By Rich Edsall
Retinal scans and fingerprints may offer excellent security to employers, but as recent lawsuits have shown, they also present a privacy exposure to private companies.
Illinois was the first of several states to pass laws regulating the collecting and handling of employee biometric information, and an increasing number are considering adopting their own laws. Privacy claims over biometric information serve as an example illustrating how private companies must navigate a changing landscape of exposures. Private companies should look for a comprehensive management liability policy that covers emerging risks from a wide range of sources, including creditors, suppliers, customers and employees.
What should private companies look for in management liability insurance?
Here are the three major types of coverage private companies should look for in a management liability insurance policy:
1. Directors and Officers (D&O) Liability
Some private companies might believe their directors and officers aren’t vulnerable to claims because they don’t work for a publicly traded company.
While it’s true that private companies don’t face the headline-grabbing class-action shareholder lawsuits that publicly traded companies do, directors and officers can be held personally liable for their actions as part of the management team of a private company. Private companies should make sure they have a comprehensive management and professional liability policy that includes D&O coverage.
2. Employment Practices Liability (EPL)
Wrongful termination, harassment and discrimination claims are well-known exposures covered under an EPL policy, which protects private companies and managers from lawsuits. But biometric data is a relatively new type of privacy exposure employers must take seriously. Depending on the circumstances, a privacy claim about the collection, storage or handling of an employee’s fingerprint could fall under D&O or EPL coverage, so it’s essential that private companies fully understand what their policy covers.
3. Fiduciary Liability
Voluntary retirement and health benefit plans offered by private companies may be regulated under the Employee Retirement Income Security Act of 1974 (ERISA), which requires plan administrators and other fiduciaries to act in the best interests of plan participants and beneficiaries. Fiduciaries of a company’s benefit plan can be sued personally for breach of fiduciary duty, which underscores why fiduciary liability coverage is an important component to include in a private company’s professional and management liability policy.
Private companies can look for a policy designed to offer the specific coverages they need. Argo Pro’s new streamlined Private Company PROtect℠ policy is a modular package policy that offers D&O, EPL and fiduciary liability coverage to manage the risk exposures private companies face today (and will face tomorrow).
Learn more about Private Company PROtect.