Tuesday, September 15, 2009

The Insurance Issues of Hiring Ex-Offenders

Earlier this year, I worked with an individual interested in starting a faith venture business that employed individuals rebuilding lives from prison. This new business as ministry aimed to provide property maintenance services for landlords and apartment communities.

Unfortunately, the venture ran into a significant obstacle when pricing liability insurance for the potential operation. The prospective business owner was told by his insurance agent that he would be unable to hire felons under his insurance policy. And he discovered that an expanded policy would be prohibitively expensive. He decided to not pursue the venture, ending the possibility for 5 positions for ex-offenders.

We’ve explored the issue of insurance and felony employment in the past here in the Faithventure Forum. It’s the biggest obstacle to increasing opportunity for individuals rebuilding lives from prison. And studies show that finding employment after prison saves money by reducing up to 50% the chances of individuals re-offending and ending up back in jail.

A recent article in Business Insurance explores the tricky issue for employers of crafting a hiring policy around the issue of felony offenses. I’m not a big fan of legislation that tries to level the field for the hiring of ex-offenders because I believe that the only individuals that benefit are employment lawyers. The additional costs and higher potential legal liabilities decrease employment opportunities for the very people such laws are supposed to help.

But the Business Insurance article does point out one area that does concern me. If the government wishes to increase the employment of ex-offenders, it needs to craft legislation that protects business owners from the legal challenge of “negligent hiring.” If an employer wants to hire ex-offenders then they need to be protected from potential liability related to that decision. A “negligent hiring” legal theory chills the willingness of employers to hire ex-offenders.

In addition, the government can set up a public/private insurance entity that provides cost effective liability insurance for employers that are willing to hire ex-felons. Right now, the government offers bonding for felons, but the main area of need and biggest potential benefit is in the area of commercial liability.

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