Negligence Claims Due to Staffing Shortages in Nonprofits

Topics: Nonprofit

Summary: Staffing and volunteer shortages have dramatically impacted nonprofit organizations since 2020. A lack of skilled workers could result in potentially lower-quality services and increase the amount and severity of negligence claims. Find out how to help lower the number of these claims by hiring the right staff and focusing on workplace safety.


Nonprofit Negligence Claims Are On The Rise

Staffing Shortage in Nonprofits

The nonprofit industry has the third largest workforce in the U.S., slightly behind the retail, accommodation and food service industries. Nonprofits face specific risks such as financial instability, damaged reputations, data breaches, unknown and untrained staff and board member liability. Lately, nonprofits are facing a new challenge due to staffing shortages. When there is a shortage of workers and volunteers for nonprofit organizations, people can lose access to critical services and there is a potential for incidents that lead to negligence claims.

Due to many different reasons, including recovering from shutdowns from COVID-19, the nonprofit community is suffering from a labor shortage that impacts their services to the community. Each nonprofit and community are impacted differently. Some nonprofits received more funding during and after the pandemic shutdowns allowing them to hire adequate staff, while others, such as daycare facilities, adult care centers, or residential homes that require 24/7 care, are having difficulties recruiting new staff.

Workers don’t stay with nonprofits because of the money; they are passionate about the care and giving that they are helping to provide. However, with the staff shortages and inflation, nonprofits are losing more than other industries because they can’t offer additional wages or incentives that other industries can.

Many factors have put a damper on nonprofits hiring new staff members, including:
  • Salary competition with for-profit organizations
  • Lack of long-term professional growth potential
  • Inability to find childcare
  • Vaccination policies
  • Stress
  • Burnout

In childcare and adult care, such as residential or group homes, workers often have lower pay and face difficult work. They can easily be lured to work in other industries, leaving their previous employers suffering due to staff shortages or qualified workers.

Rise in Negligence Claims in Vulnerable Communities Due to Staff Shortages

Negligence claims usually come from services rendered, so staffing shortages are at the issue’s core. A lack of skilled and qualified employees will result in rendering subpar services and may increase the frequency and severity of negligent claims and could lead to higher insurance costs. The frequency of these types of claims has decreased over the past few years, but the claim’s severity is higher. However, in certain classes, such as daycare and human services, both the frequency and severity of these types of claims are up.

Claims are not coming in as a staffing shortage; they are being submitted as negligence or abuse. As we investigate the claims, we have been looking into why the incident happened and how the organization allowed it to happen. In the investigation, we found that many organizations were not following their own set of standard operating procedures due to unqualified or limited staff.

Certain nonprofit organizations have a higher expectation of caring for the most vulnerable clients. For example, in an adult care organization, clients might need to be monitored at all times because of certain actions, tendencies or allergic reactions, especially during mealtimes. If the nonprofit is short-staffed or has unskilled workers, they might not be keeping a close eye on the client, which could lead to deadly consequences. Not enough staff to monitor continuously, lack of care or people at every step of the way is hurting the nonprofits. If it results in death or fatality, it could become a million-dollar claim.

Nonprofits have a greater responsibility to provide superior service to their vulnerable clientele and attracting and retaining qualified employees makes a world of difference. If a nonprofit mismanages a potential incident, the claims can evolve from general liability to directors and officers (D&O) or an employment practices liability (EPL) claim. However, this type of escalation doesn’t happen very often. The D&O claim would be for being negligent in providing the standard of care or hiring more staff when the organization is in need.

Solutions for the Nonprofit Worker Shortage

Some nonprofits have decided to offer better pay and benefits and improve workplace advancement opportunities, flexibility as well as diversity and equity to attract and retain their staff. Other nonprofits might be able to rely on funding reserves, fundraising or government contracts to meet short-term staffing needs, but this option might not be available for many organizations.

With demand for the services that nonprofit organizations provide increasing and with limited budgets, what can a nonprofit do to address the nonprofit labor shortage?
  • Change hiring, recruiting and internal promotion policies
  • Increase diversity in staff and volunteers
  • Access the organization’s culture and make changes where needed
  • Offer flexible scheduling, remote work options, additional time off or other perks
  • Add family-friendly options such as free daycare services for staff, recommendation letters for Master’s programs or continuing education
  • Use contract workers to outsource administrational duties such as bookkeeping, payroll, IT or marketing
  • Partner with schools and universities for volunteer or co-op opportunities
  • Recruit workers via social media channels

Creating a culture of safety throughout the organization is critical. Continuous training and safety should be prioritized from the board to the volunteer. Nonprofits must make use of the safety resources available to them, such as OSHA, NIOSH, down to your insurance carrier’s loss control team, and make sure that the safety procedures are implemented throughout the organization.

Nonprofits should invest in training for their staff, including:
  • Abuse policies
  • Background checks
  • Loss Control safety training
  • Safe driving

AmTrust Partners With Nonprofit Organizations

Nonprofit organizations can face unique risks that set them apart from other types of small businesses. Along with needing coverage for property damage, workers’ compensation and personal injury, nonprofits will require additional insurance to ensure they properly protect their people, vulnerable clients and other assets and continue to fulfill their missions.

AmTrust Financial provides all lines of insurance coverage specifically tailored to the needs of nonprofit organizations. For more information about our nonprofit insurance, please contact us today.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.

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