Licensing, Liability and Legal Compliance Issues in Protective Security: What High Net Worth Families Need to Know

There is a lot of confusion surrounding liability and legal compliance issues concerning private security services, including the protective services relevant for high net worth families. The problems are complex, and there are plenty of gray areas open to interpretation. The laws that impact non-governmental security services all vary considerably from country to country and even within one country. Even though the security consequences of good or bad training are significant, training requirements vary wildly from one place to another.

In the United States, the regulation of private security is left up to the states and not to the federal government. Some states have no regulation of civilian security services whatsoever; others maintain complex sets of legislation. Training standards, criminal record checking, licensing and oversight all change at the state line, even though the nature of relevant threats and the basics of good protective security remain largely the same.

Countries, states and municipalities organize the regulation of private security in a hodgepodge of different ways. In Florida, the installation of security alarms is controlled by the Department of Business and Professional Regulation while anything having to do with security personnel or investigations comes under the aegis of the Department of State Division of Licensing. In Ireland, the Private Security Authority regulates everything the private security industry does. In Italy and France various police agencies, national and departmental authorities are all involved in controlling private security services.

The law of unintended consequences: How efforts to mitigate security risks can open new risks of legal liability

To avoid liability, you need to know precisely what is required and allowed in every different jurisdiction, and how regulations impact specific security services in specific contexts. What is legal in one place might not be in another. What is good, acceptable practice in one situation might expose you to legal risks and civil suits in another.

We know of cases where major corporations have hired experienced protective security professionals with stellar backgrounds in military or government services, but didn’t think to check local licensing requirements. The corporations were then found to be noncompliant and therefor liable to fines and civil suits. Even though the protective agents are highly trained pros, they can’t protect the CEO unless they have taken a few hours of superficial training to become properly licensed locally.

We know of other cases where high net worth families hire their own security personnel (armed or unarmed) for residential protection –even though these families have no professional experience regarding labor laws or security, standard operating procedures, protective training or best practices. Whether such programs actually mitigate security risks is one question. Whether they mitigate or increase liability risks is another. If you don’t run the show properly, it’s still your show.

Depending on local legislation, such direct hires may not need to be licensed or have any formal training at all. They may not able to conduct security anywhere but on the family’s property, either. As soon as they step onto the sidewalk – off private property and into a public space – their activities come under the jurisdiction of the state and they can no longer legally perform any kind of protective intervention. If protective personnel do not consistently make razor-sharp distinctions between being on private or public property when working for families they expose their employers to significant liability if anything goes wrong – or if any lawyer gets interested for the wrong reasons.

Hiring off-duty police for private security is not always as simple as it seems.

Some families hire off-duty police for residential protection and expect that everything will be fine. Police have security experience and they also have strong networks they can call if the need arises. We have complete respect for the men and women working in law enforcement, and many of our colleagues in the security industry have paid their dues in the public sector before joining the private sector. However, the duties and approaches of police officers differ fundamentally from those of executive and residential protection personnel.

For one thing, police work is generally reactive – responding to incidents after the fact – whereas the focus of private protection work is generally proactive and attempts to prevent incidents from happening. Proper training for both professions differs accordingly.

Another difference between police officers and executive protection is that licensing requirements are not the same. In California, for example, everyone performing private security services (including retired and off-duty law enforcement officers) must be registered with the state’s Bureau of Security and Investigative Services (BSIS) – something LOE and their private employers don’t always realize or comply with.

Employing public servants in private settings raises other issues, too – some obvious to high net worth families, some less. Staffing can be a problem, as “the day job” will always be prioritized when there is a scheduling conflict or sudden change of plans. It’s readily apparent that people who work full-time in one job are hardly fresh and well rested when they start their moonlight shift. But there are also ambiguities concerning the legal liabilities of off-duty police working in private security that families don’t always appreciate.

Police officers are generally sworn to enforce the law 24/7, whether they are on duty or not. In some jurisdictions, officers are required by law to carry a weapon while they are off-duty; in others, they are not. How are off-duty police officers supposed to respond in an emergency if their law enforcement oath is at odds with their private client’s security needs? Can they run a suspicious car’s license plate number when they’re on a protective security job?  What if they notice something illegal happening on the street while working on a client’s property – are they obligated to leave their private job to perform their public duty, or exonerated if they don’t? Do they need to identify themselves as police officers if they intervene while working for a private client? Who is liable if an off-duty police officer’s actions become the object of a civil court case – the officer, the department or the employer?

Families need to consider their exposure to liabilities carefully, even when this includes off-duty police officers.

Security services are always regulated for a reason. But how they’re regulated isn’t always reasonable.

Police everywhere are tasked with protecting people and property and upholding the law. As representatives of the state, they have what sociologists call the “monopoly on the legitimate use of physical force”: only the police are allowed to use force against fellow citizens. We willingly accept this tradeoff – giving up our right to use force in return for general lawfulness and security – because it works out well for everyone when it’s based on legitimate ways of doing things.

Private security services are generally seen as a supplement to State actors such as police forces. They provide security that is additional to what the police provide, but they don’t replace the police or, in general, take part in the police’s monopoly of the use of force. This is an important distinction that forms the basis of the myriad ways different governmental bodies relate to private security services. How can legislators ensure that people can satisfy their needs for enhanced security without undermining the State’s monopoly of the use of force?  The answer is regulation.

Governments around the world regulate private security companies in one way or another. Regulation can include everything from codes of conduct to use of force, use of weapons, minimum training standards, transparency of police records, information sharing, uniforms and more.

If all governments regulated security in a similar fashion, our lives in the security industry would be easier and the regulatory pitfalls that face families hiring security services would be more predictable and easier to avoid. The problem is, governments regulate security in very different ways. Some ways work better than others. Frankly, some don’t work well at all.

According to a report by the United Nations, States fall into three broad categories when it comes to regulation of private security services. In UN-speak, a “State” is a member country; for our purposes, the term applies just as well to countries and individual states within the US or other legislative entities in other countries. The UN defines these three categories as:

1. States with no regulation
2. States with inadequate regulation
3. States with effective regulation

According to the authors of the report, “Most States fall into the first two categories.”

Based on our professional experience across the United States and in many countries around the world, we can only agree. The regulation of private security services is uneven at best. At worst, State regulation can give a false sense of security and open new dimensions of liability risk.

Licensed security personnel: What does that mean?

It is important to understand the scope and limitations of State regulations concerning security.

Take licensing, for example. Occupational licensing is common for professions that can have significant negative effects on people – think of medicine, law or structural engineering – so States set up licensing requirements to protect their citizens (and to protect professions). States also have licensing requirements for all kinds of other lines of work, from plumbers to morticians. Most States require security personnel to be licensed, too.

Licensing criteria for security include things like age, training and background checks. Internationally, some countries do a decent job such as Israel, South Africa and the UK. Most countries have minimal licensing standards that inspire minimal confidence.

Within the US, licensing requirements vary wildly from state to state. The good news is that most US states (41) do in fact require security personnel to be licensed and thus live up to a set of minimum standards. The bad news is these standards fluctuate so broadly that they are impossible to compare – and that “minimum requirements” can be so minimal that they are basically worthless.

Seven US states require no background checks of security officers at all, and only three have set up reliable programs that utilize FBI data to run in-depth, country-wide security checks even though this is possible under federal law.

Some US states require security personnel to undergo a relatively respectable but, in our opinion, unimpressive 40 hours of training as a minimum. Most ask for far less. Some stipulate annual refresher courses, most don’t. Nine states have no regulations for security personnel at all. Over 20 states require no training of unarmed security at all. South Carolina mandates a grand total of four hours of training to become a licensed security officer, then another four hours to be licensed as an armed security officer. Compare this to South Carolina’s minimum training requirements of 300 hours to become a licensed manicurist, and you begin to get a sense of how arbitrary and ineffective regulatory requirements can be.

Legislative attempts to tighten up regulation get stranded for all kinds of reasons. Anti-regulatory sentiment many places prevents new laws that create new restrictions. Both large security firms and mom-and-pop operations lobby against tighter regulations that would force them to spend more money on training. State agencies balk at legislation that would require better background checks since this would incur more costs for them.

So, what’s a family to do?

Rather than blindly depend on State governments to set standards that are reliable and effective, high net worth families should be aware of the actual requirements that must be fulfilled for licensing where they live and work – then be prepared to go beyond them.

One might doubt that most high net worth families, upon careful consideration of all the facts, would decide that hiring the cheapest licensed security provider or a few off-duty cops is the answer to all their needs and wishes. Unfortunately, we see this happen all the time.

We believe that families need to set their own standards. This is admittedly not a simple thing to do, so most families choose to work with specialist partners to define the criteria that should inform the design of protective programs and then implement them.

We encourage high net worth families to use the same types of criteria that States expect security companies to meet, but to go beyond minimum standards to source vendors and programs that actually work.

These criteria should as a minimum include:

• Sufficient initial and ongoing training in a variety of security skills and additional training in firearm use if relevant. The minimum requirements stipulated by most US states and many countries are far from adequate in our experience. There are other and higher national standards, however, that point in the right direction. Israel requires up to three months training for executive protection personnel; South Africa’s Private Security Industry Regulatory Authority (PSIRA) maintains a detailed set of robust training requirements for a wide range of security functions; the UK’s Security Industry Authority requires a minimum of 140 hours, which we think is a reasonable minimum requirement for executive protection positions, while at least 80 hours should be demanded for entry-level residential security positions. And don’t forget continuing training to keep perishable skills fresh.
• Extensive pre-employment and ongoing background checks that reliably reveal candidates with criminal records and other pertinent issues. In the US, this means more than the superficial background checks that are commercially available. Does the protective security candidate have a history of litigation? Has he or she sued previous employers? What about personal debt and collection accounts? Someone could meet all the criminal criteria but still have cash flow problems that make working with a prominent family, with millions in jewels and cash, an unfortunate incident waiting to happen.  If the family does not have the means to perform sufficient background checks, they should work with a reliable partner who does.
• Quality assurance methods that hold personnel and programs accountable to measurable standards, and proactively combat complacency. If security providers can’t demonstrate how they maintain program quality, they probably aren’t. Families have the right to know how they can determine the readiness of their protective team to prevent security breaches and respond to incidents if necessary. After all, just because nothing usually happens doesn’t necessarily mean that the team is competent.
• Full liability insurance for all protective personnel including workers’ compensation, general liability and professional liability policies. It’s important that families understand all insurance issues – whether they hire security personnel directly or through a third party.

Families don’t need to have all the answers, but asking the right questions and comparing how alternative security providers respond to them will go a long way.