Trades of services between employees are an everyday occurrence amongst massage therapists. How does your SML coverage treat these encounters? Some relevant policy language from an industry leader can shed some light:
“Insured Person” is defined to mean “any person who was, now is, or shall be an Employee or duly elected or appointed directors, officers, trustees or Managers…
“Employee” is defined…to mean “all persons whose labor or service is currently or has formerly been engaged by and directed by the Insured Organization. This includes employees, volunteers, part time, seasonal, leased and temporary employees as well as any individual employed in a supervisory or managerial position and Independent Contractors.”
The plain English meaning of the above is that anyone who has EVER been an employee or is currently an employee who is subject to a sexual harassment claim by another employee (past or present) is excluded from SML coverage. There is no SML coverage in place for trades among employees or family members of employees.
Trades are very common and difficult to eliminate or exclude. Services to family members are likewise difficult to curb. Trades represent a gap in coverage for franchisees and should be seen as an uninsured risk.
There may be some limited coverage on the Employment Practices Liability policy (EPLI) for sexual allegations employee to employee, but this should not be seen as an adequate substitute for Sexual Misconduct and Molestation Coverage.
The only way to completely guarantee the elimination of all exposure is to shutter your franchise. We believe taking informed and reasonable measures to understand and control risks is a more practical path. Real world decisions about acceptable levels of risk are made every day and trades among employees need to be considered in the same light. Knowing the risks and how to mitigate them is crucial to successfully navigating difficult terrain.
