Product

Professional Liability

Occupation

Human Resources Consultants

Industry Segment

Consultants

Claim Description

A human resources consultant was hired by a small construction contractor to perform outsourced HR services, including recruiting seasonal electricians.

In earlier years, the electricians were hired as independent contractors to reduce the contractor’s overhead costs. But, as business improved, these became full-time summer positions. However, the electricians were still treated as independent contractors.

The state labor department audited the contractor and determined that the electricians were improperly classified as independent contractors for several years. This information was shared with the IRS and Department of Labor, resulting in enforcement actions and lawsuits filed on behalf of the electricians. The contractor then sued the HR consultant.

Outcome

The HR consultant was covered under their Professional Liability policy, and the matter was resolved prior to trial. Their insurer paid defense costs and indemnity totaling approximately $250,000.

The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizInsure for Agents.

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