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Home / Claims Stories / Claims That Could Have Been Avoided: The Ill Effects of Poor Communication

Claims That Could Have Been Avoided: The Ill Effects of Poor Communication

August 10, 2017

Dave Gibson

A lack of communication can be detrimental to businesses and organizations alike, as well as the working relationship between employees, as it elevates stress levels and undermines confidence. However, as one nonprofit learned, that’s not the full extent of the damage that can result from poor communication. Poor or absent communication can end up costing tens of thousands of dollars. To learn just how damaging it can be, read below for one nonprofit’s experience.

The Claim

A nonprofit offering recovery services hired a short-term, part-time employee to their staff. The employee was given a verbal offer, as opposed to a written offer letter, and was under the impression that she would be in a position that would receive supervised hours, which she needed in order to obtain a professional license. Instead, the insured had hired her into a position that did not have the desired supervision, as she had understood. Once the employee began work, she complained that she was not being supervised, but nothing was done because she had been hired into a role that did not include supervised hours. Additionally, she objected to the client medication dispensing procedures and refused to perform this function.

After being employed for a mere six weeks and working just 48 hours, the employee’s job was terminated because: 1. the nonprofit could not give her the supervised hours that she desired and; 2. she refused to follow the medication procedures, which the nonprofit labeled insubordination. The employee responded by filing a complaint against the nonprofit with the professional licensing board, followed by a lawsuit in State Court. Although the claim relating to the employee’s lack of supervision had no merit, the suit brought several issues to light regarding the propriety of the nonprofit’s medication procedures, which ultimately supported the plaintiff’s claim of retaliation for whistleblowing. In the end, the nonprofit settled with the former employee for a significant amount of money, even though she had earned very little during her employment.

Lessons Learned

This claim likely could have been avoided if proper communication had been utilized at the outset of the hiring process. The expectations of the position should have been clearly communicated to the employee in a job description listing essential job functions with a written job offer establishing the terms of the employment.  If this had been done, the employee may not have accepted the job to begin with, or would have understood that professional supervision was not being offered so there would not have been the unmet expectation that motivated her filing suit. Written documentation would have supported the nonprofit’s hiring intent.

Additionally, the nonprofit should have investigated the concerns expressed by the employee to determine if proper medication procedures were being followed, rather than dismiss her objections as insubordination. Had it done so, the nonprofit would have been able to correct the internal errors and it would most likely have avoided liability. In essence, the lack of communication ended up costing tens of thousands of dollars, and hours of staff time, which far exceeds the staff costs associated with drafting clear on-boarding documentation and conducting an investigation into complaints related to operational compliance.

If your nonprofit is not a member of the Nonprofits Insurance Alliance and you’d like to learn more about joining our community, check out our list of coverages and other benefits of membership. You can also send an email to info@insurancefornonprofits.org.

All members have unlimited access to risk management and loss control consultations, and those members with Directors & Officers coverage (who also have employees) have access to unlimited consultations with our Labor & Employment Risk Managers (LERMS) on issues such as HR, labor and employment.

View Topic: Claims Stories Tagged With: Article, Claim, Claims, Communication, Employee, Employment, Employment Claim, Employment Practices Liability, Hiring, insurance, Insurance Carrier, Insurance for Nonprofits, Job, Liability, Loss, loss control, Nonprofit, Nonprofit Sector, Nonprofits, Nonprofits Insurance Alliance Group, On-Boarding, Poor Communication, Procedures, Risk, Whistelblowing

About Dave Gibson

Dave Gibson is Chief Claims Officer for the Nonprofits Insurance Alliance. Mr. Gibson brings more than 30 years of experience in the insurance claims industry, and has held management positions for most of that time with Universal Underwriters Insurance Company, Zurich Direct Markets, and Philadelphia Insurance Companies. He holds a Bachelor of Arts degree in Psychology from Rutgers University. His most recent nonprofit service has been as a youth soccer coach in Rocklin, California, for recreational, select, and competitive teams.

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