By: Josh Johanningmeier | IIAW General Counsel

 

In addition to all of the other complications created by what has been a very complicated year, it’s likely that both you and your business clients have encountered the difficulties of coordinating a remote workforce at some point in 2020. From trouble with Zoom calls to remote notarizations, the problems associated with working from home can be frustrating. Unfortunately, with Covid cases on the rise, many workforces may again make the transition back to remote work environments. Many may have never transitioned back to the office at all. One issue that should not be forgotten as both your agencies and your clients prepare for a winter working from home is the possibility of workers’ compensation liability even when an employee is off company property. While ensuring employee safety from afar may seem impossible, there are steps that can be taken to reduce the risk.

Remote Workers’ Compensation Liability

Worker’s compensation laws vary by state, but under most state laws, including Wisconsin’s, employers are liable for employee injuries that arise both out of and during the course of employment. According to Wisconsin’s Department of Workforce Development, this liability extends to “[a]n injury occurring away from the company premises, but while the employee is still performing service for the employer and under the employer’s direction and control.” Moreover, an employee whose job requires travel is covered at all times during a business trip. While air travel and hotel stays may have seen a significant recent drop, many companies have likely seen their employees driving more for work. Importantly, traffic accidents occurring while on company time are compensable under Wisconsin’s workers’ compensation laws. All of this combines to mean that workers’ compensation liability can extend far beyond the brick and mortar.

Now What?

The prospect of ensuring a safe work environment for at-home workers can seem daunting for employers, but it can also get lost in the shuffle of the logistical issues currently facing businesses around the world. Reaching out to your clients with a list of best practices for protecting at-home employees will not only generate goodwill, it may also reduce the prospect of future liability.

Specifically, here are some recommended practices when engaging a remote workforce:

• Require express written authorization before an 

   employee can work remotely

• Update and maintain accurate employee job descriptions 

   and expectations, and confirm that employees 

   understand the specific responsibilities of their positions 

   when working from home

•  Require employees to specifically define their home 

    office space and provide employees with information 

    and training about safe workstation set-ups, consistent 

    with your in-office practices

• Create and maintain a safety checklist for home offices 

   to ensure employees’ offices are free from any recognized 

   hazards

• Remind employees, in writing, of their obligation to 

   promptly report all work injuries consistent with your 

   worker’s compensation and safety policies, even if they 

   occur at the remote worksite

• Remind employees, in writing, of who should receive 

   any reports of injuries that occur in their home office 

   environment

• Require both non-exempt and exempt employees to 

   record and maintain a detailed record of actual time 

   worked, including a detailed record of meal breaks and 

   other personal breaks during the workday.

While a remote workforce can create innumerable complications, it is still important to ensure that employee safety does not get lost in the shuffle. Continue to follow updates from the IIAW and this column for more suggestions on how to best protect your agencies and serve your clients.

In the final days of its 2019-20 term, the Supreme Court issued a decision with potentially vast implications for religious organizations.  In Our Lady of Guadalupe School v. Morrisey-Berru, the Court ruled that parochial school teachers do not, for the most part, enjoy protections under federal employment laws.  This decision, and the potential for the Court to expand on it in the years to come, could have a major impact on insured claims against religious institution employers.

 

The Our Lady of Guadalupe School Case and Decision

 

The Our Lady case is actually a combination of two employment discrimination cases brought by Catholic school teachers in the Los Angeles area.  In both cases, the teachers argued the schools terminated them for discriminatory reasons.  The first plaintiff, Agnes Morrisey-Berru, claimed her former employer fired her based on her age.  The second plaintiff, Kristen Biel, argued her former school terminated her because she had breast cancer.

 

Before delving into the Court’s opinion in Our Lady, however, it is necessary to discuss a bit of background.  In 2012, the Supreme Court considered a similar case in which a terminated parochial school teacher sued her former employer for discrimination under the Americans with Disabilities Act.  In that case, the Court recognized a “ministerial exception” to federal employment laws rooted in the First Amendment’s protection of the free exercise of religion.   Specifically, the Court dismissed the plaintiff’s suit, holding that the ministerial exception precluded her claim given that she had received extensive religious training, was considered a minister of her church, and her firing fell into a category of decisions religious institutions make that are essential to their central mission.

 

Despite important differences between the two cases, the Court reached the same decision in Our Lady as it did in 2012.  In the 2012 case, the Court ruled the ministerial exception barred the teacher’s ADA claims based on evidence that the fired teacher had extensive religious training and was considered by her church to be a “minister.”  The same could not be said for the Our Lady plaintiffs, as the two teacher plaintiffs in the case did not have any specific religious education credentials, and one of them testified that she was not even a practicing Catholic.  However, according to the Court’s majority opinion, whether a teacher has religious training is

inconsequential to the ministerial exception analysis.  What mattered in Our Lady was that the teachers taught religious curriculum, prayed with their students, and accompanied them to mass.  Ultimately, in dismissing the teachers’ claims, the Court held that the schools had initially made the determination that the teachers knew enough about Catholicism to teach the subject, and “judges have no

warrant to second-guess that judgment.”

 

Now What?

 

Despite the fact that both the Our Lady decision and the 2012 case involved teachers, the rulings could have much broader implications.  In her dissent, Justice Sotomayor criticized the majority, arguing it had destroyed the existing standard of review for the ministerial exception and replaced it with a single consideration: “whether a church thinks its employees play an important religious role.”  Not only could this “strip[] thousands of schoolteachers of their legal protection,” according to Sotomayor, it could also extend to “countless coaches, camp counselors, nurses, social-service workers, in-house lawyers, media-relations personnel, and many others who work for religious institutions.”

 

If you or your agency have religious institution clients, this decision, and its progeny, could have a considerable impact on the scope of potential employment-related claims and litigation.  If lower courts consistently (or even more 

broadly) apply the holding from Our Lady, it could greatly reduce the amount (or at least the success) of employment discrimination claims against religious institutions. Moreover, if Justice Sotomayor’s dissent proves prescient, the opinion could serve as the backbone for future decisions dismissing discrimination claims brought by any employee of a religious organization, or even claims brought by parishioners involved in community outreach or charity work.

 

Conclusion

 

In Our Lady of Guadalupe School v. Morrisey-Berru, the Supreme Court expanded the ministerial exception to employment discrimination claims brought against religious institutions.  While the case involved teachers at parochial schools, the decision may impact claims brought by any employees of religious organizations.  Keep an eye on this column and updates from the IIAW for related developments.

By: Josh Johanningmeier | IIAW General Counsel

* This article was featured in our April 2020 Wisconsin Independent Agent Magazine. Click here to read the full April 2020 issue. 

Federal Court Rules Business owners Policy Covers Ransomware Attack Damages

 

In late January, the United States District Court for the District of Maryland, in National Ink & Stitch, LLC v. State Auto Property & Casualty Insurance Co., ruled that a business owners policy provided coverage for an embroidery and screen-printing business that had fallen victim to a ransomware attack.  The court described its decision as a continuation of a nationwide trend of courts finding coverage for loss of data or systems functionality following a cyber-attack.  Implicit in the court’s decision may have been a recognition of the increasing frequency and severity of ransomware attacks across the country.  It is critical that you and your agencies also take note of these trends.

 

The National Ink & Stitch Case and Decision

 

In December 2016, National Ink & Stitch suffered a ransomware attack, which prevented it from accessing all art files and other data contained on its server along with most of its software.  The attacker demanded payment in the form of bitcoin to release access to the software and data, which National Ink & Stitch paid.  However, the attacker then requested further payment.  At that point, National Ink & Stitch contracted with a security company to replace and reinstall its software.  While the business’s computers functioned after the reinstall, the new protective software slowed the system.  Further, National Ink & Stitch still does not have access to the lost data, meaning it has to reproduce all of the lost art files.  Finally, computer experts found that it was likely there are still remnants of the virus on the business’s computers, which could ultimately “re-infect the entire system.”

 

Due to past and continuing damages resulting from the attack, National Ink & Stitch presented a claim to its insurer, State Auto, for the cost of replacing its computer system.  The relevant business owners policy states that State Auto “will pay for direct physical loss of or damage to Covered Property…resulting from any Covered Cause of Loss.”  The policy defines “Covered Property” to include “Electronic Media and Records (Including Software).”  However, State Auto denied the claim, finding its insured did not experience “direct physical loss of or damage to” its computer system under the policy. National Ink & Stitch then sued to resolve the coverage dispute.

 

Ultimately, the court held that State Auto’s policy did provide coverage for National Ink & Stitch’s losses.  The court began with the policy language, which explicitly includes “data” and “software” within the definitions of “Covered Property.”  The court also construed the phrase “physical loss or damage” to include the inefficiency of National Ink & Stitch’s computer system following the installation of protective software, finding that a computer can “suffer ‘damage’ without becoming completely inoperable.”  While the court came to its conclusions based on an analysis of Maryland state law, it noted that its interpretation tracks with holdings “reached by the majority of courts interpreting similar policies.”

 

 Now What?

 

Before getting to the potential effects of this ruling on your agencies and clients, it is important to understand the basics.  Ransomware is a computer virus that effectively holds a computer, or an entire system, hostage until a fee is paid.  Ransomware attacks have become increasingly common in recent years.  In the first four months of 2019 alone, there were more than 40 million ransomware detections.  Experts predict that by 2021, a business will fall victim to a ransomware attack every 11 seconds.  Further, the costs for businesses targeted with ransomware can be incredibly high.  The total damages associated with ransomware in 2019 surpassed $11.5 billion, or an average of $141,000 per incident.  In other words, this problem is common, it’s expensive, and it’s not going away any time soon. 

 

So what does this all mean for your agency?  To start, as reflected by the National Ink & Stitch decision, courts across the country have begun to construe business owners policies to cover damages arising from ransomware attacks.  Given the severity and frequency of the problem, and its effects on organizations ranging from multi-national corporations to small towns, courts are unlikely to reverse this trend.  As a result, it is critical that you and your agencies understand the policy language you are presenting to your clients and the coverage they are requesting.  Further, it is increasingly important to have connections with consultants, lawyers or firms that have expertise in not only insurance law, but in the expanding field of data privacy and cybersecurity, so that evaluating response strategy, security planning and coverage can be accomplished.  

 

Conclusion

 

Ransomware attacks may soon become a daily headache for your business clients.  In order to recoup some of the costs associated with these attacks, those clients are likely to bring claims under their business owners policies.  If past is prelude, courts may be sympathetic to those claims and you need to be prepared to handle coverage requests and claims arising from these attacks.