Unlike schools, most business do not have risk associated with children in their care or activities, such as, physical education and outdoor

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5 Unlike schools, most business do not have risk associated with children in their care or activities, such as, physical education and outdoor activities. Most insurance programs on the market are not set up to cover schools. If dealt with proactively, a well structured program can address the issues that make schools inherently challenging to insure. Products and policies vary by the carrier and school. Abuse and molestation are lightening rod issues. Unfortunately, schools, by their nature, can attract abusers. Liability and casualty can provide coverage. Laws governing corporal punishment, and the type of force that can be used, varies state by state. Educational legal liability is a growing area of concern and refers to allegations that a child was not educated adequately (e.g., the child is reading at a lower level that s/he should or special needs were not served). Other areas of growth include internet liability and renting coverage (see later on in this presentation for more). 5

6 There is statutory protection for board members. It is not common for board members to lose their house and assets in a law suit, but this does still happen. If board members are not wantonly negligent, they are usually not sued successfully, but they are often named personally in suits and must defend themselves. Board members have a duty to care and loyalty. BoardSource defines each as follows (taken from What are the legal responsibilities of nonprofit boards? available at Duty of Care The duty of care describes the level of competence that is expected of a board member, and is commonly expressed as the duty of "care that an ordinarily prudent person would exercise in a like position and under similar circumstances." This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization. Duty of Loyalty The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization. 6

7 Defendants: Plaintiffs cast a wide net. There is statutory protection for board members, but naming everyone in a suit is a leveraging tactic, even when most defendants are dropped. Plaintiffs: At times, board members sue other board members when boards fracture. Suing on behalf of a student is an emerging area and is sometimes related to another motive, such as seeking tuition refunds. If a child is expelled, sometimes parents bring an education legal liability suit against the school. 7

8 This chart can be used to explain coverage to board members and staff. It describes which types of claims are covered by which types of policies. It is important to single out Educators Legal Liability (i.e., failure to educate) which is not always covered under D&O. Sometimes, coverage against such claims are taken out of D&O policies and covered under a separate, special policy. Both D&O and General Liability should cover board members. 8

9 Financial Mismanagement e.g., a donor alleging that donated funds were misspent. Human Resources Issues e.g., wrongful termination Failure to Deliver Services e.g., failure to educate 9

10 70-75% of claims are related to employment practices liability 10

11 When buying D&O coverage, ensure that EPLI is included, especially if the vendor is not a school carrier. Note that abuse or corporal punishment is not covered under EPLI. Policies do not pay for punitive damages or civil and criminal fines. - Criminal fines associated with code violations that led to a fire, for instance, would not be covered. - Criminal behavior is not insurable. If a teacher is an abuser, that teacher is not covered, but other parties at the school may be protected by the policy. 11

12 Most of EPL claims involve discrimination. Last year, discrimination claims were up 9%. School policies and procedures on how to handle these issues must be in school handbooks. Genetic information is now a protected classification. Record keeping is critical, but you must know the law on record keeping and retention periods. The method in which you retain records could be helpful or harmful in defending you against a claim. For example, do not keep medical certifications for FMLA with an employee s personnel file. Store this elsewhere. Retaliation against an employee is the second leading claim. It s easy to prove and jurors are easily convinced. 12

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14 Note: The deductible was $20,

15 Reliable and reasonable avenue of complaint for the person discriminated against Consistent Discipline - the employee should have time to fix the problem they are reprimanded for. A business manager on the call asked if schools can be sued if they do not renew a teacher s one year contract. The answer is yes. You can be sued any time. If you did not renew teachers because of job performance, you should have documentation attesting to this. It can help in your defense. A business manager said that California law on these issues starts with the assumption that W2 employees, like teachers, will be rehired. Business managers on the call suggested that: Speaking to a lawyer before terminating would have been helpful. Trying to settle out of court would be a good tactic. Documents attesting to why other staff sat in on the teacher s class might also help defend. 15

16 Note: The deductible in this case was $10,

17 A school cannot force a woman to stop working and take pregnancy leave if she is still willing and physically able to work. Your policies should state this clearly. 17

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20 Having policies and procedures is not enough. You must educate all employees on the procedures, as well as consistently enforce them. There was a recent Supreme Court decision in favor of employers. It confirmed that employers can substantially limit their liability if they have effective and reasonable complaint processes, and train ALL employees on the procedures. This means that they should Include all policies and procedures in an employee handbook and receive a signed acknowledgement from each employee of receipt annually. Also consider posting the complaint process and distributing it as a separate document. Do not ignore employee complaints. Investigate for validity and even if your investigation turns up nothing, never punish an employee for making a good faith complaint they ll never tell you anything again. Training is not mandatory by law but it is your best affirmative defense in court; will limit liability. Prior to making disciplinary decisions, consider an employee s status Has the employee recently filed a workers' comp claim? Did the employee just return from family medical leave? Did the employee report wrongdoing recently? Negligent and inconsistent hiring practices: fingerprinting and background checks (know your state policies); everyone should complete an employment application it collects necessary comparable info on all candidates. Obtain references for potential employees. Have a policy on accepting and retaining resumes to avoid a failure to hire claim (EEOC 1 year from date of decision or date of receipt whichever is later). Remember, policy for note taking, writing on resumes, standard interviews and testing etc. Train anyone who is interviewing!! It is NOT ENOUGH just to have policies in place! You must show that you enforce them and train managers/supervisors! 20

21 Understand which laws apply to your school Federal, State, local, etc. For example, in NYC teachers/employees with access to day-care age children must be fingerprinted and have background checks! Refer to USDOL, State DOL, resources at the end. It is also important to note which regulations apply e.g., EEO-1. Keep pace with changes in the law; FMLA The National Defense Authorization Act/January 2008 service member leave up to 26 weeks of leave to care for an injured or ill service member; employees are only entitled to receive a combined total of 26 weeks during a single 12 month period. Still pending clarification is leave for active duty family member leave which would be 12 weeks for a qualifying exigency, which is yet to be defined ** use of SSNs; blood donation to name just a few. Handbook Updates: Define at-will. Receive a signed acknowledgement. Retaliation should be separate paragraph in handbook -- statement that can be modified with or without notice to ees. Overall, allow flexibility. Your handbook should be a guide not all-inclusive. It should contain only general statements of company policies; who is covered by the handbook ees/teachers Performance Appraisals: Conduct them regularly with all employees; create a perception of fairness surrounding performance appraisals (multiple types of feedback); review the appraisal with the employee personally, if possible; require employee to sign performance appraisals, after they have been reviewed with them to ensure they are aware of need for improvement. Will also be proof if employment at-will challenged. Mandatory Training: This is necessary for affirmative defense in court. Train all people in the complaint process of what their roles are/others roles are consistent information. Don t give same training every year- people will tune out; signed attendance; keep training records from year to year. Contact your broker or EPLI insurance carrier to see what programs they can provide for you to help reduce your risk (trainings, etc). Your best defense against liability training, policies, zero tolerance; for all discrimination; 21

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23 When should you consider a change in coverage? If the policy was written by a school insurance carrier, it s usually strong. If not, then often there are gaping holes. What is the industry practice for insuring your building site? Builders risk insurance is property insurance during construction. It is not liability insurance. You need to transfer risk to the builder. Indemnification and hold harmless language is required. Make sure to have the policy reviewed by an outside expert, such as your carrier. Business interruption insurance covers income and expenses when the school has to close due a natural disaster, epidemic, or other unanticipated occurrence that causes the school to close operations. How can we go about creating emergency and safety plans? This is a full topic in of itself. Develop lockdown procedures; have eyewash stations. A school insurance provider can help you develop these. What is the recommended amount of umbrella coverage? $5 million. Not more than $20 million. Internet liability is becoming a new area of coverage. It deals with personal data being compromised or defamation over the internet. D&O won t pay. If a person s personal information is compromised and they are attacked physically, the general liability policy will cover this. Most insurance contracts are vague on internet liability. The law is still evolving. Rental insurance for outside groups using the building is another area. The size of the group and time of activity are two dimensions determining the type of coverage required. One school requires families using the facility for birthday parties to present a certificate naming the school as insured. It costs about $95 for the family. The school also requires the family to sign a four-page agreement. 23

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