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Crime Risk Management of Employees
Unfortunately crime or embezzlement is a fact of life even in the non-profit world, but that doesn’t mean your organization has to be a victim. By taking the necessary precautions, you can minimize the potential for crime.
In the MJ Sorority Program, we have seen an increase in embezzlement claims from both the chapter operations and house corporation operations.
As illustrated by the above results, one of the exposures facing a chapter and house corporation comes from the employees you hire, mainly the house directors. The first line of defense is to hire honest employees. What follows are some risk management recommendations for you to establish for your hiring process.
- Develop comprehensive employment application form that will allow for an in-depth exploration of the applicant’s background. The form should be consistent with federal and state requirements and should include at a minimum, information about residence, education, job history, criminal arrest, and bankruptcy filing and references.
- Require applicants to fully complete and sign the application form, accounting for any gaps in information. Check references and previous employers by mail or phone. All questions by telephone should be direct. Letter inquiries should be designed as check-off type questions, not requiring narration-type answers and should include a self-addressed, stamped envelope for return. If you have an email address for this contact, use the check-off type question format above.
- MJ can also be a resource to you as you narrow your candidates. If your candidate for hire has previous house director experience you can contact the MJ Sorority Claims Manager, Heather Cox, to see if there are any “employment red flags” that we have seen.
- Background checks should be secured on your final applicant and the extent to which depends upon the importance or sensitivity of the job. See our resource at www.mjsorority.com more detailed information on background checks.
- Develop a list of questions for the job interview that will provide insight into the applicant’s character. Regarding the hiring of house directors, there can be tension points that you would want to address with your applicant to help anticipate any employment issue.
The importance of the employee selection process cannot be overstated. A solid employee can make a significant contribution to your operations to insure a sound business practice and a rich sorority experience for collegiate and alumnae members.
This is excerpted from our new resource: Crime Risk Management Best Practices. Read the whole thing on our website.
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 Important Update Regarding Change to Overtime Pay Policy
We have been staying on top of the Department of Labor's (DOL) proposed changes defining which employees are exempt from the minimum wage and overtime pay requirements of the Fair Labor Standards Act (FLSA). The Labor Department announced the changes May 17, 2016, many of which were expected. The final ruling makes the following important changes:
- Raise the salary threshold from $23,660 to $47,476 a year, or from $455 to $913 a week. Nearly all workers earning salaries beneath that threshold are entitled to time-and-a-half pay whenever they work more than 40 hours in a week. The Labor Department will now update the threshold every three years to make sure it keeps pace with inflation.
- The new ruling makes no changes to the “duties test” and allows bonuses and incentive payments to count toward up to 10 percent of the new salary level. Workers earning more than the salary threshold are still subject to the duties test to determine eligibility for overtime.
- The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.
Dave Jamieson of The Huffington Post writes, "What the rules will undoubtedly do is give many employers a hard choice: Either limit workers’ hours to 40 per week so they don’t incur the time-and-a-half premium, or start paying workers more for the extra time they work." Chapter and House Corporation employers will no doubt be facing some of these difficult decisions.
We will keep you informed as developments arise, but you should begin to familiarize yourself now with the changes. We recommend you review several resources directly from the Labor Department, including the final rule in its entirety and FAQs.
In addition, review the following resources from Chubb, your Employment Practices Liability insurance carrier, on our website for additional reading, both of which were written before the final ruling but are still relevant and helpful:
We are planning upcoming webinars with an expert in this field and a Human Resources professional to help assist you with this confusing and substantial change. Stay tuned for those details.
Should you have any questions or concerns in the meantime, please do not hesitate to contact your Client Executive.
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We will be hosting a webinar with Michelle Anderson, non-profit employment expert, of Fisher & Phillips LLC to discuss how the FLSA changes will impact our clients specifically. Register here.
*If you cannot attend at the designated time, register anyway, and you will be sent a recording of the webinar at its conclusion.
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The Growing Risk of Cyber Liability
The internet provides one of the best ways to efficielntly run your business from ordering food to checking the upcoming weather. The internet, social media, and mobile technology have it advantages but they also come with risks. These risks of data breach, identity theft, and electronic corruption of someone else's system or what is now termed cyber liability.
These risks continued to grow in frequency, as our usage increases. In 2013, there was an 18 percent increase in the number of cyber attacks. The most troubling of the exposures is the possibility of data breach of someone's personal information. This information generally would be credit or debit card information or bank account information.
We have also heard that on some occasions, a member's social security number has been secured. We strongly discourage the practice of collecting social security numbers, as it significantly increases the risk of data breach and, subsequently, identity theft.
As you manage personal information in your role, it is important that you be mindful of your obligation to protect the information to ensure that it is secure.
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Employment Practices Liability Resources
The Employment Practices Liability coverage is provided by Chubb Group of Insurance Companies, one of the leaders in professional and management liability insurance coverage. Employment Practices Liability coverage protects an employer against claims made by employees, former employees, or potential employees that covers allegations of discrimination, wrongful termination, sexual harassment and other employment-related allegations.
Chubb offers many resources to help our clients better understand and prevent employment-related claims, including the following:
- ChubbWorks.com website: a free online resources for clients seeking assistance with employment issues
- Employment Practices Loss Prevention Guidelines Manual: a free booklet that discusses key employment issues in layman's terms and offers proactive ideas for avoiding EPL lawsuits
- EPL Hot Line: the toll-free hot line enables employers to contact directly with a nationally recognized law firm for immediate answers to your EPL questions.
We are most excited to be able to offer the EPL Hot Line to our clients to assist you with your human resource and employment law questions. The Hot Line is available to employers all over the country, not just specially designated individuals at each organization's national headquarters like the previous helpline.
The toll-free number is (888)249-8425. In order to connect with a Hot Line attorney, you will need to reference your EPL policy number, which should be located on the Insurance Overview that was emailed to you at the inception of your policies. Please contact your Account Executive if you have trouble identifying your policy number.
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FLSA Implications
Essential reading for employers on Fair Labor Standard Act implications for House Directors from Fraternal Law. Stay tuned for additional resources on the upcoming FLSA changes.
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New Webinar: On the Frontlines Version 2.0
Register for our On the Frontlines webinar geared toward House Directors and their employers. More details here.
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Crime Risk Management Best Practices
As most of you know, there have been some important changes to the crime coverage. Check out this new packet of helpful resources to learn more.
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Background Checks
Travelers, the primary insurance company for the sorority program, has partnered with a Intellicorp to offer background checks. Background checks are an essential component of the hiring process. Learn more here.
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