Unmanned Aerial Systems Theft and Fraud

Unmanned Aerial Systems

A couple of benefits of UAS—their portability and advanced technology—can also prove to be great liabilities. Small UAS make easy and attractive targets to thieves, and the industry hasn’t developed many internal safeguards against stolen drones. Unlike the traditional aircraft industry, which has a tracking system and serial numbers for aircraft parts, the UAS industry hasn’t adopted either a tagging or tracking system. In other words, there’s almost no chance of recovering a stolen UAS.

While the military and hobbyists have been using unmanned aerial systems (UAS), better known as drones, for some time, businesses are just starting to adapt the technology for their own uses. UAS are creating new opportunities—and new risks—for businesses to evaluate, and regulators and insurance carriers are scrambling to keep pace.

Unmanned Aerial Systems and Opportunities and Exposures

Unmanned Aerial Systems

A benefit that could become a potential liability is the flexibility of the technology—that is, a drone’s potential as a broad-use aircraft. In theory, the same UAS that photographs a parcel of land for a realtor on one day could be used to survey a hazardous chemical spill the following day.

This kind of flexibility offers a broad number of business opportunities, but each new opportunity brings with it attendant exposures that compound upon one another. Businesses will have to think through how they plan on using their UAS in order to make sure that their FAA authorization, and their insurance, covers each arena of commercial use.

Unmanned Aerial Systems: Who Watches the Watchers?

Unmanned Aerial Systems

Privacy represents one of the largest exposures with regard to drones. A highly maneuverable technology that gives remotely operated cameras virtually unfettered access to any location is bound to result in claims of privacy breach. What’s unclear, however, is how both the legal system and insurers plan to address these new exposures.

Currently, carriers exclude all privacy-related claims, but the increased exposure means that there’s a potential market for such protection. However, without some kind of precedent, it’s uncertain how, if at all, the insurance industry will respond.

Unmanned Aerial Systems Cyber Liabilities

Unmanned Aerial Systems

Perhaps the greatest potential liability regarding unmanned aerial systems comes from the cyber risks posed by UAS. The greatest fear is that a hacker might hijack a drone and fly it into a commercial airliner or some other populated location, resulting in massive property damage and loss of life.

However, while that scenario is possible, other scenarios are more likely avenues of loss. Customer data—names, addresses, credit card numbers, images, videos, etc.—is a far more enticing target for hackers, and one that an enterprising thief with a little skill and a wireless transmitter might be able to access from a drone flying overhead.

Why Do Companies Outsource FMLA Administration?

FMLA Administration Outsourcing

Many small companies struggle to find the time and resources required to properly train staff on FMLA administration, and employers who deny eligible employees leave or violate FMLA requirements could face hefty fines and legal repercussions.

As a result, HR representatives will sometimes grant too much leave to employees out of fear that an eligible employee’s leave request might accidentally be denied. While this practice might spare companies from finding themselves in serious legal trouble, it can also lead to staffing issues and decreased productivity.

The Family and Medical Leave Act (FMLA) is a federal law that allows eligible employees to take unpaid leave for a variety of personal circumstances.

Due to the numerous regulations and complexities of the FMLA, administering FMLA leave can be a daunting task for many HR departments. In an effort to make FMLA administration more accurate and efficient, many employers have opted to outsource their leave programs to outside vendors.

How Does FMLA Outsourcing Work?

FMLA Administration Outsourcing

When leave programs are outsourced, the process of handling all of a company’s FMLA-related workload is transferred to an outside FMLA administration vendor. FMLA administration vendors stay current on evolving regulations and changes to the federal law as well as individual state laws which may affect an employee’s eligibility and leave rights. This greatly increases the likelihood that leave will be administered properly and in compliance with all applicable rules and regulations. In addition, lifting the responsibility off of in-house HR departments can significantly reduce workloads, giving staff more time to devote to other necessary projects and tasks.

What Are the Disadvantages of FMLA Administration Outsourcing?

FMLA Administration Outsourcing

While FMLA outsourcing can make FMLA administration more accurate and efficient, there are a few drawbacks to consider. HR departments may need an initial adjustment period while they re-shuffle their workload and delegate new tasks.

Employees might be displeased with needing to contact an outside resource rather than their company’s HR department to make leave requests. In addition, decisions regarding leave requests may not happen as quickly as they do when employees are able to speak directly to an HR representative, even if the vendor is complying with FMLA deadlines. Any additional delay can cause frustration as employees attempt to plan for their personal circumstances.

Is FMLA Outsourcing Right for Your Company?

FMLA Administration Outsourcing

It is important to consider several factors in order to determine which FMLA administration option is best for your organization.

Examine how efficiently your company’s HR department currently handles FMLA administration. Are they able to keep track of FMLA regulations and stay up to date on changes to FMLA requirements? Are leave requests being over-granted due to a lack of understanding of FMLA regulations and employee eligibility requirements?

In addition, assess your HR department’s current workload to determine whether FMLA administration is making it difficult to delegate or complete other tasks.

ERISA: A Timeline for Compliance

Final Rule Updates SBC Requirement

When you offer retirement and health benefits to your employees, you need to make sure you’re providing the right documents to stay in compliance with the Employee Retirement Income Security Act of 1974 (ERISA).

ERISA requires that you provide several types of documents to the Department of Labor (DOL) and plan participants. Noncompliance can result in fines, so make sure you’re providing the right documents at the right times.

Here’s a quick overview of the documents you need to stay in compliance:

Plan Document  The plan document contains a description of the terms and conditions for the operation and administration of the plan. It must be provided within 30 days of a written request.

Summary Plan Description (SPD)  The SPD contains plan information, including the benefits, rights and obligations of the covered participant. It should be written in a style and format that can be easily understood by the average plan participant. The SPD should be provided within 90 days of the participant being covered by the plan or the beneficiary receiving benefits, or within 30 days of a written request.

Summary of Material Modification (SMM) The SMM describes material changes to a plan and any changes in the information required in the SPD. An updated SPD satisfies the SMM requirement. The SMM or updated SPD must be distributed to participants and pension plan beneficiaries no later than 210 days after the end of the plan year in which the changes were made, or within 30 days of a written request.

Form 5500  The Form 5500 satisfies various annual reporting obligations that plan administrators must meet under ERISA and the Internal Revenue Code. Form 5500 may be filed electronically on the DOL website. This form is generally due by the last day of the seventh calendar month after the plan year ends, or within 30 days of a written request. See www.dol.gov/ebsa/pdf/rdguide.pdf for details. Some plans are exempt from this requirement.

Summary Annual Report (SAR)  This report is a narrative report of the Form 5500 and includes a statement of the participant’s right to receive the annual report. Plans that are exempt from annual 5500 filing, as well as large and unfunded health plans, may be exempt from the SAR requirement. The SAR must be provided to participants and pension plan beneficiaries no later than 210 days after the plan year ends or two months after the Form 5500 due date.

SBC Effective Date

Final Rule Updates SBC Requirement

The final regulations generally apply to coverage that begins on or after Sept. 1, 2015. However, for disclosures to individuals and dependents in the individual market, the requirements apply to coverage that begins on or after Jan. 1, 2016.

Until these final regulations become applicable, plans and issuers must continue to comply with the 2012 final regulations, as applicable.

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.