Intel Company Threatened to Fire Workers if They Left Before Deadly Tornado, New Lawsuit Claims

Company Threatened to Fire Workers if They Left Before Deadly Tornado, New Lawsuit Claims

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Featured Solutions: Management Liability

A candle company in Mayfield, Kentucky, is being accused of threatening to fire factory workers who wanted to leave the building before dangerous weather approached. A new lawsuit filed in December by employees of Mayfield Consumer Products claims multiple workers were prohibited from leaving the facility Dec. 10, 2021, despite the company having at least three hours of notice about violent tornadoes, ABC News reported. Instead, the more than 100 employees present at the time were reportedly told to shelter in place at the factory, which had just one hallway and two bathrooms available for shelter.

Nine workers were tragically killed in the tornado, which completely destroyed the factory and left many workers injured and trapped under rubble for hours. In the lawsuit, which seeks unspecified damages for false imprisonment, intentionally inflicting emotional distress, and defamation of employees’ character, it is also alleged that workers had not been trained for emergencies, ABC News reported. The company maintains that it followed regulations.

“It is incredibly sad,” said Allison Arnold, Broker, Professional Liability, Burns & Wilcox, Indianapolis, Indiana. “One of the company’s rebuttals is that they were in a shelter-in-place protocol, but employees said they were in that protocol for three hours. The company may not have had great practices in place, then they have this horrific event, and now they are seeing lawsuits from it.”

The new filing comes in addition to a class-action lawsuit initiated in March by eight workers who survived the disaster and who have made similar claims regarding the company’s response to it. Though each case will vary, these sorts of lawsuits could be covered under a company’s Employment Practices Liability (EPL) Insurance, which can respond to employee allegations such as discrimination, wage issues and more.

“It is tough to speculate at this point, but these incidents can leverage large payouts or bankrupt businesses,” said Corey Short, Broker, Professional Liability, Burns & Wilcox, Detroit/Farmington Hills, Michigan. “It is heartbreaking when there is any loss of life from a weather event and given the circumstances of what it sounds like these employees went through, it is even more tragic.”

Insurance ‘not meant to cover bad practices’

The original lawsuit against Mayfield Consumer Products is currently pending in federal court, according to the Courier-Journal. In both suits, the company is also accused of defaming workers in comments to media outlets following the disaster. Some workers have also claimed their Workers’ Compensation benefits were denied in retaliation for participating in an OSHA investigation that resulted in the company facing $40,000 in fines, the Courier-Journal noted in a Dec. 8 report.

“That is definitely alarming,” Arnold said, pointing out that coverage for retaliation under EPL Insurance may or may not apply. “Insurance policies are not meant to cover bad practices for companies. It’s not likely, but it will really depend on the specific policy that they have as to whether the retaliation portion could be covered.”

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It could be very detrimental, especially because the new lawsuit is adding to the class-action lawsuit. It is not only about any future payout, but also the defense costs of going through the process of trying to defend themselves.

Mayfield Consumer Products said the month after the tornado hit that it would lay off 250 employees who could not be transferred to another factory. In June, the company announced an expansion including a $33.3 million investment over five years and plans to hire over 500 workers in the state, Spectrum News 1 reported.

Although the candle company disputes the claims being made by employees, even businesses that are not at fault can face significant legal expenses when responding to lawsuits. “It could be very detrimental, especially because the new lawsuit is adding to the class-action lawsuit,” Arnold said. “It is not only about any future payout, but also the defense costs of going through the process of trying to defend themselves.”

Legal defense is one of the most important expenses that can be covered by EPL Insurance, Short agreed. “If it is true that the company felt they were doing exactly what they were supposed to, they will still have those defense costs,” he said. “Across the board, coverage for alleged acts of discrimination, harassment, retaliation, wrongful termination and other acts are on the rise. Even with strong protocols, management, and culture in place, frivolous acts can occur.”

Without insurance, defending against those claims could be extremely costly. “The financial ramifications of not having EPL insurance can be crippling, especially for small firms because they do not have the operating budgets to handle the defense costs, let alone settlements or judgments, of an uninsured claim,” Short said.

In addition to legal defense and settlements, EPL Insurance could help pay for investigations, consulting work to improve company practices, and more. Reputational damage could also be “severe,” Arnold said. “If you see this in the news, you may not want to give your money to that company or anything associated with it,” she said.

Prioritizing employee safety, disaster readiness

Other tragic incidents have also drawn attention to the issue of worker safety at large factories and warehouses. During the same tornado outbreak that hit Kentucky on Dec. 10, an Amazon warehouse in Edwardsville, Illinois, was hit by a tornado, causing the building’s roof to collapse and killing six employees, CNBC reported. Multiple lawsuits have been filed over that incident, including claims that Amazon did not allow workers to take time off until after the storm, Fox 2 News reported in April.

Both cases underscore the importance of having strong policies and procedures in place so that supervisors know how to respond when dangerous weather approaches and so that employees are familiar with steps to take in an emergency. “Having tighter employment practices training and protocols in place could help companies avoid being in a tragic situation,” Arnold said.

The threat of termination could contribute to a hostile work environment and potential retaliation, Short noted. Mental anguish and emotional distress may also be taken into account in these instances. “Based on how the events unraveled, there could be a case here for that,” he said.

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Having tighter employment practices trainings and protocols in place could help companies avoid being in a tragic situation.

Having a separate human resources department can be helpful for risk management, Short said, along with establishing and regularly updating an employee handbook. “A lot of small- to mid-sized companies may not have that,” he said. “You also want to have written procedures in place for when employees have complaints, so they can be addressed in a timely manner by management.

Still, business owners should not have a false sense of security just because they have taken precautions.

“Ownership may think their operations and protocols are flawless, however, they are unaware of many scenarios that could leave them and the company liable,” Short explained. “In many instances, insureds have to defend against frivolous claims to protect themselves and the reputation of the entity moving forward. These losses often cost companies well over six figures. That is the biggest misconception with these policies that a lot of companies do not think about.”

Company directors could also be sued

It is important for workplaces to be prepared for weather emergencies, especially as research shows storms increasing in frequency and intensity due to climate variability. Extreme weather in the U.S. caused $145 billion in damages in 2021, NPR reported. In Canada, severe weather in 2021 caused $2.1 billion in insured damage, according to the Insurance Bureau of Canada.

In July, a survey by Rave Mobile Safety found that 47% of employees would like their employers to offer more training on what to do in a weather emergency, Business Wire reported.

Whatever natural disaster could happen in your area, I would hope that companies would lean on their EPL Insurance carrier and go through preparedness training to help them be tighter on that front,” Arnold said. This should include verifying that their facility has appropriate shelter-in-place spaces for the number of employees onsite, she said. “The laws and regulations in your community should also be on the forefront of your mind to begin with, and they should also bring the human element into their training as far as what you would do for yourself and your family. Sometimes it just comes down to good, common-sense practices.”

When purchasing EPL Insurance, business owners should ask about any sublimits on the policy for wage-and-hour or third-party claims, for example, Short said. Beyond EPL Insurance, employers should consider Excess Liability Insurance to obtain higher limits as needed, as well as Directors & Officers (D&O) Insurance to respond in the event claims are made against the company’s board of directors for their role in company decisions.

“We like to quote D&O Insurance with the EPL Insurance because a lot of times, those directors are making decisions that directly impact what protocols are in place or what trainings employees go through,” Arnold explained. “Lawsuits can trigger different policies, and these are two coverages that we write together often.”

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