Lack of insurance exposes companies in labour disputes

Some strike management firms forego insurance, exposing clients in the process

TORONTO – While companies may feel they are doing the right thing by hiring firms to assist them in labour disputes, they may be unknowingly adding risk to already highly sensitive situations, since many of these firms no longer carry proper insurance.

Skyrocketing liability insurance costs have driven several labour management firms out of business and some of those that remain have chosen not to purchase proper coverage – without disclosing that information to the client.

“Companies that hire firms without the proper insurance are walking into a minefield of issues,” says LDMG, a labour dispute management company that carries the proper insurance to manage these highly sensitive situations. “They hire firms like ours because they want to do the right thing, yet by not completing due diligence around insurance, they are exposing themselves in a significant way.” Recent altercations at strike sites are to blame for the spike in coverage costs – by as much as 2,000 per cent – while many insurance companies don’t offer this type of coverage at all.

The result of this non-disclosure is massive legal and financial exposure for the labour dispute firm and, more critical, for the company hiring that firm. LDMG, which has managed hundreds of strikes in Ontario and Nova Scotia over the past five years, makes a point of providing clients with proof of insurance, says LDMG, who recommends a few simple but important steps before hiring a labour dispute management group:

• Insist on proof of insurance specifically covering activities relating to labour management services;

• Ask for recent references and promptly follow up on those references; and

• Be sure the firm is aligned with your company’s values and approach to employee relations.

“The firm you hire will ultimately be representing your company, your brand and your position in the community, so it’s important that you take the time to do the research,” says LDMG.

Faced with overwhelming insurance costs in Canada, LDMG was forced to source an insurance company in the United States.

“We invested a significant amount of time and resources in order to secure proper insurance because we understand the critical nature of the business and the need to protect our clients,” explains LDMG. With the apparent pitfalls involved in hiring a labour management firm, some companies facing a potential strike situation may be tempted to manage the situation themselves. This is another decision that needs to be made carefully, says LDMG.

“We have the ability to combine consulting, security, investigations and logistics during a labour dispute,” he says. “Strikes can be highly volatile and sensitive, and if they are not handled with the utmost care and consideration, it can cause irreparable damage to companies. We bring care and continuity to a challenging situation.”