Be wary of service that can backfire

By Raymond Dreyfack -- Plant Engineering, 5/1/1998

It's a good policy and good business to serve others, employees included. Good for morale, good for employee relations. Service almost always pays off. Almost. But some kinds of service, however well intentioned, can be ill advised. A manufacturing company learned this the hard way.

The big safe in the maintenance office was used to store confidential documents, selected high cost instruments and tools, and a maximum of $250 in petty cash. In line with insurance requirements, a list of the safe's contents, detailing each item stored and its value, was conscientiously kept up-to-date.

Since robberies occurred in and around the plant from time-to-time, it was a long-standing practice to allow selected employees to keep valuables in the safe as well.

Maintenance people who sometimes worked outdoors were especially vulnerable. George Vinson, for example, was in the habit of carrying large sums of money with him. He felt more comfortable keeping his wallet in the safe and picked it up at quitting time. Alice Kargin stored her diamond ring for safekeeping, and Ben Soskind used the safe for his credit cards.

One day when the office was deserted at lunchtime, the safe was broken into, cash and other valuables stolen. Neither company security people nor the local police were able to determine if it was an inside job or not. Whatever the case, an insurance claim was filed for listed corporate assets and unlisted personal belongings missing.

The insurance agent said the company would make good on the corporate loss, but disclaimed liability for what the employees claimed they had lost. Plant Engineer Ed Toska checked with Corporate Attorney Roseanna Lewin to see if they could get away with that.

Question: Do you think the insurance company can be made to honor the total loss involved?

Lewin's opinion: "The employees are out of luck," Lewin said. "The insurance contract specifies liability for company assets on the one hand, and requires a detailed accounting of loss on the other. Since the employees' valuables don't comply with either of these specifications, and since there's no way of verifying the amount of value claimed, it's unlikely the insuror can be made to pay."

"That's what I was afraid of," Toska replied. "The question is, what obligation does the company have to the workers?"

"That's another story," Lewin said. "But one thing is sure: Employees should no longer be allowed to use the company safe to store valuables. In fact, I think it would be best if they are advised not to bring their valuables to work in the first place."