Increasing agency value through HR services

Rough Notes, Aug 2002 by Zinkewicz, Phil

Growth in employment practices litigation spurs agencies to offer human resources programs

Sexual harassment, employment practices liability, age and sex discrimination-all of these phrases and more send fearful chills up and down the spines of human resources people employed by the largest corporations. The giants of industry live in fear of the possibility of being in violation of any one of the myriad of federal and state laws relating to management's behavior towards employees in the workplace. They have to deal with the Americans with Disabilities Act (ADA), COBRA, the Family and Medical Leave Act of 1993, and the Equal Opportunity Employment Commission-and that's just at the federal level.

Violating one or more of these laws can lead to multimillion-dollar jury awards. In 2000, an Ohio jury returned a $31 million verdict against a health services organization for age discrimination. A major television network settled a sex discrimination lawsuit for $8 million in that same year. According to Jury Verdict Research in Horsham, Pennsylvania, the median award for an employment practices liability lawsuit rose to $218,000 in 2000, up from $150,000 a year earlier. A fifth of all verdicts top $1 million, according to the research institute.

But large corporations have an edge over small and mid-sized commercial establishments. The large companies can at least afford to hire a legal staff and human resources people to keep abreast of trends and developments in the area of employment practices. Smaller organizations often do not have the wherewithal to bring on that kind of staff.

Because of that, a new trend seems to be developing in the property/casualty insurance industry. Insurers and even agents are striking deals with independent human resources operations that, for a fee, will assist the smaller and mid-sized companies in complying with employment practices laws.

For example, GuideOne Insurance has been a leading insurer of churches since it developed the first multi-peril policy designed especially for religious institutions in 1962. Based in West Des Moines, Iowa, the company also writes commercial insurance products for schools and colleges, as well as not-for-profit senior living communities. The company employs more than 1,000 individuals across the country and is licensed to do business in 50 states. It markets its products through a network of more than 2,000 independent and career agents.

Earlier this year, GuideOne contracted with HR Client, Inc., an online company that provides human resource tools and guidance to small and mid-sized organizations. "Since churches are in the business of providing members with quality ministry, they often don't have the time or the staff to manage an effective human resources infrastructure," says Jim Bonney, assistant vice president of business development at GuideOne. "By subscribing to any 'HRAdministrator' product offered by HR Client, GuideOne's church policyholders can receive forms, best practices processes, business policies, and federal and state regulatory information, all at a reduced price. The arrangement can also save GuideOne policyholders the cost of having a full-time human resources professional as part of their senior staff. The arrangement also demonstrates an ongoing commitment on the part of GuideOne to offer commercial customers a wide array of risk management services and products."

Says Janice Beach, a principal of HR Client: "We understand that we can enhance our product offering by developing strategic alliances with complementary businesses. As a result, we are interested in building strong relationships with companies that will lead to success for everyone--our customers, our partners, and HR Client. We are thrilled to work with GuideOne Insurance, a company that has a proven track record of meeting the specialized needs of churches."

Beach says that HR Client launched its first online human resources product in November 2000. She and her coprincipal, Karen Clary, had been doing human resources consulting before starting up HR Client. "We noticed that there was a growing need among smaller organizations for just the basics-things such as employee handbooks and manuals. We also recognized that it was difficult for smaller organizations to meet the high consulting fees charged by large human resources consulting operations. We digested all the basic employment practices information into one online package called HRAdministrator. It is simple and easy to read and can be understood by everyone from the administrative assistant to the company CEO. The program helps the smaller organization develop a human resources infrastructure. HRAdministrator contains more than 150 forms and policies on things such as age discrimination and sexual harassment, which can be downloaded for use. We also offer HRAdministrator Special 19, which is designed for organizations of 19 or fewer employees. We don't act in a legal capacity for our clients. We are providers of the information that they need to be in compliance."