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By Kristin Casler
Featuring Joseph D. Jean of Pillsbury Winthrop Shaw Pittman LLP and Jennifer A. Kearns of Duane Morris LLP.
When a long, cold winter ends, it can be easy to relax and enjoy the warm breezes of spring. Snap out of it! Tornadoes are already ripping through the Midwest. Is your company prepared for the next big storm, wildfire or earthquake? Take that zeal for spring and apply it to your disaster readiness checklist. From employee safety-and-leave policies to obtaining proper insurance, here’s what you need to take action on before you are caught unprepared.
The most important task is to actually form a plan in advance of a disaster. Joseph D. Jean, partner at Pillsbury Winthrop Shaw Pittman LLP, outlined the fundamental elements of every disaster preparedness plan: 1) understanding the particular disaster for which the company is preparing, governing law, resources and the response; 2) organizing pre-disaster preparations, and resources, during- and post-disaster response and communications plans, and insurance coverage; and 3) testing the effectiveness of the preparations and the response and running emergency response drills. Every disaster plan should, in turn, address preparedness, prevention, mitigation, response and recovery, Jean said.
Preparedness—Understanding your unique risks
Disasters come in all shapes and sizes and so must a company’s disaster preparedness. Jean noted that several critical factors determine the components of a disaster plan—the type of company, the nature of the risk, and the particular rules and regulations governing the company’s business and/or industry.
Jennifer A. Kearns, partner at Duane Morris LLP, said a company must identify and examine foreseeable dangers, including those that are unique to that business. A hurricane will naturally involve large amounts of water, flooding, destruction of property, loss of transportation. An earthquake may naturally result in building collapses, breaks in gas lines, and fires. A research lab working with highly contagious disease organisms should consider the risk that could be created if an earthquake decimates the building and the disease organisms are released into the air, she said. Companies also should consider their critical business functions and develop plans for continuing or resuming them rapidly in the aftermath of a natural disaster. “By identifying usual as well as business-specific risks in advance, employers can evaluate whether their systems for minimizing such risks can be improved,” Kearns said.
A company should have a readiness team comprising inside and outside resources and personnel, Jean said. “In-house resources should include senior management; general counsel’s office; risk/crisis manager; and other key operations, management and business personnel—all of whom must be empowered to make relevant decisions and effectively take direction in the midst of the crisis,” he said. Outside resources should include outside counsel and subject matter/industry specialists. The readiness team should be asking a lot of questions. But when starting out, he said, several of the most important questions include:
1.) What situations pose the greatest physical, financial or reputational threat or damage to the company, its employees, customers and community?
2.) Do we have the necessary insurance coverage to respond to the situation, and do we have a plan in place for notifying the insurer and pursuing the claim?
3.) What federal, state and local rules and regulations govern the company, pre- and post-disaster?
4.) Do we have an effective crisis-communications plan?
5.) Do we have a contact list?
6.) Who are the key resources for the readiness team?
7.) Do we have a disaster response plan, and have we effectively tested and drilled it?
8.) What does our supply chain look like—do we have multiple suppliers for critical components?
Additionally, Kearns advised checking state laws for requirements for emergency contingency plans. In California, for example, employers are required to have written Injury and Illness Prevention Programs. The IIPP must include a written plan for emergency situations, listing each emergency that could arise and detailing response procedures for each. Employers also should check federal, state and local occupational safety regulations to determine whether any emergency procedures are mandated by law or other regulation, she said.
Prevention and mitigation can save time and money
Every company should take every available, reasonable and practical step to reinforce its critical infrastructure against disaster as part of its preparedness plan, Jean said. A sound infrastructure can resist or mitigate damage when Mother Nature delivers her worst.
Plans for securing critical and/or confidential equipment, hard data and electronic data should be at the top of the checklist. Backup systems for everything from electronic data to suppliers go a long way toward recovery after a natural disaster. Some measures can include regular back up of electronic data to the cloud or to some off-site location unlikely to be affected by the same natural disaster, Kearns said. Conduct periodic testing of key systems to learn how quickly they can be restored in the event of an interruption. Consult a cybersecurity expert to ensure your vital information is secure.
How to respond when the worst happens
Keeping your employees safe is paramount. Kearns advised developing evacuation/stay plans for each type of foreseeable natural disaster. An earthquake that causes a collapse at a nuclear power facility may result in the release of high levels of radiation. In that case, safety might dictate that employees remain inside their work building rather than leaving and risking greater exposure, Kearns said. When considering and possibly developing evacuation/stay contingency plans, employers must be aware that, in certain circumstances, evacuation may be mandated by governing authorities and not up to the employer.
A company also should designate individuals to manage different aspects of emergency response. Employees should be regularly notified (a) where to gather in the event of a natural disaster; (b) who will be responsible for managing employees’ safety; and (c) how those individuals will be identifiable (usually by wearing vests or other identifying attire), Kearns said.
Getting operational and back on track financially requires proper insurance, no matter the size of your company. Knowing the risk and the company’s financial resources is essential to understanding coverage, Jean said. The best way to maximize coverage is to know and understand your coverage and ensure that you have the right coverage in place before disaster strikes. “That means you must read your entire policy, you should work with your insurance broker and you should get advice from experienced insurance counsel,” Jean said. Non-profits and critical infrastructure companies should know and understand the availability of public funds (e.g., FEMA grants) to help restore operations. Experienced counsel and specialized consultants are very important because knowing and complying with the rules and regulations from the outset is essential. Failure to do so can be extremely costly.
If the business is still operating during or after a natural event, employers should consider whether asking employees to come to work subjects them to unsafe conditions, including adverse weather, Kearns said. The federal Occupational Safety and Health Act and counterpart state work safety laws require employers to protect employees from unreasonable danger in the workplace, which includes imminent natural disasters that threaten employee safety and health. Know your options and designate who has authority to make critical safety decisions in these situations.
Test it. Then test it again.
Once you devise a plan, how will you know if it achieves what you want? Regular emergency response drills not only will show you any holes in your plan but will give employees the knowledge they require to protect themselves and company assets should disaster strike.
Other considerations for employees
In addition to keeping employees safe, companies may have other obligations to them. Making certain you and your employees understand provisions for pay and leave in the event of a disaster can spare a great deal of time and expense in the long term.
Pay. If the company is closed due to the disaster or inclement weather, it is not obligated to pay non-exempt hourly workers for the lost work opportunities, Kearns said. Those employees are only paid for hours actually worked. Exempt employees who have worked any part of the work week are entitled to be paid their salaries for the full work week, although the business may require them to use accrued time off for this purpose.
If the business is open, and an exempt employee chooses to remain home because of weather conditions, the federal Department of Labor considers this a personal choice, Kearns said. If the employee is exempt and performs no work that day, the employer may require the employee to use accrued time off or may deduct for a full day. If the exempt employee remains home and performs any work that day, such as checking and answering emails, the employer cannot make a partial day deduction from the exempt employee’s salary. It may, however, make a partial day deduction from any accrued time off bank that the employee has, she said. Employers should be careful if deciding to make partial day deductions from time off banks, however, particularly if the employee in question has worked from home before and been paid full salary.
As noted above, non-exempt employees are only paid for hours actually worked, and so if they do not come to work, they are not paid anything for the missed work time.
Time off. Military personnel or reservists called upon to assist in disaster remediation may be entitled to protected time off. Employees who become ill or are injured as a result of the natural disaster might be entitled to take protected leave in some situations, Kearns said. For example, if the employee is incapacitated and cannot work as a result of a “serious health condition” caused by the disaster, and is otherwise eligible to take leave under the Family and Medical Leave Act, he or she may be entitled to up to 12 weeks of time off with job reinstatement rights. If the employee has a family member (as defined in the FMLA) who has a serious health condition caused or exacerbated by the disaster, and the employee is “needed to care for” the family member, an employee may be entitled to take FMLA leave (again, provided other eligibility requirements are met), she said. The “needed to care for” element generally requires that the employee is needed to care for the health, transportation, emotional well-being and physical needs of the family member. “Taking time off to help clean a parent’s home damaged by flooding would not be a circumstance that would qualify for FMLA leave,” Kearns said.
An employee who is not eligible for FMLA, but who has suffered injury or illness as a result of the disaster, may be eligible for a leave of absence as a reasonable accommodation of disability, provided that the illness or injury meets the legal definitions for determining “disability.” Relevant laws are the Americans with Disabilities Act and its reasonable accommodation provisions, as well as state counterpart laws, Kearns said.
Companies with 100 or more employees that close as a result of a natural disaster should consult with counsel to determine whether they are required under the circumstances to provide any notice of plant closure under the Worker Adjustment and Retraining Notification Act (WARN) or counterpart state laws.
If an employer has employees who are on leaves of absence (not working) at the time of the disaster and the business closes for some period of time, it is possible that the period of business closure may not be counted against the employee’s leave of absence duration. Counsel can determine whether the period of absence coupled with business closure will count.
Dust it off every now and then
Once you have a preparedness plan in place, revisit it regularly. Companies grow and change, people come and go, and new risks are always on the horizon. You don’t want to pull out your plan during a critical situation and find its provisions won’t get the job done.