If you have any questions about I-9 forms, regulations surrounding them and the proper method for verifying employee identities, the experts at BCN Services can help.  Contact us at 800-891-9911.



Lisandra Quinones, HR Administrator

Handling reasonable accommodation requests due to disability

How do you respond to an employee who reports a disability and requests a reasonable accommodation?

Take the case of a long-term employee who has been mostly exemplary but her attendance has recently been poor, she has been frequently tardy and her performance is declining. You meet with her on this matter and she informs you that she has a medical condition that is depriving her of sleep and causing her to be late or absent.  It leaves her so exhausted that she can’t perform her work to normal standards.

What action does an employer take?

If you are an employer with 15 or more employees you are covered by the Americans with Disabilities Act (ADA). Under the ADA, a “disability” is defined as a physical or mental impairment that substantially limits one or more of the individual’s major life activities. Under the ADA regulations, “major life activities” include performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, interacting with others, and working.

In our example, how would you determine if your employee has a disability?  While the Americans With disabilities Amendment Act of 2008 (ADAAA), amended the ADA and makes it easier for an employee to be considered disabled, you are not required to take the employee’s word.   If the disability is not obvious, you may be entitled to seek medical certification from the employee’s physician to determine if the condition qualifies as a disability. (Note: you should never contact the doctor yourself.  BCN Services would conduct that review.)

Let’s assume that the employee’s doctor states that the medical condition is significant and would be considered chronic. It affects the employee’s “major life activity” of sleep. The employee has been prescribed medication and will likely be improving but it may take 3 to 4 months to adjust the level of medication to allow the employee to get back to normal. It is the doctor’s opinion that the employee may have difficulty getting to work on time, may miss a day or two of work periodically suffering from sleep deprivation and may have difficulty focusing at work at times.

You now know that the  medical condition substantially limits your employee’s ability to sleep and you are required under the ADA to explore a reasonable accommodation in an interactive process with the employee.  You may reject the employee’s proposed accommodation if doing so would impose an undue hardship on the operation of your business. You may still require the employee to be qualified to perform the essential job functions with or without accommodation.

How can you determine if an accommodation is an undue hardship?

Undue hardship means that an accommodation would be unduly costly, extensive, substantial, or disruptive, or would fundamentally alter the nature or operation of the business. Among the factors to be considered are the cost of the accommodation and the employer’s size, financial resources, and the nature and structure of its operation.

According to the Equal Employment Opportunity commission (EEOC), if providing an accommodation would be an undue hardship, the employer must try to find another way to accommodate the employee. For example, if the undue hardship is due to cost, the employer must seek funding from an outside source, such as a vocational rehabilitation agency, or consider whether the cost can be offset by state or federal tax credits or deductions.

If there is no reasonable accommodation, it is possible to terminate the employee. But to limit potential liability, you should have a thorough discussion with the employee and seek guidance from BCN Services before making that decision.

In our example, a scheduling change would be one way to accommodate the employee. The employer might offer a flexible schedule allowing the employee to start work at 10 a.m. instead of 8 a.m. If the employee is a manager that opens the business, this might not be a reasonable accommodation.

Explore other options with the employee.  She may not like an accommodation of transitioning to night manager, for example, but it could be a reasonable option for your business. Another accommodation could be to provide the employee with unpaid leave until the condition is controlled. If her work performance is significantly impacted you may find no option but to offer unpaid leave until her condition is corrected. That could be considered a reasonable accommodation.

How long would an unpaid leave be reasonable?

According to the EEOC and recent court rulings, a leave estimated by the physician to be of a specific time period and not indefinite would likely be considered reasonable.

Each case must be evaluated on its own merits and should be based on the company’s size, resources and the nature of the business.

While all disabilities are not eligible under the Family and Medical leave Act (FMLA), some are. Employers with more than 50 employees may have to offer the employee a Family Medical Leave. In our scenario,  if the business has more than 50 employees the employee could use Family Medical Leave intermittently or consecutively while her medication was being regulated. If the employee is eligible for FMLA, she would be allowed up to 12 weeks of leave. If she exhausted her 12 weeks of FMLA, the ADA rules might still provide her with accommodations.

In other circumstances the FMLA and the ADA might cover an employee at the same time. To complicate the issue further,  ADA, FMLA and workers’ compensation injuries can be intertwined in the same case but that is a blog for another day!

The EEOC has publically stated that ADA enforcement is a primary focus of its compliance efforts. If you have a situation where an employee or applicant tells you that he or she has a disability and needs an accommodation, please contact your Partnership Manager or the Human Resources department at BCN Services for assistance and guidance on this tricky area of employment law.

Follow the HR HeaRtbeat.com blog for updates on this topic and others relating to employee disabilities.  Contact BCN Services at 800-891-9911 or click here to be directed to our contact us page.

Jeff Walsh (200x190)

Jeff Walsh, Partnership Manager

Employers may send an employee home for minor illness or other reason

In all 50 states in the U.S., an employer has the right to ask a sick employee to go home.

Employers are under no obligation to allow a sick employee to stay on the job and infect their co-workers. In fact, an employer can send an employee home at any time for any reason, or without reason.  However, the employer must be careful that they do not engage in illegal discrimination against an employee based on race, color, sex, pregnancy, religion, national ancestry, or violate any written contracts.

A few examples or reasons an employer may send a worker home include:

  • There is little work for him or her to do.
  • The employee seems too ill to be productive.
  • The employer fears that the employee is contagious.
  • The employer has reason to believe that the employee is not physically fit for duty. In this case the employer may require a doctor’s release for the employee to return to work.

When an employer sends an hourly employee home, the employee must be paid for any time worked. There is no federal or state law requiring that the employee be paid for time not worked. An exempt employee who works a portion of the day must be paid his or her usual salary for the entire day, regardless of whether they have, or do not have sick leave or paid-time-off benefits.

Finally, employers must be aware that different rules apply if the employee has a permanent disability under the Americans With Disabilities Act (ADA) or a serious health condition under the Family and Medical Leave Act (FMLA), rather than a minor illness.

The experts at BCN Services can offer guidance in specific employment situations.  Contact us at 734-994-4100 or toll free at 800-891-9911 or visit our website at www.www.bcnservices.com.

Lisandra Garrow, Partnership Manager


Collective Bargaining Thoughts for Owners

Many employers don’t know how to address the topic of unions in the workplace. The National Labor Relations Act prohibits employers from a few items. Remember the acronym of TIPS of what you cannot do:

  1. Threaten – Employers cannot threaten employees with adverse actions if they support a union. An example would be telling employees that the company would close a location or lay people off if a union were supported or elected by the employees.
  2. Interrogate – Employers can discuss unions with their employees but they may not Interrogate, or question, their employees about their union activities, whether they support the union or if they signed a union authorization card.
  3. Promise – Employers may not promise benefits (raises, for example) to employees if they don’t vote for the union or if they campaign against the union.
  4. Spy – employers may not spy or place employees under surveillance to identify union activities.

Beyond these specific limitations, employers and company managers may discuss facts, experiences and opinions about unions.

You or your management team can inform employees of the process of a union campaign, that they may be forced to pay union dues and initiation fees, that a union contract would limit or eliminate employees coordinating their hours, wages, benefits and working conditions with individual managers.  Share that the union cannot promise anything to your employees since everything would be negotiable. You can discuss your past experiences with unions, facts about union strikes and other similar issues.

That said, employers should note that most union campaigns are no longer about economics. Employees that do not have a voice in the workplace, that don’t feel respected and appreciated or feel that they are not treated are more likely to gravitate to a union. These emotional issues are the forces that drive many to join unions today. If you and your management team keep your employees engaged, seek their thoughts and input in ways to improve business and make the employee feel valued, you have a taken a huge step in preventing union activity in your workplace.

Here is a common-sense approach:

  • Be pro-employee, not anti-union!
  • Treat employees fairly.
  • Maintain open lines of communication with your employees.
  • Survey employees, formally or informally, to ask whether they are being treated respectfully and fairly.
  • Explain unpopular company decisions. Employees may not like something, but understanding your reasons for actions will earn the employees respect.
  • Maintain an open door policy and listen to employees that have complaints or concerns. Ensure that employees understand that their concerns are taken seriously.
  • Maintain competitive wages and benefits within your industry and market.
  • Beginning with the orientation of new employees, make it clear to your employees that you prefer to deal directly with your employees. A position statement regarding unions can be included in the company handbook, if desired.

Should you discover that your employees are exploring a union, the National Labor Relations Act limits your actions during a union campaign. For example, if you discover employees are signing or being asked to sign union authorization cards and you offer raises during that time, you might face an Unfair Labor Practice charge. If you need help with this topic or other employment issues, contact BCN for further discussion and guidance.

Jeff Walsh (200x190)

Jeff Walsh, Partnership Manager

What’s Protected Under The Pregnancy Discrimination Act?

Discrimination on the basis of pregnancy, childbirth, or related medical conditions constitutes unlawful sex discrimination under Title VII of the Civil Rights Act of 1964. Employers cannot treat someone who is pregnant or has a pregnancy related conditions any differently than other employees or applicants with similar work abilities.

The Pregnancy Discrimination Act of 1978, which amended the Civil Rights Act,  applies to employers with 15 or more employees, including state and local governments.

The following protections apply under The Pregnancy Discrimination Act:

  • Hiring and Working Conditions:  As an employer, you cannot refuse to hire a woman due to a pregnancy or a related condition, as long as she is able to fulfill the requirements of the position. It is also unlawful to discriminate based on pregnancy when it comes to other aspects of employment, including pay, job assignments, promotions, layoffs, training, fringe benefits, firing and any other term or condition of employment.
  • Temporary Disability and Maternity Leave: If a pregnant employee becomes temporarily disabled due to the pregnancy, they must be treated the same as any other temporarily disabled employee. If you as an employer allow temporarily disabled employees to modify tasks or perform alternative assignments, then you must also allow an employee who is temporarily disabled, due to pregnancy, to do the same. The same is true when it comes to disability leave. Employers are required to hold open a job for a pregnancy related absence the same length of time that jobs are held open for employees on sick leave.
  • Health Insurance: Any health insurance provided to employees must cover expenses for pregnancy related conditions on the same basis as costs for other medical conditions. In addition, pregnancy-related expenses must be reimbursed in the same method as those incurred for other medical conditions.
  • Fringe Benefits: Accrual and crediting of seniority, vacation calculation and pay increases during a leave must be handled in the same manner for a pregnant employee on leave as it would be for any other temporarily disabled employee.

It’s important to treat a pregnant employee in the same manner that you would treat any employee in all aspects of employment. If you have questions or concerns regarding a pregnant employee at your workplace, please contact BCN Services at 1-800-891-9911 or visit us here.

Amanda Cline (200x184)

Amanda Cline, Partnership Manager


PPACA-Important Update: Exchange Notification Delayed

The Affordable Care Act requires employers to notify their employees of the existence of health benefits exchanges. That notification requirement was to be fulfilled by March 1, 2013.

The notification date has been postponed.   A new date most likely in late summer or early fall will be announced.  The goal is to coincide with open enrollment on the Exchanges, which begins Oct. 1, 2013 (for a Jan. 1, 2014 effective date.)

Two reasons were cited for this delay:

1.  To coordinate with educational efforts and guidance on minimum value (the rule that employer-sponsored coverage must be affordable and cover at least 60% of services).

2.  To provide employers with sufficient time to comply.

When published, the notification must inform the employee of the existence of the Exchanges, including a description of the services provided by the Exchanges and the manner in which the employee may contact the Exchanges to request assistance.  In addition, the notification must convey the availability of premium tax credit to the employee if the employer’s plan doesn’t cover 60% of services and the employee purchases coverage through the Exchanges.  The employee may lose the employer contribution (if any) toward the cost of health benefits if the employee purchases coverage through the Exchanges.

BCN will work with you on Department of Labor and HHS requirements and provide the necessary notices needed for your Plans.  Please call us at 1-800-891-9911 or or contact us.




Sue Kester, HR Manager

Determining Independent Contractor status must include a review of the whole

Independent Contractors (employees who receive 1099s) are a topic that much is written about, but still there is a great deal of confusion in the workplace.

Part of the problem is that everyone would like a simple question or checklist that clearly states “this is an employee” or “this is an independent contractor.”  In fact, the Internal Revenue Service had such a test, commonly known as the “20-Factor Test” and most Human Resource departments and companies referred to this test to help make their decision of choosing employee or 1099 independent.

After years of arguments about use of the test, the Supreme Court has ruled that there is no definition that solves all problems relating to the employer-employee relationship under the Fair Labor Standards Act (FLSA).  The Court also said that determination of the relationship cannot be based upon isolated factors or a single characteristic, but depends upon the circumstances of the whole situation.

This didn’t make things any clearer, so under pressure from Congress and representatives of labor and business, the IRS has attempted to clarify and simplify the test.  The result is guidance based upon 11 main tests that are organized into three groups:  Behavioral Control, Financial Control, and the Type of Relationship between the parties.

Along with these guidelines, we have seen an increase in both investigation and enforcement of companies using Independent Contractors.

Below are brief summaries of the three groups and questions you should ask;

  • Behavioral Control –This includes instructions the business gives the worker.  Do you provide instructions about when, where or how to do the work?
  • Financial Control – How do you pay the worker?  Who sets the pay?  Are they reimbursed for expenses?  What is the extent of the worker’s investment?
  • Type of Relationship – What is the permanency of the relationship?  What is the extent to which services performed by the worker are a key aspect of the regular business of the company?  Are there contracts created by both parties?

A word of warning:  while researching this topic I have seen the following mentioned several times in IRS publications: “Do not underestimate the difficulty of applying these standards to specific individuals performing services.”

For more detail, including the complete tests with all questions, or if you have concerns about your use of Independent Contractors, contact BCN Services for an in-depth review and discussion.  Please contact us at 1-800-891-9911 or contact us by clicking here.

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Michigan’s Workers’ Compensation Law is Changing How Injuries are Handled

The 2011 changes in Michigan’s workers’ compensation law approved by Michigan Gov. Rick Snyder began to take hold in 2012.  These updates to the law were intended to bring clarity to the statute in several areas and attract and keep business in Michigan.  Let’s highlight just four substantial revisions here.

  1. Time extended for directing injured employee’s medical care: One significant change allows employers to direct the medical care of an injured employee during the first 28 days of an injury or disease.  Previously, the employer had 10 days to direct the care.  Directing post-injury care is vital to providing quality treatment and keeping costs reasonable.  Whenever possible, occupational medical facilities are the best choice for care and treatment of employees.  These facilities understand the dynamics of a work-related disability and prompt recovery.The key to putting the treatment on solid footing is ensuring a positive experience for the employee while offering needed treatment after an injury whether your employee receives a couple of stitches or strains a shoulder.  Although they provide vital medical care, emergency rooms, urgent care clinics and family physicians are not as adept in handling worker injuries and should not be a first choice unless the severity of the injury warrants it or no other alternative is available.
  2. Pre-existing medical condition definition clarified: Prior to the 2011 changes, a pre-existing medical condition often extended the duration of a worker’s compensation claim as it was difficult to distinguish between a work-related disability and the pre-existing condition itself.  A second change in the statutory language clarifies that a pre-existing condition is not payable under workers’ compensation unless there has been a change in the pathology of the pre-existing condition caused by a work injury.
  3. Such conditions must “significantly change” or are not covered: A degenerative arthritis located in the back area can be a pre-existing condition.  When a worker having degenerative arthritis sustains a back injury, that condition can complicate and extend treatment and recovery, keeping an employee off the job if not addressed early.  A third change in the statutory language specifies that degenerative arthritis is part of the aging process and would be considered work related if the injury aggravates or accelerates the degenerative arthritis in a significant manner. If the pre-existing condition has not changed in a significant manner, it is not workers’ comp.  Physicians should be asked more often and more proactively to medically distinguish between the “pre existing condition” and the worker’s injury.  This change is expected to limit the duration of many claims, particularly as our population ages.
  4. Mental disability language strengthened:  A fourth change brings further clarity and stability to the overall system regarding mental disabilities.  These are work related if they arise out of actual events of employment, not unfounded perceptions.  The new law states that the “the employee’s perception of actual events” must be “reasonably grounded in fact or reality.”

These are but a few of the statutory changes intended to modernize and provide greater efficiency in the workers’ compensation system in Michigan.  While the Dec.19, 2011 law signed by Gov. Snyder is barely one year old, the system is already experiencing greater discipline and proactive management when it comes to claims handling.

At BCN Services, we manage day-to-day items such as Workers’ Compensation claims and offer employers up-to-date advice about changes in the law.  Call us toll-free at 1-800-891-9911 or in southeast Michigan at 1-734-994-4100 or contact us here.  Let BCN handle that!


Patrick Boeheim, Risk Manager

How will Michigan’s Right to Work laws affect the workplace?

Michigan’s new Right to Work legislation, consisting of two bills, was signed into law by Gov. Rick Snyder on Tuesday, Dec. 11, 2012, but will not take effect until late March or early April of 2013.

Michigan is the 24th state to enact such legislation.

Both new laws make it illegal for employees to be required to join or financially support a Union, even if there is a union currently representing employees in a workplace.  However, contracts or collective bargaining agreements already in effect will not be affected by the new laws until the contracts expire.

Contrary to what the name implies, neither law creates the right to a job for any employee, but rather makes it illegal for a union shop clause (forcing employees to pay union dues) to be a part of a bargaining contract.

Proponents of right-to-work laws argue that workers should be free to join unions or to refrain from doing so.  Opponents argue that right-to-work laws restrict freedom of association, and limit the sorts of agreements individuals acting collectively can make with their employer.

Not surprisingly, this decision has created a political divide and Democratic leaders have promised to attempt to block the Right to Work legislation by litigation and political activity including recall efforts against legislators who supported the laws.

We’ll continue to monitor the situation and keep you apprised.

If you need advice about these issues surrounding collective bargaining or other human resources matters in your business, contact the experts at BCN Services.



Sue Kester, Manager, HR