Insureon’s Small Business, Big Impact Scholarship Now Open for Submissions!

by Brenna Lemieux2. September 2014 08:50

woman at a university

Around the country, pools are closing, schools are opening, and the days are getting shorter. And while the end of summer may feel like a letdown, there are plenty of things to look forward to in the months ahead. For example, as of yesterday, insureon’s Small Business, Big Impact scholarship is once again open for submissions.

That’s right: any undergraduate student who will be enrolled fulltime for the spring 2015 semester can enter to win a $2,500 scholarship to help pay college expenses. We launched the scholarship last semester and are excited to restart it.

How Do You Win an insureon Small Business, Big Impact Scholarship?

Every semester, two students win $2,500 scholarships from insureon through the Small Business, Big Impact program. Here’s how you can be eligible:

  • Write a 500- to 1,000-word essay about how a small business has impacted your life.
  • Visit our scholarship application page, and fill out the application form.
  • Upload your essay in the box provided.

We accept entries until November 3, 2014. After that, we’ll send the essays to our panel of judges to pick two winners. We’ll announce the winners by December 5, 2014, and the two lucky students will receive their scholarship money in time for spring semester.

Tips for Submitting Your Scholarship Application

Before submitting your application, make sure you meet all eligibility requirements (they’re listed at the “official rules” link on the scholarship page). And remember: this is an essay contest, so spend some time reading over your work before you hit “submit.”

We’re looking for thoughtful accounts of how a small business impacted your life, so your insight and reflection on your experience is as important as the experience itself.

Past Winners of the insureon Small Business, Big Impact Scholarship

Interested in seeing who won the first round of the scholarship contest last semester? Check out our scholarship winners page to read about the winners’ experience with small businesses.

We look forward to reading this semester’s essays and helping two more students with small-business experience pursue their higher education dreams. Happy submitting!

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Best Practices for Reviewing Employees

by Rieva Lesonsky29. August 2014 08:29

an employer reviewing an employee

If you’ve never done an employee review before, the idea of telling someone how they are doing might keep you up at nights – even if you have only good things to report.

But if you’ve kept the lines of communication open throughout the year, nothing you say should come as a surprise. And if you use the review correctly, it can be a valuable tool that facilitates an honest conversation about the employee’s future, improves job performance, and motivates employees.

Ready to conduct your employee reviews with confidence? Try these tips on for size:

  • Do your homework. Hopefully, you’ve created an employee handbook that outlines employee expectations and describes your company culture. Refer to the handbook if it’s relevant (more likely in a negative review). Make sure to tell the employee where they’ve excelled and what can be improved. Try to create a review form that has measurable standards so the employee can see what they need to work on. Tip: Have each employee fill out a self-evaluation so you can see how they think they’re doing.
  • Be specific. Leave general feelings about performance and ability out of the review. Stick to the specifics. Don’t say, “You seem like you don’t care.” Instead, say, “I’d like to see you take initiative and offer your own ideas about how to improve the process.” Tip: Make sure you document all the specific tasks or behaviors that need improving in case you have to fire the person down the road. For more advice, read the post, “Small-Business Owners: What Happens When You Hire the Wrong Person?
  • Be honest about positives and negatives. You aren’t helping anyone if you gloss over the bad parts and only focus on the good stuff. At the same time, you don’t want the person to walk out of the review feeling picked on and uninspired. Tip: Go over the review with a spouse or friend before you deliver it. They can help you determine whether the review is too harsh or too nice.
  • Encourage feedback. Don’t do all the talking. Emphasize that the review should be a conversation. (However, if you don’t want the person to talk until the end of the review, say so at the beginning.) Ask the employee if they need clarification on any points you made or actions you requested. Tip: If the employee is too shy to talk, ask specific questions about each of the review points to get the conversation going.
  • Focus on the future. Make sure the employee knows what you expect to happen by the next review, and ask them to share ideas on how to improve. Tip: Set one or two goals that you would like to be met by the next review.

Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at, follow her on Google+ and, and visit her website,, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

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When Does a Company Need Liability Insurance?

by J Easto27. August 2014 08:41

guy filling out an application

No matter if you run an LLC, sole proprietorship, or corporation, you can get important liability coverage from your company insurance. Many companies sign up for insurance as soon as they start doing business – a wise investment that could raft the company through trouble.

Think for a minute about what happens when a company opens its doors to the public. The company interacts with clients, customers, and vendors each day. At any given moment, something could go wrong. A delivery person could slip on the company's walkway. A client could complain about the quality of the company's work. An employee could suffer an on-the-job injury.

Any of these mishaps could become your liability – which means you are legally responsible for making up the injured party’s loss. Liabilities lead to lawsuits and the hefty legal bills that come with them. It's not uncommon for personal injury lawsuits to cost hundreds of thousands (if not millions) of dollars. But there's some good news.

Company liability insurance protects you from having to pay for a lawsuit out of pocket. There are a few different types of coverage that small businesses tend to buy. Let’s go over each common insurance policy and what it covers.

What Company Liability Insurance Do I Need?

Sole proprietors, small companies, and partnerships generally invest in a combination of the following liability insurance policies:

  • General Liability Insurance. This covers third-party lawsuits (those coming from people outside of your company) over slip-and-fall accidents, product liability, property damage, and reputational injuries.
  • Professional Liability Insurance (Errors and Omissions Insurance). This liability insurance covers lawsuits over errors or problems with the quality of your work.
  • Workers' Compensation Insurance. This covers medical costs and partial salaries of injured employees. Workers' Comp policies with Employer's Liability Insurance also cover employee injury lawsuits.
  • Employment Practices Liability Insurance. This protects your small business from employee disputes over discrimination, harassment, unpaid overtime, and other employment issues.
  • Cyber Liability Insurance (Cyber Risk or Data Breach Insurance). This covers the high cost of data breaches. 

Why Do I Need Company Liability Insurance?

There are many reasons to protect your company with commercial insurance. You should invest in coverage if...

Is Company Insurance the Same for LLCs, C Corps, S Corps, Etc.?

Depending on your business’s structure, there might be small variations in your coverage needs.

For instance…

  • Workers' Compensation laws in some states don't require LLCs to cover business partners with Workers' Comp coverage.
  • Larger organizations (typically C corporations) may need policies with higher coverage limits than, say, sole proprietorships.

When you fill out an application, your insurer asks for details about your business, including what type of company it is. An insurance agent can find appropriate coverage, no matter how your company is structured.

If you haven't founded your company yet, visit the Small Business Administration's guide to choosing your business structure for more information.

Where Can I Find Free Business Insurance Quotes for My Company?

Submit an online insurance application at insureon, and our agents will send you free quotes on company liability insurance. If you need coverage in order to sign a contract or meet state requirements, our agents can get your company covered ASAP.

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5 Back-to-School Promotions Any Business Can Try

by Rieva Lesonsky25. August 2014 08:29

back to school

It seems that as soon as summer rolls in, consumers are already thinking about school starting up again. In fact, 48 percent of consumers start back-to-school shopping online three to four weeks before the first day of school, and about 31 percent do so two months before (according to PM Digital’s, "Back To School Trend Report").

Even if you don’t have a business that specifically sells to the school market, you can still get in the spirit. Here are five ideas to help you ace back-to-school marketing:

  1. Offer back-to-school specials. Any business can discount products or services and call it a back-to-school special. With millions of kids and parents shopping for school supplies (e.g., computers, clothes, and paper goods), mark something as a back-to-school special or use those keywords in your online product description, and you’ll get their attention. For example, if you own an IT business, you could offer a special on computer tune-ups or new computer setups.
  2. Hold an end-of-summer promotion. Think, “Say Goodbye to Summer,” or, “Make the Summer Last,” or, “Endless Summer Savings.”
  3. Use social media. Don’t forget about social media promotions. Back-to-school ideas include appealing to fans of local college or high school sports teams, getting fans to upload their best chewed pencil photos, or offering discount codes for becoming a fan. Because summer is a great time for visual social media promotions, you can also ask your fans to submit their best summer or vacation photos.
  4. Get a jump on holiday promotions. Once summer comes to an end, consumers know the holidays are just around the corner. Don’t procrastinate on your holiday promotions. Offer early bird specials or appeal to consumers’ need to take care of business before the holidays get too busy.
  5. Give back. The Southern Education Foundation reports that nearly half of all public school students in the nation are considered low-income. So make it part of your back-to-school strategy to give to your local schools. You could do everything from volunteering your time in a school’s computer center, to contributing to the PTA, to donating new school equipment. Talk to school administrators and parents to see where the greatest needs are, and then adopt a school to make a difference.

Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at, follow her on Google+ and, and visit her website,, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

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Running a Business from Your Smartphone? Know How to Stay Safe

by Ruth Awad22. August 2014 08:18

man raging at his phone

Big, bad news for smartphone-centric business owners: there are two major threats that can compromise your device and steal your data. Insurance Journal reports on the research of Accuvant and Bluebox Security, two cyber security firms that found two separate risks that can affect up to 90 percent of smartphones. (For perspective, there are over 2 billion smartphones in use globally.)

Here’s what the researchers found:

  • Risk #1: Smartphone management software has a glaring flaw. Don’t get too cocky, iPhone users. This security flaw affects Google Android, Blackberry, and Apple devices alike. Turns out, all these operating systems conform to a weird industry standard that affects how user identities and network connections are managed. This uniform vulnerability may allow hackers to access the device and wreak all manner of havoc on the thing – from installing malware to accessing sensitive data.
  • Risk #2: “Fake ID” malware affects 75 percent of older Android devices. Devices running older versions of Android software can be tricked into giving up secure information. Anything that relies on verified “signatures” to access personal data (e.g., Google and Adobe software) can be scammed by these malicious apps.

The good news is that developers across all smartphone platforms are scrambling to strengthen security measures (and Google already overhauled Android’s core software to address the “Fake ID” risks in newer devices). But until they get their metaphorical ducks in a row, you should be aware of how these threats could affect your business.

Is Your Smartphone a Smorgasbord for Hackers?

As a small-business owner alive and well in the digital age, you probably run a significant portion of your business from your smartphone – even if it’s just checking your work email. Your business could be at risk for data breaches if you…

  • Have a mobile app for your business that collects user information. As you saw in the first risk above, hackers can exploit a management system vulnerability and swipe your customers’ data. If that happens, you could be sued over the breach. (To learn about creating safe and lucrative mobile apps, read, “Lessons in Mobile Marketing from Madison's Oasis Day Spa.”)
  • Access sensitive data on smartphones. Ever check your business’s bank account from your phone? If so, that information could be ripe for the taking.
  • Allow employees to use their mobile devices on the secure business network. Some viruses can spread like colds through wireless networks. Let’s say your employee uses an older Android device. If that employee’s device is riddled with malware and they connect to your secure connection, your network could be exposed.

Though it’s worth noting that the smartphone risks the researchers unearthed usually won’t affect average users, your device may need more careful surveillance simply because you use it for business.

How to Use Your Smartphone… Well… Smarter

To keep your smartphone and your data safe, consider implementing the following tips:

  • Make sure you have an antivirus plan. You might consider downloading the app Lookout to safeguard your device. It scans apps and detects malware that’s infiltrated your phone. It’s also ideal for BYOD (bring your own device) workplaces, as it allows you to remotely manage and monitor all devices on your network from one dashboard.
  • Only download trusted mobile apps. This is especially true if you use a device that allows you to download apps from third-party sources. For instance, Android users should only download apps through Google Play.
  • Update apps and software regularly. App and software updates are often developed to patch security vulnerabilities. Be sure to check your device for these updates.

As a final risk management measure, consider carrying Cyber Liability Insurance. This policy can help your business handle the onslaught of bills associated with a data breach, such as the cost of…

  • Notifying affected parties about the data theft.
  • Identifying and repairing the cause of the breach.
  • Implementing PR measures to restore your business’s image after the leak.
  • Negotiating with cyber extortionists who hold your data hostage.

To learn more about Cyber Risk Insurance, read, “Cyber Insurance: Why It Matters, Where You’re Exposed.”

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Insureon Ranked #1 Fastest-Growing Insurance Business in the Inc. 500

by Brenna Lemieux20. August 2014 07:44

the insureon team

The insureon team welcomes new members to the office in March 2014.

This morning, entrepreneur-focused magazine Inc. released its lineup for this year’s Inc. 500, a list of the fastest-growing private companies in the United States. We’re thrilled to report that insureon came in first place in the insurance category!

Overall, we placed 107th. Check out the full list on

So what is the Inc. 500? It’s a list that the magazine has compiled every year since 1982. In it, Inc. ranks U.S. companies by revenue, then offers a sorted list by industry. Growth is measured over the four-year period prior to the ranking.

Growing insureon to Help Small Businesses

While we’re honored to say we made the list this year, what’s really great about this recognition is that it offers some external proof that our work to make buying insurance easier for small businesses is paying off. As we grow, we’re able to serve more of the small businesses, entrepreneurs, freelancers, and independent contractors who keep America’s economy humming.

In the last few years, we’ve added a number of resources to help business owners navigate the world of business insurance more easily – and we have many more in the works! To get an idea of some of the resources available on insureon’s site, check out the following:

  • The Policy Analyzer. This tool lets business owners input their industry, the number of employees they have, and their annual revenue to get an idea of what kinds of insurance businesses similar to theirs buy.
  • The ISBI. The Insureon Small Business Institute publishes numbers on how much various insurance policies cost for small businesses. This gives business owners an idea of how the market is moving and what to expect from their premiums.
  • The video library. Need someone to explain how business insurance works? Browse the short videos in our video library. They offer quick, concise explanations of how various types of coverage work to protect small businesses.
  • The Small Business, Big Impact Scholarship. This spring, insureon launched a scholarship for college students whose lives have been impacted by small businesses. In the summer, after considering the many excellent entries we received, we were happy to award scholarships to two students who ran businesses they’d started themselves.

Help Us Help You

The last few years have been ones of growth and change at insureon. Our goal is to improve our ability to protect small-business owners not only by providing great coverage, but also by making the process of finding and securing insurance less intimidating.

If you’d like to see anything from our website or wish there were some insurance resources in the world that don’t yet exist, send us a note. We’d be happy to try to make your wish come true.

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"No Business Too Small" to Be Hacked, Says Security Expert

by Ruth Awad18. August 2014 07:55

cyber dementor

When it comes to cyber theft, a credit card is a credit card is a credit card. It doesn’t matter if those numbers were lifted from a big-box store or a mom-and-pop shop, according to Andrew Bagrin, a small business digital security specialist – the information is still valuable and worth stealing. The only difference is that it’s easier to hack into a small business. (Related reading: “The OTHER Way Data Breaches Hurt Small Businesses.”)

In his interview with Small Business Computing, Bagrin confirms that small businesses are more likely to experience a data breach than their larger commercial counterparts because big corporations can afford fancy IT solutions and a staff to manage them.

Small-business owners, already tiptoeing a financial tightrope, simply don’t have the resources to amplify their data security. And friends, the numbers paint a grim picture. According to Bagrin…

  • 70 percent of breaches target small businesses.
  • $300,000 is the average amount a small business loses when its data is leaked.

But here’s the silver lining in all the doom and gloom of data breaches: 90 percent of them can be avoided if you know what to expect and take the right precautions.

When You’re a Cyber Crook, the World Is Your Oyster

When we talk about cyber criminals and data breaches, it’s easy to disassociate. A cloaked villain storms a digital fortress by nightfall, filling his dollar-sign emblazoned sack with codes and customer data. Maniacal laughter fills the air, and the small-business owner shakes her fist at the trail of dust the nefarious figure leaves in his wake.

It’s the stuff of legends, and surely it won’t happen to you. (Right?)

But in reality, data breaches are crimes of opportunity. A door can easily be opened, so the hacker walks through it. Bagrin outlines the techniques hackers use to infiltrate small businesses, which include…

  • Targeting outdated firewalls. An old-school firewall is easier to work around if you’re a sophisticated scam artist. These outdated safety measures don’t have the capacity to detect and block suspect traffic.
  • Sidestepping anti-virus software. Today’s successful attacks involve a lot of patience. The hacker may use malicious links on Facebook to sneakily drop into a target’s system. Because these new forms of malware don’t operate the same way as the old guard, anti-virus software can’t detect it. The malware can quietly collect data and send it along. (To learn more about how malware works, read, “Data Security: When Malware Training Could Save You Thousands.”)
  • Nosing out unsecure wireless connections. Does your Wi-Fi have an encrypted password? If not, you’re leaving your network exposed to suspicious traffic.

Remember, too, that some industries are simply more prone to data breaches. For example, complete health records are worth a considerable sum on the black market, which is why healthcare businesses may be targeted more often. It doesn’t help that health businesses are among the most lax when it comes to data security protocol, either. To learn more, check out the post, “Allied Health Professionals: Why Your Data Isn't Safe.”

How to Keep Cyber Scammers at Bay

Now that you understand how the hackers can get in, let’s learn how to keep them out.

  • Step up your password game. Encrypt, encrypt, and encrypt some more. All your passwords – on your Wi-Fi connection, online accounts, and your actual computer – should be encrypted. Think of this as your way of “locking” the door to your network and the valuable information housed on your devices.
  • Automate your security. Because most breaches today look like usual traffic, it can be hard for older software to catch. Bagrin suggests finding technology that can detect and prevent the transfer of sensitive data before it lands in the wrong hands.
  • Get a failsafe in place. If your sensitive information is leaked, you could be on the hook for an avalanche of expenses. For instance, depending on laws in your state, you may have to pay to notify all the affected parties about the breach. If you don’t do this in a timely fashion, you could be fined by your state. (For more on that, read, “Small Business Faces $3,000 Fine for Data Breach.”) Then you’d likely have to hire a security consultant to find and repair the damage. A Cyber Liability Insurance policy can help your business finance the fallout following a cyber attack.

To get free Cyber Liability Insurance quotes for your small business, submit an online insurance application today.

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Find Insurance Where You Live

by Ruth Awad15. August 2014 07:42

map of florida

Chances are, you didn’t choose to build your business just any old place. You carefully selected the state, city, and community where you laid down roots. Maybe the market opportunity was too good to pass up. Perhaps you saw the potential in an area’s peculiar charm and decided to see what happens.

You probably already appreciate that your location is part of what makes your small business unique. But you may not know that where you live also affects your insurance coverage.

That’s why we created this user-friendly guide: “Small Business Insurance by State.”

On each state’s page, you’ll discover hallmarks of your state’s business climate, insurance laws you must comply with, and hazards specific to your area.

How Does Your Location Affect Your Insurance?

Your small business insurance needs and premium rates can vary drastically depending on where you live. Here are a few location-based factors that impact your coverage:

  • Property values. As a rule, the more valuable the property, the more you can expect to spend insuring it against loss or damage. That’s why commercial real estate in the heart of New York may be more expensive to insure than property in the outskirts of Illinois. But even within the same state, your Property Insurance rates may differ. For example, business property in Chicago, IL, may be worth more than property in downstate Carbondale, IL.
  • Geographical risks. Your location comes ready-made with a slew of risks. For example, in Florida, your business must be prepared for the possible destruction a hurricane can cause. That means you may have to add a hurricane endorsement to your Property Insurance policy. Meanwhile, in California, you might choose to add an earthquake rider to your plan. Businesses based in big cities may need a little extra General Liability Insurance coverage if they are open to the public in a high-traffic location. There’s simply more chances that a customer could waltz through the door, trip, break a leg, and sue for damages.
  • States laws. Most states have some regulations in place that dictate the need for certain coverages. For instance, unless you’re based in Texas, your state laws probably require you to carry Workers’ Compensation Insurance to cover the cost of employee occupational injuries. Your state might have insurance requirements for different industries, too. For example, doctors and lawyers may have to carry Malpractice Insurance, which covers lawsuits over professional errors.

If that seems like a lot of information to keep straight, don’t worry. Just check out our guide and click on your state’s link for a concise summary of its notable quirks.

Why You Should Work with an Insurance Agent Who “Gets” Your Area

Why make protecting your business more complicated than it ought to be? At insureon, we tend to think the process of getting tailored coverage should be a cakewalk for every small-business owner. That’s why our agents are trained by the industry and by the area. This allows us to…

  • Explain your region’s risks.
  • Walk you through any laws that affect your coverage needs.
  • Find the most competitive insurance rates for your area.
  • Shoot the breeze about your favorite teams (depending on your agent).

To get your quotes underway, fill out an online insurance application.

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Gawker Suit Illustrates Difference between General Liability and Professional Liability Policies

by Ruth Awad13. August 2014 07:37

two men comparing apples and oranges

According to PandoDaily, a self-declared site-of-record for startups, celebrity gossip site Gawker is in a bit of a bind. Apparently, Hulk Hogan sued the media company for $100 million for posting a video of him in a compromising position with a friend’s wife. Hogan cited invasion of privacy and emotional distress as the reasons for the claim.

And because Gawker is no stranger to publishing gossip, this particular lawsuit isn’t the most interesting part of this story. But the part about Gawker being sued by its insurance company, Nautilus? Now that’s interesting.

Gawker reportedly filed a claim with the accident liability insurance company to cover its legal costs during the Hogan lawsuit, and now Nautilus attests the policy wasn’t intended to cover such a lawsuit. Here’s how the weird fiasco came to be, according to sources:

  • Gawker bought a policy from Nautilus. However, that policy was only intended to cover physical injuries that happened on Gawker’s New York premises. In other words, it’s your run-of-the-mill General Liability Insurance.
  • Gawker tried to use this general policy to cover a professional error. According to the court documents, Gawker claimed to have a separate insurance policy that covers the type of lawsuit Hogan filed. The insurance provider made a tentative agreement to cover defense costs while the details were being ironed out.
  • Nautilus wants its money back. The company wants the court to agree that the policy was never intended to cover professional mistakes. It wants Gawker to pay back every cent that has been paid toward the Hogan lawsuit.

Now, don’t get us wrong. Gawker probably wasn’t purposefully trying to commit insurance fraud. Maybe it just didn’t know what the insurance did and didn’t cover – an easy mistake to make when you consider the amount of legalese in any given policy.

Unfortunately, good intentions won’t save a business in the throes of legal trouble. And the cost of the mix-up may be twofold for the media company. Not only will Gawker have to pay for its own legal costs in the Hogan lawsuit ($100 million is a hit for any company) – it might also have to pay back the insurance company.

When It Comes to Insurance Coverage, Context Is Everything

For those of you already familiar with General Liability Insurance, you may be scratching your head over this case. After all, we’ve written a series of blog posts about Advertising Injury Insurance – a coverage included in many GL policies. Advertising Injury coverage usually covers lawsuits over invading someone’s privacy and the emotional distress that comes with it. (You can read more about it here: “Can Social Media Advertising Be an Invasion of Privacy?”)

So why wasn’t this policy enough for Gawker’s situation?

The simple answer is that Gawker didn’t use the lurid video of the pro wrestler to advertise its business. Instead, it was simply publishing click-worthy content, which is the nature of the media company’s work.

That’s why the Hogan lawsuit is more an issue that a Professional Liability Insurance policy would cover. This policy covers legal expenses when a business is sued for making mistakes in its work.

Arguably, given Gawker’s industry, it should have reasonably known publishing someone’s private video without permission is an invasion of privacy. So the case is more a matter of professional negligence than an advertising mistake.

Keeping General Liability and Professional Liability Policies Straight

It’s true – there seems to be a lot of overlap between General Liability Insurance and Professional Liability Insurance. But knowing the difference between the policies can spare you a lot of headaches and ensure your business has the appropriate coverage when it needs it.

Essentially, keep in mind that General Liability Insurance covers lawsuits over…

  • Bodily injuries that happen to third parties on your commercial property.
  • Damages your business causes to another person’s property.
  • Advertising injuries (e.g., libel, slander, invasion of privacy, etc.).

On the other hand, Professional Liability Insurance covers lawsuits related to your work. This includes allegations that your business…

  • Provided negligent services.
  • Breached contracts.
  • Delivered incomplete or mistake-laden work.

You can learn more about the similarities and differences between these two policies in our article, “General Liability Insurance vs. Professional Liability Insurance.” And if you have more questions about how these policies protect your small business, feel free to contact an insureon agent at 800.688.1984.

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LinkedIn Forks Over $6 Million for Wage and Hour Violations

by Ruth Awad11. August 2014 08:23

someone counting money

Tsk, tsk, LinkedIn.

As a business-oriented social network site with 300 million users worldwide, LinkedIn is probably one of the last businesses you’d think would violate the Fair Labor Standards Act. But here we are.

According to CNET, a tech product review site, LinkedIn was investigated by the U.S. Department of Labor for failing to document and pay for all hours its employees worked. Many employees were working off the clock, which is straight-up illegal. In total, LinkedIn neglected to pay almost $3.3 million to its 359 current and former employees.

Fortunately, the social network company was quick to settle the case, but it wasn’t cheap. LinkedIn paid $6 million, which includes…

  • Over $3.3 million in overtime back wages.
  • Over $2.5 million in damages to employees in California, Illinois, Nebraska, and New York.

Though LinkedIn has stepped up to pay the arrears, the business learned a valuable and costly lesson during the ordeal, and you can, too. In short: your employees can sue the pants off your small business if you don’t pay them for the hours they’ve worked.

Pointers on Complying with the FLSA

Unfortunately, ignorance is not a defense for failing to comply with the Fair Labor Standards Act, no matter the size of your business. That means you must…

  • Have the right tools to properly track and document employee hours. You are required to document employee time and pay records. Perhaps the easiest way to ensure you do this is to use time clock software.
  • Pay employees for all their work. This includes overtime pay, which kicks in once your nonexempt employees work more than 40 hours in a week.
  • Never allow employees to work off the clock. Whenever your employees are required to be on duty or at a prescribed workplace, you must pay them for their time.
  • Compensate your employees fairly. Every employer is legally required to pay employees at least the minimum wage.
  • Be careful when hiring minors. There are some things you can’t require workers under the age of 18 to do. Find your state’s child labor laws on this YouthRules! map.

You can learn more about federal employment laws in the post, “Employee Rights: What Small-Business Owners Need to Know.”

And now that you know the basics of wage and hour laws, let’s look at what your business can do if it’s sued for violating them.

EPLI: A Safety Net for Managerial Mistakes

Of course you would never purposefully neglect to pay your employees for their hard work. You’re not a monster! At the same time, there are a lot of federal laws to contend with. So what happens if you’re accused of making an oversight on payroll? Or worse, what if an employee sues you over it – even if you’ve done nothing wrong?

It’s times like these you’ll be glad your small business invested in Employment Practices Liability Insurance. This coverage can pay for your lawyer fees and settlement or judgment expenses when your business is sued for…

  • Mismanaging employee benefits.
  • Sexually harassing employees.
  • Wrongfully firing or demoting employees.
  • Discriminating against employees based on age, gender, religion, race, nationality, or genetic information.
  • Breaching an employment contract.
  • Invading employees’ privacy.
  • Making negligent hiring or compensation decisions.

It’s worth noting that these lawsuits are among the most expensive claims a business owner can face. Even if the suit is frivolous, you can expect to pay a couple thousand dollars in legal fees alone. To learn more about these claims, be sure to read our EPLI blog series.

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