Insuring a Remote Workforce

A year ago, few had heard of an exotic new respiratory illness dubbed the “novel coronavirus.” Today, virtually no one remains untouched by the COVID-19 pandemic. As everyone struggles to come to grips with a world where COVID-19 is more manageable, workplace leaders need to consider how—or whether—to convert remote-working into a permanent arrangement.

Many white-collar industries discovered that a remote workforce does not necessarily equate to a less productive one. Stories about increased morale have some trying to re-imagine the office as a place where staff meet, build social capital, and collaborate for two or three days a week and work from home the rest of the week. Employers need to meet with their broker or carrier to understand the risks they might face.

Insurance products for the usual risks are fairly stable: underwriters know how to price the risks, and most companies are able to discern their likely exposures. Having a dispersed workforce raises challenges that risk managers need to consider.

General Liability Insurance
General liability is one of the most commonly purchased insurance products, after workers’ compensation; it responds to everything from customer slip-and-falls on premises to advertising injury. If your workforce in a particular location is smaller and the number of guests on premises is lower, you might be able to save on your premium. This coverage, however, should always remain in force.

Commercial Property Insurance
Strictly speaking, property insurance is for real property that the business owns, while inland marine insurance is for the equipment and other physical assets that you own. This type of coverage reimburses you for damage, loss and theft of your business property.

With a remote workforce, questions about the use of computers, tablets and mobile phones are just the beginning. It is worth reviewing to see if your coverage needs to be updated to reflect the fact that employees are taking business property off the premises. If an expensive piece of equipment goes missing, will your coverage pay to replace it?  

Cybersecurity
Cybersecurity coverage is more critical than ever with a dispersed workforce. This insurance is sometimes included as an add-on to property policies; more often, it is purchased as a stand-alone policy to mitigate the cost of data breaches and cyberattacks on company-owned assets.

Depending on the terms, it might cover  costs to help recover from a malware attack, notify customers and pay for customer credit monitoring.

When devices leave the office and employees access the network remotely, risks go up. Is the employee accessing the company network from a personal computer on a public WiFi network? Is the employee complying with network-security policies? Is the data being accessed or hosted on a secure platform and not being downloaded to a local device?

In addition to the increase in phishing schemes, the threat to proprietary data from theft or simple loss of a device is compounded. Insurance may need to be adjusted to address the risks.

Directors and Officers Liability
D&O Insurance is meant to protect individuals from generalized claims of dereliction of their duties on a corporate board or as a corporate officer. It might also cover the corporation’s costs in the event that it gets sued.

The shift to a remote workforce might not appear to have much of an effect on a company’s D&O coverage, but beware of claims about poor management and oversight leading to a drop in corporate profits or a loss of donations. This really can become an issue in the nonprofit sector.

And beware, too, about cyber claims affecting D&O insurance. If there is no cyber coverage, or even if there is, corporate officers and directors could be sued on claims that they failed to implement policies to prevent cyber breaches.

Privacy
Many companies monitor employee communications when they are in the office and working on company-owned devices.

Handbooks and other policies often notify employees that there is no expectation of privacy when using those devices and also impose rules on internet use.  

With a remote workforce, monitoring activity for productivity or to guard against cyber theft must follow established company policies; these should be clearly outlined to employees and address the use of personal devices. Businesses should review password requirements and two-factor authentication procedures for remote workers and even consider the use of data encryption.  

Remote workers are not necessarily “at home” and may not be on a secure network. Using a personal hotspot or VPN is far better than public WiFi. And while cybersecurity needs to be a priority, businesses and employees must remember that the physical security of paper files and electronic devices themselves remain essential.       

For the Employee: Homeowners’ Coverage
Employees who work from home might want to check on their homeowners’ coverage. Most homeowners’ policies exclude coverage for business pursuits undertaken from home, with home-based day-care centers being an example that regularly comes to mind. If you’re meeting with clients at your home office because your regular office is closed, and that person trips and falls, what are your liabilities? A call with your broker to discuss the issue could give peace of mind and help any remote worker better understand his or her rights and responsibilities.

Other Considerations
There are a host of other issues to review when dealing with a remote workforce. Those can range from workers’ compensation questions to whether the employee’s remote location affects health insurance, unemployment calculations or other benefits. Work hours and compliance with wage and hour laws must be monitored.

The evolving geography of the workplace may trigger issues if there are restrictive covenants or non-compete agreements.

In some esoteric cases, questions may arise as to what constitutes a workplace injury, or even if the employee is in the coverage territory as defined by business policies. Businesses relying on a “work from anywhere” model should review all insurance policies, bolster training and give strong consideration to using employee remote work agreements to define appropriate protocols for remote access.    

Take a hard look at your current insurance policies and make sure they align with your company’s remote work strategy.

This is a tricky area and one you want to make sure you get right. Nothing is worse for all involved than for something bad to happen, and a coverage gap is discovered after the fact.

Alexander Henlin is co-chair of the Insurance and Reinsurance Group at the law firm of Sulloway & Hollis in Concord. Christopher Pyles is co-chair of the Labor and Employment Group. For more information, call 603-223-2800 or visit  sulloway.com.