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What Employers Need to Know About Illinois Recreational Cannabis Law

On June 25, 2019, Governor Pritzker signed the Illinois Cannabis Regulation and Tax Act into law, making Illinois the 11th state to legalize recreational cannabis. The law went into effect this January and dispensaries sold over $10 million worth of recreational marijuana in the first week.

The legalization of Illinois recreational cannabis has potentially serious ramifications for business owners, HR professionals, and managers. Many fear that their employees will show up high at work or get high at work during breaks. And because using recreational marijuana is no longer in itself illegal in Illinois, employers can’t enforce zero-tolerance policies towards its use – just its use at work.

While there are valid concerns, Illinois recreational marijuana legalization doesn’t pose an existential threat to employers. As long as you are careful and implement a few straightforward policies, there is no reason to fear legal recreational cannabis.

So, how can you protect your business from having employees show up high at work and from discrimination suits for taking action against employees for being high at work? In this article, we’ll explore:

  • Concerns About Recreational Marijuana in Illinois
  • Preventing Employees From Being High at Work
  • Protecting Yourself Against Lawsuits for Policies Against Marijuana in the Workplace
  • Why Illinois Recreational Marijuana Legalization Isn’t a Threat to Businesses
  • How to Learn More

Concerns About Recreational Marijuana in Illinois

Whether you support it or not, Illinois recreational cannabis legalization is a reality. What does that mean for you as a business owner, manager, or human resources professional?

For the most part, your policies on recreational marijuana and drug testing in the workplace shouldn’t have to change. But the way that you enforce those policies may need to be modified.

Despite what some business owners think, and some overeager employees might insist, your employees aren’t suddenly allowed to show up high at work. Employers are still allowed to have zero-tolerance policies for the consumption of recreational marijuana, intoxication from recreational cannabis, or the storage of marijuana during work hours or while on call.

But you’re no longer allowed to take action against employees who use recreational marijuana outside of company time and are not high at work. Many employers might not have a problem with this on the face of it. After all, off the clock employees’ time should be their own unless the after-effects impact their job performance.

However, even if you fully support the use of recreational cannabis outside of work, the legalization of recreational marijuana in Illinois makes it harder for you to prevent employees from being high at work. And it exposes you to potential discrimination lawsuits if you take action against employees for being high at work based on evidence of their use of recreational cannabis in general rather than just at work.

After all, there is no equivalent of a breathalyzer for marijuana as of yet. That means that there is no surefire way to tell if an employee is high at work. And methods for drug testing in the workplace have varying degrees of accuracy. Many companies that are currently drug testing for marijuana are using hair follicle drug testing. But hair follicle drug testing is only useful to tell whether or not an employee has used recreational marijuana in the past several weeks or even months. That means that hair follicle drug testing is now more or less obsolete for drug testing in the workplace in states with legalized recreational cannabis. And urine tests are not even a reliable solution for drug testing in legal states as they can deliver positive results for recreational marijuana use anywhere between two weeks and a month in the past.

You might think that you can still take action against employees for using recreational marijuana during off hours because recreational cannabis is still illegal on a federal level. That might be true if the Illinois law simply allowed employers to control marijuana use at work and did not give the same right for off-work hours. But the 600-page law amends the Illinois Right to Privacy in the Workplace Act that prohibits employers from punishing employees for using legal substances outside of work to expand the definition of legal substances to include recreational cannabis and medical marijuana. So while you won’t break federal law by punishing employees for consuming recreational marijuana outside of work, you will be in violation of state law.

So, how can you stop employees from being high at work without breaking the new Illinois recreational marijuana legalization law or exposing yourself to lawsuits?

Preventing Employees From Being High at Work

If you can’t rely on traditional drug testing in the workplace to prevent employees from being high at work, what can you do?

The Illinois recreational cannabis law establishes reasonable suspicion or good-faith belief that an employee is high at work as a legitimate standard for taking action against that employee. So, until somebody invents foolproof technology for marijuana-use testing to see if an employee is currently high at work, your best bet is to leverage the reasonable suspicion standard.

How can you take advantage of the good-faith belief standard as laid out in the Illinois recreational marijuana bill? The first step you should take is to train supervisors and managers on how to identify drug use, including distributing reasonable suspicion checklists that they can fill out for incident reports, and educate all of your employees about the reasonable suspicion standard that will be used to tell whether they are high at work. That way, your team will be prepared to meet the standard and your company will be sheltered from liability for enforcing the standard. You should also include the reasonable suspicion checklists in all of your accident report forms, especially if your business is especially susceptible to workplace-safety issues.

According to the Illinois recreational marijuana legalization law, these are the symptoms that your team should record if they suspect an employee is high at work and that you can use to meet the good-faith standard:

  • Changes in speech, dexterity, agility or coordination
  • Irrational, unusual or negligent behavior when operating equipment or machinery
  • Disregard for the safety of others
  • Carelessness that results in any injury to others
  • Involvement in any accident that results in serious damage to equipment or property
  • Production or manufacturing disruptions

So long as you are meticulous about recording symptoms at the time, you should not have to fear reprimanding employees for showing up high at work. Under the Illinois recreational marijuana bill, if an employer demonstrates a good faith belief that an employee is high at work, the burden shifts to the employee to prove that they were not impaired.

And you can still use drug testing in the workplace as part of your efforts to dissuade employees from being high at work. Random drug testing for marijuana is explicitly permitted under the new law and can provide additional support for reasonable suspicion claims. And you can maximize the usefulness of random drug testing by reviewing your methods for drug testing in the workplace to ensure that you are testing for use in the past 6-12 hours rather than the past 30+ days. For instance, replace hair follicle drug testing with more accurate saliva or blood testing. Just don’t use drug testing as the sole justification for any disciplinary actions.

Protecting Yourself Against Lawsuits for Policies Against Marijuana in the Workplace

Now that you know how you can effectively address the use of recreational cannabis in the workplace, let’s take a look at how you can safeguard yourself against lawsuits when you take action against an employee for being high at work.

First and foremost, don’t take action against employees without the standards we outlined in the last section and always air on the side of caution, even if you meet the reasonable suspicion standard. It’s generally not worth risking serious disciplinary action against an employee unless their use of recreational marijuana poses a threat to their productivity or workplace safety, and if that is the case, then they have probably well surpassed the good-faith suspicion standard.

Beyond following proper enforcement procedures, another step that you can take to minimize your liability is to give employees advanced notice regarding any changes in drug enforcement policy and to provide comprehensive education about the recreational marijuana policies and their enforcement. This can head off claims of unfair surprise, prevent unnecessary lawsuits from being filed because an employee didn’t know what the policies were, and ensure that managers enforce the policies properly.

You may well have to review your drug enforcement policies as well as your anti-discrimination policies because Illinois recreational cannabis legalization adds pressure behind previous discrimination issues. Recreational marijuana enforcement has a history of racial bias and you have to tread especially carefully to avoid any semblance of bias, whether conscious or unconscious. So, conduct rigorous implicit and explicit bias training and make sure that random drug testing in the workplace is genuinely random and applies to all employees equally.

So long as you follow these steps, you shouldn’t have too much to worry about regarding discrimination lawsuits as a result of the legalization of recreational marijuana in Illinois.

Why Illinois Recreational Marijuana Legalization Isn’t a Threat to Businesses

The good news is that unless you work in an industry fraught with workplace-safety concerns, such as construction, Illinois recreational marijuana legalization is cause for caution rather than concern. As long as you put the right systems in place, there’s no reason to be too worried about the legalization of recreational marijuana. You will still be able to stop employees from being high at work and take action against employees who do use recreational marijuana at work, without fear of damaging lawsuits.

And while you should protect yourself from repeated workplace intoxication that causes performance or cultural issues and from discrimination lawsuits, casual use by employees should not be an issue for most employers. Ten other states have legalized recreational marijuana and businesses continued to thrive. States with legalized recreational cannabis states represent four out of the top five state economies in the country and California, the poster-child for legalization, is the largest state economy in the country. Illinois business owners will be fine – so long as they handle the transition correctly.

Illinois recreational cannabis even presents opportunities for employers to set themselves apart and win the war for talent. According to a 2019 survey by PBS Research, Civilized, Burson Cohn & Wolfe, and Buzzfeed News, half of Illinoisans surveyed said that their ideal workplace would permit marijuana use outside of work but that two-thirds were uncomfortable with use in the workplace. If those numbers are accurate, most employees are likely to respect the prohibition of marijuana use at work and business owners can improve their employer branding by taking a hands-off approach to recreational cannabis use outside of work.

How to Learn More

The legalization of Illinois recreational cannabis has made things a lot more complicated for business owners and HR professionals throughout Illinois. There’s no way that we can cover all of the complexities and details of how you should handle the legalization of recreational cannabis, prevent employees from being high at work, and protect yourself from discrimination lawsuits in one article. Nor are we attorneys who can give you sufficient legal advice.

That is why we’ve enlisted the help of an attorney who is well-versed in all things employment law to help guide business owners and HR professionals through this turbulent transition. Heather Bailey is a partner at SmithAmundsen’s and an expert in employment and labor counseling and litigation. She’ll be joining our very own HR Client Manager Karina Castaneda for a comprehensive free webinar on understanding the ins-and-outs of the Cannabis Regulation Act and how it affects Illinois employers.

Join us on February 19th at 11am CST to learn what these two experts have to say about preparing your company for legalization. Register Today!

Becoming Unbeatable Together: Building a Data-Driven Approach to Diversity & Inclusion

Part 1: Setting Yourself Up to Become Unbeatable

Defining Diversity & Inclusion

Before we dive deep into the power of Diversity and Inclusion, let’s take a second to establish our terms and clarify what D&I actually looks like.

  • Workplace Diversity: The practice of hiring, promoting, and building a team in a way that brings together people of different backgrounds, educations, personal histories, experiences, and areas of expertise.
  • Workplace Inclusion: The practice of ensuring diverse voices are fully comfortable, integrated into, and valued as members of a thriving, complementary, interdependent team.

To be clear, diversity is nothing without inclusion! It’s pointless and somewhat dishonest to build a diverse team only to maintain a leadership framework where a certain “in-group” maintains the power to impactfully steer the ship while a nominally diverse team underneath them feels disenfranchised or fearful.

Why Diversity and Inclusion Build the Best Possible Team

The true potential of humanity lies in our ability to come together and build a unit that’s more powerful than the sum of its parts. A group of people from similar backgrounds, educations, and ways of navigating the world might be able to put their heads together to come up with one, two, or even three ways of solving a given problem, but when you invite professionals of diverse backgrounds to the table, the possibilities are far more open-ended.

When businesses make diversity and inclusion main values and priorities, they can gain incredible benefits, includes:

  • Increased brainstorming/innovation potential
  • More access to outside-the-box problem-solving
  • A wider skill and knowledge base across the organization
  • A thinktank and business team that accurately reflects the national and global marketplace

Building a Foundation for a Great Team

There’s no magic recipe you can learn to turn D&I into areas of pride and opportunity for your business, but the key is to foster a strong culture. If that culture is one that values diversity of people and ideas, fights for representation and inclusion in every situation, and works to give everybody a voice, then you can really capitalize on the innovative power of D&I.

Workplace culture determines both the levels of buy-in, engagement, and persistence your team will put into their work on a day-to-day basis, their feeling of personal investment and their job, and the dedication they put into embracing and maintaining the company culture. Great talent wants to work in a culture that supports them and sets them up for success. When they encounter a situation where they don’t feel comfortable, valued, or positively plugged in, they leave quickly.

Creating a Level Playing Field Through Education

While diversity hiring programs are nearly ubiquitous in the big business world, they often lack the crucial, consistent ground-level follow-through (inclusion) that turns that diversity into business power. Employee education (in the form of in-house training or formal professional development) is a key piece of the puzzle when it comes to shaping your existing culture into the kind of inclusive environment that sets the business up to win big with D&I.

Of course, you can’t just do diversity and anti-harassment education to check them off the list for compliance purposes – employees can smell that from a mile away, and it directly affects their ability to engage authentically with the training and reflect on the information in a way that’s going to augment their mindset or behavior at work. Discussions of diversity and inclusion need to be powerful, real, and backed by thought-provoking human-to-human engagement – not a comprehension quiz at the end.

Designing and building that education program is a key step in articulating, fostering, and supporting a great employee culture. When you give great talent something important to aspire to and make it real for them, the possibilities are endless. At the same time, worker education creates a foundation for accountability and makes it easier to remove toxic mindsets that do damage to inclusion or morale.

Don’t Hesitate to Be Great!

The biggest mistake organizations make is waiting to articulate the perfect approach to D&I. Every business can and should be doing something about diversity and inclusion at scale today. If you think diversity training or inclusion workshops would be valuable to your team, seek out a great independent PD provider who can help you today – don’t form a committee to discuss what the training might look like two years from now.

Of course, long-term initiatives are key to harnessing diversity and inclusion as business strategies over time, but the best thing any organization can do from a talent-centric and corporate decency standpoint is to identify a starting point and dig into exploring the challenge and addressing the issues at hand.

In the next section of this book, we’ll explore some of the thinking points and strategies businesses can use to find a starting point for their D&I program, articulate a commitment to diversity and inclusion and begin creating that great culture and winning team. Depending on the size, industry, or existing culture of your business, some of these approaches might be more relevant or feasible early-on in the process than others, but any of these strategies will help you grow in your ability to embrace D&I in a powerful, data-driven way.

Part 2: Planning to Become Unbeatable

The Top 5 Myths About Captive Insurance Programs

Captive insurance programs enable businesses to reduce their insurance overspend, fully control their coverage, and turn safety initiatives into profitable returns.

Unfortunately, though, many organizations shy away from forming or joining captives because, when they start doing online research, they often run into incorrect and damaging myths about captives.

Moving forward, we’ll:

  • Identify the top five myths about captive insurance programs that are prevalent on the web
  • Debunk each myth using evidence
  • Describe the true value and possibilities of a captive insurance program.

Myth #1: You have to be a huge corporation to benefit from a captive

Why is this myth so prevalent?

When you first start researching captive insurance programs, most of the messaging on the first page of search engine results focuses on how captive programs are used by large corporations who hold multiple businesses and operate facilitates across the globe.

Why is this a myth?

It’s true that single-member captives (in which one business creates its own insurance company) are generally formed by large corporations, but that’s not the full story! Group insurance captives or “pool” captives specifically exist to bring together medium-sized businesses so they can gain the insurance negotiating power of their bigger competition.

When it comes to whether or not your business is a good candidate to join a group captive, your business’ size, headcount, or profits don’t enter into the equation at all. It’s all about the scale of your business insurance premiums.

The Bottom Line

If you pay more than $150,000 annually in premiums, you are a strong captive pool candidate. You don’t need to be a multi-national corporation or a Fortune 500 giant – just a business with a goal of doing things better.

Myth #2: Entering a group or pool captive exposes your business’ health to other people’s risks

Why is this myth so prevalent?

The idea that group insurance captives expose your money to other business’ risks is a logical fallacy. That is, it seems right on its surface when you have a cursory knowledge of the topic, but a deep dive proves it to be completely false.

When businesses hear the words “group” and “insurance” together, they incorrectly assume risk and responsibility are shared equally among the pool members for claims. They connect the dots and assume that if one pool member has a “bad year,” it damages their business allies as well.

Why is this a myth?

Pool captives are specifically structured to protect the vast majority of each member’s investment from the risks and claims of others. Over 90% of your premiums are specifically set aside for your use.

That means less than 10% of your total investment can be lost due to claims made by other members of your pool.

In fact, in Launchways’ group captive program, each member retains complete ownership of 98% of their funds. This means that with the Launchways group captive, only 2% of your investment is considered “at-risk.”

The Bottom Line

Yes, group captive membership requires the willingness to take on increased risk compared to the traditional insurance marketplace, but it’s absolutely false to say that your potential for profits is at the mercy of your pool partners.

Myth #3: When you’re in a captive, one big claim can blow up your business

Why is this myth so prevalent?

Like Myth #2, the “catastrophic claims scenario” is a logical fallacy: it sounds right, but it isn’t!  When people hear “self-insurance,” they assume that means “we’re on the hook for every dollar and cent of every potential claim.”

Unfortunately, this myth is also sometimes perpetuated by insurance providers and brokers who are hesitant to work outside the traditional marketplace. Their motivation is to protect their own interests and ease of doing work, not yours!

Why is this a myth?

One word: reinsurance. Whether you operate your own single-member captive or participate in a group or pool program, part of your investment is always in reinsurance to prevent exactly this scenario.

That reinsurance policy prevents unforeseen or much-larger-than-expected claims and issues from damaging your business’ long-term viability or standing as a strong group captive partner.

The Bottom Line

Reinsurance is a part of every captive program, and it’s there to protect you from potentially harming the health of your business.

Myth #4: We’d have to change the way we do business to form or join a captive

Why is this myth so prevalent?

The idea of creating your own insurance company sounds pretty daunting at first. Many people assume they’ll need to restructure their organization to make the captive viable or transform themselves into a more attractive group pool member.

Like so many other myths we’ve tackled, this one is at least in part in heavy circulation because many insurance package providers aren’t crazy about the idea of businesses cutting them out as middlemen.

Why is this a myth?

The whole point of a captive insurance program is that it allows your business to be itself more fully – you gain the ability to insure outside-the-box risks, gain ownership over the claims management process, and reclaim power and autonomy that traditional business insurance limits.

Captive insurance programs aren’t about changing your business, they’re about changing the circumstances under which you do business. Furthermore, in the case of group captive programs, independent managers handle pool responsibilities, meaning there’s minimal change to your day-to-day operations and responsibilities.

The Bottom Line

A captive is about supporting your business better and providing greater economy of scale. The idea that you need to significantly “whip yourself into shape” to be a captive candidate is false.

Myth #5: Captive programs used to offer great perks, but the value isn’t there anymore

Why is this myth so prevalent?

Anytime people perceive the value of a product or service has been reduced even a small fraction, there’s often an impulse to throw out the baby with the bath water.

Single-member captive programs used to offer large corporations significant benefit as tax shelters, and it is true that most of those incentives have been removed. In reactionary style, many of the big business blogs have published content claiming captives “aren’t what they used to be.”

Why is this a myth?

As we’ve established repeatedly in our myth-busting exercise, insurance captives aren’t just for the biggest companies in terms of workforce or economic power. Just because those industry leaders are upset about changing regulations, doesn’t mean you should be tricked into thinking like them.

In fact, some of those same regulatory changes that have made captives slightly less profitable for large, multinational entities have actually made it easier for medium-sized businesses to form effective pool captives. Even if captives have slightly declined in value for the biggest business, they’re still loaded with potential for mid-sized businesses.

The Bottom Line

Captive insurance programs still offer tremendous value: independence, authentic ownership of your business’ insurance and claims process, and the potential to make a dividend instead of turning overspend into loss are just three examples of why they’re still relevant and extremely useful. Don’t be scared off just because they’re not the big-money tax shelter they used to be.

Key Takeaways:

As we’ve seen, captive business insurance programs (both single-member and group or pool) allow organizations to navigate the insurance market in a more personalized, powerful manner.

Even though most entities aren’t big enough to pull off a single-member captive, medium-sized businesses are increasingly forming alliances that provide big value and the potential for profit.

There are plenty of myths out there about captives, most of them designed to make the programs seem scary and risky, but it’s important to remember:

  • You don’t need to be a gigantic corporation to qualify for a group or pool captive – you just need to pay at least $150,000 in annual premiums
  • Within a group insurance captive, over 90% of your investment is protected and sequestered for your use only
  • Reinsurance is built into captive programs to prevent catastrophic claims events
  • Captives should be about enabling you to do better, not forcing you to jump through hoops
  • Even if they’re not spectacular tax shelters anymore, there’s still immense value in the independence and negotiating power captives create

How We Do Things Differently at Launchways: We Live Our Values

Just about every company these days has a mission, vision, and set of core values. But all too often, these documents are reviewed once a year by leadership then filed back away in a drawer. In these cases, they remain hollow ideals rather than a reality of life at the company. Sometimes this happens because the company followed the trend without really knowing what it meant. Other times, businesses want to live their values, they just don’t know how to realize their values in their business goals and day-to-day operations.

Through our role as HR and benefits consultants, we’ve gotten to know hundreds of companies over the years who struggle with this exact challenge. And we’ve had the chance to guide them through the process of integrating their values into everything that they do, particularly by crafting values-driven benefits packages and human resources processes.

We’ve seen what works, and we’ve also seen what doesn’t. And we have also seen how businesses transform and grow when they start realizing their values in their day-to-day work.

This is one of the best things about being part of the Launchways team. We’ve taken the lessons we’ve learned from working with our clients to heart and live our values every day, in every way.

Our values shape who we are as team members, collaborators, and consultants. They fuel our personal growth and make us invested in the success of our coworkers, our company, and our clients. And we get the chance to help our clients live their values and build more productive, engaging, and rewarding workplaces.

Let’s take a look at what it means to live our values at Launchways, including:

  • The Launchways Core Values
  • How We Make Our Values a Reality of Life at Launchways
  • Values-Driven Customer Relationships
  • Helping Our Clients Live Their Values

Launchways’ Core Values

Before we dive into how we live our values, here’s a quick overview of what our values are, as described by CEO Jim Taylor:

Resourceful

We are a resourceful organization. We take initiative, we own the challenges that are set before us, and we embrace the work of finding solutions, no matter what it takes.

Driven

We are a driven enterprise. We’re passionate about what we do, and we strive to always go above-and-beyond for our clients and each other.

Change-Maker

We’re a disruptive business. We’re unafraid to do things differently, especially when we think it can yield better results. We’re confident in our ability to improve the industry.

Thoughtfully Candid

We’re a reflective and honest brand. We value constructive conversation and believe that differences of opinion can make conversations and businesses stronger.

Community-Builder

We’re a community-minded team. We’re always looking for new ways to support members of our Launchways community while also engaging with the greater Chicago community.

How We Make Our Values a Reality of Life at Launchways

A values-driven workplace starts from the bottom-up. No amount of cajoling from the C-Suite can make a company’s values a reality. Every employee has to buy into the values and make them an intentional part of how they interact with their work, their coworkers, and their clients. Only then will a company’s values become a driving force in the company culture.

That said, there is a lot that a company’s leadership can do to get employees to take ownership of company values. Unsurprisingly, with over fifteen years of experience consulting with thousands of businesses, Jim knows a thing or two about how to build a values-driven organization. And he built Launchways around our core values from the ground up. Every process is shaped with the company’s values in mind – how and who we hire, how we run our meetings and share feedback, how we talk to each other across every level of the Launchways team, and how we are encouraged to grow and advance within the company.

And it’s worked. Our values are an integral part of what we do and how we do it. They help us treat each other with honesty and integrity, encouraging us to be our best and most authentic selves, to genuinely care about our fellow team members, and to be deeply invested in our clients’ successes.

It makes all the difference in the world to go into the office every day and work alongside friends and peers towards common goals with a shared vision, mutual respect, and open communication.

Values-Driven Customer Relationships

At Launchways, we know that we do best when our customers thrive. And our values define every aspect of our relationships with our customers. We become an extension of our clients’ teams, as invested in their success as we are in our own.

One of the main expressions of our values-driven approach to our client relations is our consultative sales model. Essentially, we provide our clients with solutions rather than products. We never go into a client relationship with the plan to “sell them” on specific products. Instead, we identify their needs first and then find the HR technology, benefits, and business insurance solutions that meet those needs and that help our clients accomplish their business goals.

At Launchways, “out-of-the-box” packages are out of the question, and it would be anathema to us to suggest that a client adopt a product if it isn’t the absolute best solution for their business.

This approach doesn’t just deliver better results for our clients, it also makes our work a lot more rewarding and engaging. We approach each new client with a fresh perspective, using our skills and experience to develop unique solutions and solve their specific challenges.

In short, we get to be strategic problem-solvers rather than succumbing to the uncaring monotony of the hard-sell.

Helping Our Clients Live Their Values

A significant part of living your values is making sure that the way you treat your employees aligns with your company’s core values. That means that your benefits and human resources processes need to be aligned with those values.

In our role as benefits and HR consultants, we get to help our clients align their people-processes with their values. For example, we’ve helped companies who value employee safety overhaul their workplace safety practices and we’ve helped companies who value diversity and inclusion implement more inclusive benefits packages.

Even after we’ve implemented the initial values-oriented solutions, we continue to help our clients live their values over the long run. Because we deliver scalable solutions, we build long-term relationships with our clients. Our clients regularly turn to us as they face different business or human resources challenges, and we guide them towards the strategies and solutions that will keep them faithful to their core values.

This is a unique aspect of our client problem-solving that goes beyond reducing their costs, expanding their benefits, or streamlining their processes. We don’t just get to help our clients succeed – we empower them to make sure their employees succeed as well.

Key Takeaways

If there’s anything we’ve learned from our years of guiding businesses through the process of maximizing their human potential, it’s the importance of company values. That is why we live our values in every aspect of how we work and do business at Launchways. Here’s what living our values looks like at Launchways:

  • Putting our values at the center of everything we do
  • Developing relationships with our coworkers and clients that are based on trust and honesty
  • Delivering meaningful solutions for our clients through a consultative sales process
  • Helping our clients live their values by aligning their benefits and HR processes with their company values

Spice House Recovers From Fire, Comes Back Even Stronger, With Hands-On Support From the Launchways Business Insurance Team

Founded in 1957, The Spice House is a purveyor of the finest spices, herbs, blends, and extracts to customers ranging from renowned Michelin-star chefs to home cooks everywhere. They’ve spent over 60 years curating their global network of premium growers and distributors to offer their customers unrivaled quality and selection. Spice house is now the fastest-growing craft spice merchant in the Midwest, thanks to a booming eCommerce business.

Spice House started working with Launchways during a change of ownership amid a period of rapid growth. When a Private Equity firm initiated the process of buying Spice House from its original owners in 2017, they brought on Charlie Mayer as the company’s new CEO. Immediately upon assessing the business’ processes, Charlie knew that he had to overhaul the company’s HR systems, payroll operations, and benefits to accommodate Spice House’s growth and help it grow at an even faster rate.

While he considered working with a PEO, Charlie decided to work with Launchways instead because we offered customized solutions with the one-stop-shop appeal of a PEO. Our HR advisors were also able to provide expert guidance to Charlie and his team through the change in ownership and guide them through any challenges that arose during Spice House’s continued growth. And unlike a PEO, we were also able to replace Spice House’s existing business insurance, which could not meet the needs of a rapidly expanding eCommerce food industry company.

Because Spice House lacked any centralized HR systems, Launchways implemented an all-in-one HRMS platform that handles employee record-keeping, new-hire onboarding, time and attendance, and payroll using systems that could scale with Spice House’s rapid growth. We also consolidated employee benefits to a single vendor, made benefits available to all Spice House employees, and increased coverage for health, dental, vision, life, and added a 401k at a cost-savings of 16% a year compared to their previous benefits package.

But one aspect of our partnership that turned out to have an extremely significant impact on Spice House’s ability to continue to grow and succeed was our work revamping the company’s business insurance. Their previous vendor refused to renew the company’s coverage due to the change of ownership and rapid expansion, so Spice House needed a business insurance solution that would meet their current and future needs. Our insurance experts conducted an audit of the business and put together comprehensive and cost-effective coverage package that could scale as the company grew.

Little did anybody know how important that coverage would become to Spice House’s future just two years later.

In early July 2019, a repairman sent by Spice House’s landlord to fix the store’s roof accidentally lit the roof on fire with a blowtorch. The response by the fire department was swift and effective but it wasn’t enough to save the company’s inventory as Charlie reports,

“The fire department put the fire out quickly but they used a lot of water, so everything on the floor and in the basement was ruined.”

But the damage to the building was an even greater risk to his company’s ability to stay open, let alone expand. If he hadn’t had comprehensive business insurance, that Spice House location might have been driven out of business. But the coverage that Launchways had previously negotiated ensured that Spice House could weather the fire damage,

“In addition to having a significant loss in terms of our building and our product, we were closed for four months. Because we had business interruption insurance we not only recovered our lost income but we were also able to keep our staff employed through the interruption.”

One reason why the store was closed for so long was the complexity involved in resolving the claim. Since the fire was started by a contractor hired by the landlord, Spice House had to navigate shifting liability between multiple parties.

The landlord had to get the contractor to pay for the damage to the building before they could begin repairing the damage, greatly increasing the amount of time that Spice House’s store was closed. At the same time, Spice House’s initial insurance adjuster worked extremely slowly and was eventually fired by the insurance company. Launchways worked diligently to get a new adjuster on the case immediately, and then worked hand-in-hand with that party to ensure the claim was paid out quickly.

Throughout the process, the Launchways team handled the communications between the different parties and insurance companies so that Spice House could focus on their business, as Tim Taylor, the head of the Launchways business insurance team, explained:

“Because the fire was caused by a third-party roofing company that was fixing the roof, we had to work with not only the landlord and the roofing insurance company but also our insurer. When there is a large claim like this, we check in twice a week with the end adjuster at our insurance company and also check in with our insured to make sure that they don’t have any questions, that they know the timeline, and that they know when they can expect the money to be paid out for this type of a loss.”

Launchways’ hands-on approach made all the difference for Charlie, making a stressful and potentially costly process as easy and productive as possible,

“Having Launchways to talk to is kind of like having an older sibling who’s been there before and can tell you what to expect. About once a week I would get on the phone with Tim and say okay, here’s what’s going on, is this normal, should we expect more, what can I do? And he would tell me what to do and occasionally take it upon himself to go figure out what was broken and get it fixed.”

With Launchways handling communications with the insurers, landlord, and contractor, Charlie was able to focus on rebuilding Spice House’s store better than ever.

“I’ll never say that having a fire is a good thing but in the end, it was an opportunity to think about the store we wanted to have and to build that store. We had that opportunity because we had the right team together to help us recover and help us think about rebuilding. Tim gave us the confidence we needed to just proceed. When the process finally started to click, the fact that we had everything ready to go made it all work.”

Now, Spice House is stronger than ever with a new storefront that fits their brand and is helping them grow even faster. This challenging chapter ended up fueling their business because they had the proper coverage and an active partner and consultant in Launchways. It’s rare for a company’s business insurance coverage to be put to the test as Spice House’s has been and Charlie is more than pleased with the results. Going forward, he can run his business with more confidence than ever, knowing that Spice House can withstand anything that fate sends its way,

“I just don’t lose sleep about insurance because you just need someone who understands the process who will talk to you honestly about what to do and that’s what Launchways did for us.”