The Alcott Group   Good for Your Business ~ Good for Your People
    •  Business Tort Liability Costs
    •  Risk Management and the PEO
    •  5 Steps to Risk Management
    •  Who’s New at Alcott?
    •  10 Reasons for EPLI
    •  Recent New York HR Legislation
    •  Succession Planning
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Welcome to the Spring/Summer edition of the Alcott Advisor. This month's feature article is an interview on "Succession Planning" with David DePinto, Esq. of DePinto Nornes & Associates LLP, an estate and elder law firm in Melville, NY. Mr. DePinto discusses the why's and how-to's of succession planning and clears up some misconceptions along the way.

We also address the issue of risk management, primarily from an employment standpoint. It's often been said that while your employees can be your greatest asset, they can also be your greatest liability. If you haven't taken a hard look at your company's exposure, then it's important that you do so. Just the thought of an employee lawsuit should send shivers up your spine and it's much more likely to occur than you think - many times more likely than a fire, flood or natural disaster. The good news is that there are ways to protect your company through insurance, training and careful attention to policies and procedures. Your efforts will be rewarded, not only by keeping you out of the courthouse, but by making you a better employer.

Please let us know if there are employment-related issues you would like us to cover in the future. Send your e-mails to Al Anastasi at or call 631-420-0100.


Small Businesses Bear the Brunt of Business Tort Liability Costs
Consider these startling statistics courtesy of the AEI-Brookings Joint Center for Regulatory Studies regarding small businesses and their tort liability costs:
  • Despite the fact that small businesses – defined as those with less than $10 million in annual revenues and at least one employee in addition to the owner – take in only 25% of business revenue, they bear 68% of business tort liability costs.
  • The cost of tort liabilities for small businesses is a whopping $88 billion annual.
  • Very small businesses - defined as those with annual revenues under $1 million and at least one employee in addition to the owner – take in just 8% of business revenue, yet pay 26% of business tort liability costs.
  • The price tag on tort liabilities for very small business is approximately $15 billion and 44% of these costs are paid out of pocket by the business and not through insurance. Note: The $15 billion represent costs that very small business must pay because either they are uninsured or the costs are above their insurance policy deductibles, limits, exclusions and/or include punitive damages where states prohibit their coverage through insurance.
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Five Steps to Business Risk Management
While every business -- regardless of its size -- should have exposure-specific risk management policies, there are some general steps that should be taken to establish an overall corporate culture which emphasizes risk management. Following are steps which will help businesses cultivate an organization whose day-to-day activities promote risk management:
  1. Know your past losses and implement procedures to mitigate future risks which could lead to more of the same losses. Similarly, apply the necessary resources to avoid the same losses.
  2. Conduct an audit of your businesses potential risks within the key areas of: product liabilities, professional liabilities, contracts, environmental liabilities, vehicle-related liabilities and employment-related liabilities. In addition to your attorney, accountant and insurance/risk management professional, reach out to small business resources such as the National Federation of Independent Businesses, the Small Business Administration, trade associations, local business associations and Chambers of Commerce. Participate in their risk management educational programs and tap the expertise of their advisory boards.
  3. Train your staff regarding workplace regulations and proper protocol for compliance. Raise the awareness of your staff pertaining to the high costs and negative impacts associated with business liabilities and related litigation.
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10 Reasons for Employment Practices Liability Insurance
According to Jim Mooney of the Terry Gibson Insurance Agency, Employment Practices Liability Insurance (EPLI) is an essential risk management tool for every business. Mr. Mooney cites the following Top 10 reasons to have EPLI:
  1. Employee lawsuits are excluded under standard insurance policies
  2. 75% of businesses may not be insured for employee lawsuits
  3. Employee lawsuits may be 1,000 times more likely than a fire
  4. Employees file over 80,000 cases per year with the E.E.O.C.
  5. Employees can easily file lawsuits, at no cost, with no risk
  6. Employees may win 70% of jury trials
  7. Many jury awards can exceed $1,000,000
  8. Employer defense costs can exceed $200,000
  9. Owners, Directors and Officers personal assets can be at risk
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Interview with David J. DePinto, Esq. on Succession Planning
For many growing businesses, knowing when to turn over the reigns of leadership to a successor is a challenging assignment wrought with emotional and operational risks. The Alcott Advisor went to noted estate and elder law attorney, David J. DePinto of DePinto Nornes & Associates LLP (Melville, NY) for some answers that will help mitigate these risks.

Question: While larger businesses often have a highly developed infrastructure and organization chart that addresses the leadership successor question when a CEO/President steps down, many smaller businesses do not. Why are they actually in greater need for a sound succession plan, and aren’t there particular exposures to smaller companies when a CEO must step down suddenly and there is no succession plan in place?

DePinto: Unlike larger and highly structured businesses, smaller businesses usually are managed by the founder who built the company. If there is more than one owner, one is usually the rainmaker. This individual typically has most of the business contacts and referral sources and, the majority, if not all of the company’s business, originates from that executive. The serious illness or death of this individual could easily send the business in a downward spiral towards failure. Furthermore, many closely-held businesses are family run, and sometimes the next generation is not as motivated or talented as the parent/founder.

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Sound Risk Management and the PEO Relationship
For many businesses, risk management is a primary motivation for outsourcing their human resources to a Professional Employer Organization (PEO). They recognize that, in addition to gaining the ability to provide their employees with a better selection of benefits, the HR outsourcing relationship affords Management the opportunity to focus on core-revenue producing functions -- confident that their business is in full compliance with various federal and state regulations. Those very factors are what motivated Buffalo, NY based World DLA to enter into a PEO relationship with The Alcott Group.

Alcott will be providing World DLA, a leading-edge provider of real time, endpoint authentication solutions applied particularly for driver’s license authentication, with its comprehensive Human Resources (HR) outsourcing solution including payroll administration, employee benefits design and administration, tax administration and regulatory compliance.

World DLA was founded in 1997 by Rick Nicholas, an Oklahoma Police Officer and developed by Donald Meade, a Canadian businessman upon their realization that approximately 10% of the U.S./Canadian population has invalid licenses at a given moment. When the company decided to form a U.S. enterprise, it incorporated in Delaware in April 2005 and established its offices in Buffalo, New York.

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  The Alcott Group recently announced the appointment of Robert Chanin, M.B.A., as Director of Human Resources. Mr. Chanin, a 26-year business and Human Resources professional, will oversee Alcott's broad scope of HR programs and services on behalf of its over 350 affiliated companies and their over 4,500 employees. His career includes consulting assignments on behalf of The Bank of New York (New York, NY) and small businesses, as well as the roles of Director of Human Resources for Lambda Electronics, Inc. (Melville, NY), Division Personnel Manager for Veeco Instruments, Inc. (Plainview, NY) and Employee Relations Administrator for Hazeltine Corporation (Greenlawn, NY). Mr. Chanin holds a Bachelor of Arts in Political Science from the State University of New York at Albany (Albany, NY) and an MBA in Management-Human Resources from Adelphi University (Garden City, NY). Mr. Chanin holds the PHR certification which is awarded by the Human Resources Certification Institute affiliated with the Society for Human Resource Management (SHRM).

The Alcott Group, Western New York Division, announced the promotion of Holly M. Patterson to Human Resources Specialist Team Leader. Holly M. Patterson, PHR, formerly served as a Human Resources Specialist. Since joining Alcott in February 2004, Ms. Patterson has continually demonstrated a strong professional skill set and the ability to assume broader responsibilities. In her new role, she'll oversee Alcott's HR Specialists in a full range of client services. Ms. Patterson received a Bachelor of Arts (BA) in Psychology and a Masters of Business Administration (MBA) with a concentration in Human Resource Management from Niagara University. She also her holds the prestigious Certification as a Professional in Human Resources (PHR) and is a member of SHRM.

The Alcott Group announces the appointment of Jeanne Anderson as Senior Human Resources Representative. Ms. Anderson brings 17 years of experience to her new position, in which she will be primarily responsible for administrating the 401(k) plan. Directly prior to joining Alcott, Ms. Anderson served as Group Operations Manager for Mellon Financial Corporation (Uniondale, NY), where she lead, trained, coached and evaluated the organization's financial control/reconciliation team, which consisted of seven direct and 40 indirect reports working from five locations. In addition to her career at Mellon, Ms. Anderson served as an Actuarial Analyst for Improved Funding Techniques, Inc. (Lynbrook, NY). Ms. Anderson holds a Bachelor of Arts in Economics/Computer Sciences from St. John's University, from which she graduated Summa Cum Laude.

The Alcott Group, Western New York Division, has named Julie M. Winkelman Human Resources Specialist. Ms. Winkelman, who brings strong HR credentials to the role, will manage a wide range of HR-related client services. Directly prior to joining Alcott, Ms. Winkelman served as the Human Resources Manager for MJW Corporation (Amherst, NY), where she was the sole HR contact for 110 employees located in 13 states. Previously, she also served as an Agency Personnel Development/Recruiting Representative for MassMutual Financial Group (Buffalo, NY). Ms. Winkelman holds multiple degrees, including a Bachelor of Arts in Psychology and a Bachelor of Science in Business Administration from the University at Buffalo, State University of New York, where she graduated Magna Cum Laude, and an MBA in Marketing/Management Consulting from the University at Buffalo.


  New York's Governor and legislature recently demonstrated their commitment to combat identity theft with the passage of several laws requiring businesses to assist in this effort.

On June 9th, Governor Pataki signed into law legislation which requires employers to dispose of records containing employee personal information in specific ways. The "Disposal of Personal Records Law" requires employers to either shred, destroy, modify or take reasonable action to ensure that no unauthorized person has access to the information. The Law also provides that a failure to properly dispose of records by any business under this law would result in a civil penalty of up to $5,000.

The state "Security Freeze Law" also protects against identity theft as it allows consumers who are identity theft victims, or are concerned that they might be at risk of having their identity stolen, to place a "freeze" on their consumer report to prevent others from gaining access to it.

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Alcott in the News
The Alcott Group continued its tradition of support for the Central Nassau Guidance and Counseling Services, Inc. (CNGCS, Hicksville, NY) by serving as a sponsor for two upcoming events: CNGCS' Annual 5K Runday on Saturday, May 27th starting at South Oyster Bay Road in Hicksville and CNGS' 7th Annual Golf Outing on September 12th at the Town of Oyster Bay Golf Course. For more information, visit:

As a further show of its commitment to the upstate region, The Alcott Group President Louis Basso and other staff members from the downstate office in Farmingdale were on hand to cheer on the Alcott-sponsored team for the JP Morgan Corporate Challenge in Buffalo, where the Western New York Division of Alcott is based.

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