DOL looking to redefine term “fiduciary” – what that means for employer responsibilities

Vicarious-Liability-employment-contract-426x272Am I a fiduciary? I never like to answer a question with a question but do you make decisions for the 401(k) plan on behalf of the company? If you answered yes then you are in fact a plan fiduciary. There is no hotter topic in the 401(k) industry than the Department of Labor’s effort to redefine the term “fiduciary.” Yet with all the buzz surrounding the DOL’s proposal, many employers who offer a retirement plan are not aware of their fiduciary responsibilities and the liability that comes along with making 401(k) plan level decisions.

What is a fiduciary and who established the rules? Fiduciary responsibilities were instituted by the Employee Retirement Income Security Act of 1974 (ERISA) and are monitored by DOL. To ensure that fiduciaries are doing what is best for their employees and satisfying the DOL requirements ERISA has implemented standards of conduct, including:

Mental health care in the workplace & how employers can help

emp_talkingIn the wake of the devastating tragedy in the French Alps this month where one man’s struggle with depression brought down a 144-passenger Germanwings plane, concerns and questions arise across all industries about measures companies can take to manage the mental health of their employees. In situations where the employee’s mental instability threatens the safety of others, as in the Lufthansa crash, the employer could face unlimited liability.

According to research by All One Health, in any given year, nearly 30 million American adults suffer from depression and twice that many from anxiety disorders. These numbers are costing U.S. employers billions of dollars per year in lost productivity. Read more…

5 reasons your private company should consider D&O insurance

5_D&OPrivate company leaders should not make the mistake in thinking they are protected from personal lawsuits simply because their company is not publicly traded. According to Chubb’s Private Company Risk Survey, 27% of private companies experienced a D&O lawsuit over the previous decade, compared to 33% of public companies. And in 2013, the cost of a lawsuit against a director or officer of a private company was an average of nearly $700,000. Despite such risks as costly lawsuits, government fines, and more, a large percentage of company leaders are not taking steps to protect themselves. So, before you write it off entirely, keep these 5 factors in mind.

  1. The threat of lawsuits
    Private companies are statistically less likely to be sued in comparison to public companies, but a few instances stand out:

    • Creditor suits. If your private company were to go bankrupt, there is a chance creditors could sue. D&O insurance would protect the personal assets of company leadership from these creditor lawsuits.

    Read more…

As demand for wind turbines grows, take steps to mitigate risk

WindFarmSunsetFrom California to New York, wind turbine farms are popping up all over the country. The United States is second only to China in terms of installed wind power capacity, and the demand is increasing. Georgetown, Texas, with a population of 50,000 people, will be the first city in the Lone Star state to be completely powered by renewable energy. Why? Because, according to a U.S. Energy Department analysis, wind power will be less expensive than electricity produced from natural gas within the next 10 years, even without a federal tax incentive.

Wind farms provided 4.5 percent of U.S. power supplies in 2013. If that number increased to 35 percent by 2050, power prices would decrease and result in $400 billion in benefits related to reduced emissions of greenhouse gases, Bloomberg reports. Additional benefits include reduced water consumption by the power industry, 600,000 new jobs, and a drop in air pollution. Read more…

Misclassifying independent contractors could cost you

hailingacabAs the economy changes, we have seen an increased use of “independent contractors” in all areas of business as a way to try and reduce employer expenses.

Let’s take ride-sharing startups Uber Technologies Inc. and Lyft Inc. as an example. A job as an Uber driver has many benefits. Drivers are their own bosses with the luxury of making their own schedules. But as independent contractors, they are responsible for myriad expenses. After car maintenance, gas, insurance, and taxes, plus a 20 percent commission to Uber, the driver’s pay is cut nearly in half, according to The Washington Post. In recent lawsuits filed in San Francisco, drivers claim the ride-sharing companies have been mislabeling them as independent contractors according to California’s labor law. The National Council on Compensation Insurance (NCCI) notes that if drivers were declared employees and therefore entitled to workers comp benefits, there would be no disputing which policy – commercial or personal – would cover auto accidents. Additionally, as the employer, Uber would be responsible for covering fuel costs and other work-related benefits like paid sick leave and vacation days. Read more…

Cyberliability governance – early guidance for corporate directors

wyndham_lockWhen confidential personal or medical information is compromised or a computer network is breached, the event is typically described as a “failure” of data or network security. That is not an attractive characterization in realms where blame is assigned. Facing predicted increases in cyber-related shareholder lawsuits, corporate boards and their legal advisers have sought to determine what corporate directors and officers must do to avoid the personal liability that can result from shareholder claims. In an earlier blog post and white paper, I discussed the changing D&O risks associated with cybersecurity exposures. WGA’s Cyber Risk Hub also has an extensive section on cybersecurity corporate governance. Read more…

Prioritize cybersecurity – liabilities could fall to D&Os

March 20, 2015 Leave a comment

d-and-o_cyber

On Tuesday, Premera Blue Cross announced the health insurer fell victim to a security breach that exposed medical and financial information of 11 million customers – the most devastating cyber-attack in the health care industry to date. If this latest breach tells us anything, it’s that the necessity for cyber coverage has never been more essential. A recent study from the Ponemon Institute found that 43 percent of companies have suffered a data breach in the past year. Yet despite these numbers, a whopping 70 percent of security professionals consider their organizations safe from cyber-attacks, according to a separate survey published this week. These findings suggest not only a false sense of security among IT departments, but that many directors and officers may not realize their obligations related to cybersecurity.
Read more…

Follow

Get every new post delivered to your Inbox.

Join 205 other followers