Insights and tips for association & nonprofit professionals


Managing and insuring your biggest risks

By Jeff Altman, Whiteford, Taylor & Preston,

Most people are surprised to learn that one of the biggest risks for claims against associations involve employment practices. These range from the initial hiring decision to the final termination of employment, and include everything in between. These risks need to be identified and managed. Insurance coverage also is needed to protect against possible claims.

Identifying the risks

There are textbooks and manuals describing the complex array of federal, state and local laws that cover the workplace as well as how to manage your employment risks. Some of the key exposure areas include:

• The hiring process (including what information can be requested, investigated or considered)

• Immigration status issues

• Discrimination and harassment in the workplace

• Retaliation (one of the, if not the, largest number of claims before the EEOC)

• Improper exempt vs non-exempt classification and failure to pay overtime (FSLA Claims)

• Improper independent contractor vs employee classification

• Evaluations

• Dealing with the threats and impact of workplace violence

• HIPPA and privacy violations

• The unequal application of personnel policies and handbook provisions (or lack

• Terminating employment.

Risk management/claims avoidance

Perhaps the most important thing you can do is to provide management training and conduct antiharassment employee training on an annual basis. You also should consider an audit of your record keeping and classification of employees to comply with complex and changing rules.

Another key area is to document your employee files and carefully consider the risk and liability implications for various employment situations. For terminations, in particular, you should make sure the file is complete or postpone any negative action until you are in the best position to terminate. Coordinate with your legal counsel for any major employment actions to avoid claims. This includes considering and investigating initial inquiries or complaints before they become formal claims.

Also make sure that you have written personnel procedures and that your employee handbook clauses are consistent and lawful. They should be up to date and reflect all current legal requirements.


Every association should purchase Directors & Officers (D&O) insurance that includes comprehensive coverage for employment practices liability. The policy also should include each of the risks mentioned above, which are oftentimes excluded from coverage if you don’t get the right policy. Notwithstanding your best efforts, there inevitably may be a claim that can be expensive and time consuming to defend.

D&O coverage that includes employment practices is relatively inexpensive and will protect the association, its staff and volunteers, as well as the directors and officers. If there is a claim, be sure to provide timely notice after conferring with your legal counsel or insurance advisor. The way you describe your claim in your notice may make a big difference whether your carrier acknowledges coverage.

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