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Fall Claims – Costs and Modification Effects

By Construction Insurance Bulletin

Falls account for almost one quarter of all industrial accidents.

These incidents can be avoided:insuranceclaimcategory

1. Use proper handrails.
2. Use proper guardrails.
3. Use properly installed scaffolding and tie-off roofers.
Train employees to carry appropriate sized loads to reduce strain and increase visibility.
5. Automate any product movement in the construction process.
6. Level all walking paths inside and out. Avoid stairs and elevation changes wherever possible.
7. Employees must wear appropriate footwear, non-skid.

Fall claims are expensive, about $19,000 on average. For a typical small contractor, their workers compensation modification (mod) will rise about twenty percent per year for three years, from one claim. The insurance company will probably not offer reduced preferred-rate coverage either.

Large contracting companies will suffer a lower percentage increase, but on a greater amount of premium. Still costly.

Doesn’t it make more sense to invest a few dollars to work safer than to pay a premium for ignoring the risk?

From the beginning of site work, grade the walkways and parking areas to level them. Stone or pave areas prone to becoming muddy or slick in foul weather. Make sure building entries are clear of debris and any elevation change is visually marked with bright tape or signs.

Storage areas, whether inside or outdoors, need to be kept clean and orderly. Assign space to each contracting crew.

Use proper tie-off techniques for ladders. Secure scaffolding properly and restrict access. Harness and tie-off roofers.

Inspect the interior work to assure proper waste removal. Material such as sheet rock scrap accumulates in minutes causing trip hazards. Sweep up screws and nails quickly. Keep five-gallon buckets against walls rather than the middle of floors.

In other words, consider what might present a trip hazard, how falls can be prevented, and what material might create a slipping problem. Remove the hazards and install guards as needed. You’ll receive a reduced premium in return.

Legislative Proposals to Watch: changes in workers compensation

By Workplace Safety

Legislatures in many states have new issues to deal with regarding workers compensation insurance, but more importantly, workplace safety.

The elephant in the room is medical marijuana. Now that states have legalized medical marijuana, is it legal to drug test for that substance? Certainly the reasons for testing have not changed. Can employers test for it and then require any positive test be backed up with a doctors prescription? Legislatures struggle with the consequences of these laws now, and will for the next few years.

Somewhat connected to the medical marijuana question is drug formularies. Formularies are essentially a list of preferred drugs to use including generics. Doctors treating workers’ compensation injuries are required in some states to follow the guidelines and prescribe the pre-approved medication only, not the branded version of the drug. The cost savings has proven to be small, but worth pursuing.

Companies opting out of workers compensation is under review. So far, only two states have an opt out provision, and so few participants do not allow a meaningful analysis. Texas and Oklahoma allow opt outs, but both states are currently reviewing changes to the program. South Carolina and Tennessee are considering this option. The new workforce of part-time and independent contractors will muddy these waters even more.

Over the last decade, more attorneys have become involved in workers’ compensation claims. Originally and still essentially a no fault system, minimum litigation is a goal. States are considering capping legal fees in workers compensation cases, which, on the surface, suggests the most outrageous employer behavior will be difficult to fight. The over-litigated smaller claims will continue being pursued. This topic is worth watching in the state courts.

The most common cost containment legislation involves fee schedules. Overall, the medicare fee schedule acts as a basis for workers’ compensation allowable fees. With the Affordable Care Act inception, this model may change. Cost containment is, however, a universally important issue.

Allowable drugs in the workplace, cost containment, and corporate financing of costs lead the legislative agenda for workers’ compensation this year.

Why Wrap-ups Are Becoming More Popular.

By Workplace Safety

Wrap-ups cover the risks associated with an overall development project from inception to harvest. Rather than each individual contributor handling their own risk management, an overall program is implemented for workers’ compensation, general liability, even professional construction management.

Either the general contractor or the owner provide the master policy, and then the subcontractors and various stakeholders join by certificate or additional insured status.

These arrangements are becoming more popular in response to the contracting industry. Multi-state mega-contractors hire smaller, even boutique firms of craftsmen to detail the project. Risk managers tend to over-request limits from these small firms, eliminating them from competing for the work. The crew installing marble in an elevator lobby does not require ten million dollars of umbrella coverage over a two million dollar general liability policy. Nor does the suspended ceiling company.

The general contractor does need high limits, as does the owner. They don’t need to eliminate the best craftsmen over a relatively inexpensive add-on to their own policies.

The solution is the wrap-up.

Each contractor contributes to the insurance pool with proportionate payments based on contract amount. Overall, everyone receives better protection for less money, fewer cross suits, and centralized, cooperative site safety rules. The wrap-up reduces paperwork associated with chasing down certificates and spot checking legitimacy of the paper work.

Negotiate a site insurance premium and control that cost. The better spread of risk should allow for some discounts. Reduce the number of safety inspectors and conflicting advice.

Set safety rules for the site in terms of proper attire, personal protection, and documentation of the safety program and claims.

Require the contractor with the most control of a work area to be responsible for that work zone. Enforce that authority.

Wrap-ups reduce administrative costs overall, provide security that all contractors are covered more than adequately, reduce claims among the contractors, lower project costs, and lessen the conflicting and time-consuming effects of too many loss control providers.

Check out wrap-up solutions for your next multi-million dollar project.

Workers Compensation: Why Pay-As-You-Owe Policies are going self-reporting regardless of payroll service

By Workplace Safety

Pay-as-you-Owe (PAYO) is fast becoming a premium structure for modern workers compensation policies. Since payrolls shrank and grew dramatically over the past eight years, business has demanded a way to smooth out workers compensation payments to more perfectly reflect current operations.

Wild swings between estimated premium and actual audited premiums have been an issue for agents as well. Large return premiums mean large return commissions. When an audit affects last year’s commission earnings and then the current year is adjusted accordingly, the agent loses two times the reduction in one year. A financial burden proving too much for many agencies.

The many advantages to PAYO include:

1. Cash flow for the insured.
2. Premium payments align with pay periods or monthly.
3. Pay electronically, online.
4. Available at relatively low premium levels.
5. Easier audits
6. Reduction of audits with disproportionate changes in premium.
7. Easier for agents to monitor changes in operations.

Of course, insureds enjoy better cash flow when they can tie premium payments to current operations. Agents appreciate PAYO too. It’s much easier to catch wild swings in the size of operations, and therefore, the appropriateness of coverage or plan design for the insured.

PAYO premiums produce reliable commissions. The agent can count on that premium to be earned. The agent can budget accordingly.

One of the biggest sources for client disgruntlement has been audits. Sometimes because of the size of the audit, but usually the timing of both the audit and the additional premium demand are inconvenient.

Any seasonal business, or business with uneven, or maybe unpredictable payroll benefits from PAYO. Business that moves among states, like a road crew for a musician, or a professional sports team, benefits by paying the correct state rate when picking up local labor. In effect, each pay period is a mini-audit.

Can PAYO benefit your business? Probably so.

Employment Practice Liability Insurance and the Impact on Workers’ Compensation

By Workplace Safety

The effects of Employment Practices Liability Insurance (EPLI) on the Affordable Care Act (ACA) and by extension, Workers’ Compensation Insurance (WC) has not yet been fully understood.

Employers are sued for unfair labor practices such as wrongful termination, unfair pay, discriminatory hiring practices, and now, cutting employee hours below thirty per week to avoid inclusion under the ACA.

Under the Employees Retirement Income Security Act(ERISA), employers cannot interfere with employees benefits. As employers reduce an employee’s working hours to disqualify them from company paid ACA benefits, some courts are considering whether this constitutes interference.

The ACA, given its universal nature, brings into question the no-fault medical aspects of workers’ compensation, particularly for independent contractors. Can a company safely assume their independent contractors have full medical benefits as a result of ACA? The ACA does not mention a coordination of work related medical costs with workers’ compensation.

These facts combined lead to more part-time workers and independent contractor status. Both employment conditions move the employee to a home office or remote location, further shifting traditional company overhead costs to employees.

Premium for part time employees is charged as payroll multiplied by the rate. In competitive states, insurance companies give fewer discounted rates to companies with a high percentage of part time employees. If an employee only works twenty hours per week, adequate safety training takes twice the percentage of time compared to a traditional work week. Safety becomes expensive.

Independent contractor status solves the thirty hour threshold issue, but complicates the workers’ compensation issue. Technically, the independent contractor should provide a certificate of insurance to the employer. If the ACA does not coordinate benefits for job related injuries, the independent contractor pays for the same benefits twice.

If the company provides the workers compensation, their carrier will certainly raise the rates for covering uncontrollable workers.

These issues will be worked out over time. Until then, keep the EPLI in force with higher limits.

Five Great Hiring Ideas…and a Fun Bonus Idea!

By Your Employee Matters

jobs (1)Hiring great employees is a never ending challenge for most all employers. Here’ a few ideas to help you stand out from the crowd:

1. Include a brief slide deck or video explaining the job opportunity on any job posting page. Make sure the link is mobile-friendly. If you do not know how to do this, ask one of the 20-somethings in your workplace and they can do it for you. Make sure you get a YouTube and SlideShare account.

2. Identify what skill and cultural characteristics matter most. Have your employees talk about it on a video. For example, are you hiring in the top 25% of skill sets? Is there a place where applicants can actually get themselves tested to see if they pass muster before you ever interview them? Also, what type of culture, attitude or personality are you looking for? Spell it out for people. You may be a crazy, fast-paced, frantic company. If so, say you are looking for people who thrive in such an environment. Conversely, you may be a laid-back, family business that’s really not interested in hiring Type A’s. Let them know that too.

3. This is a knowledge economy. Find out if applicants are learners. What have they done to educate themselves, given their career aspirations, over the last year? What books, magazines, courses have they paid for on their own? Also ask them what they’ve learned about the company at the beginning of the interview process and then follow up with the very same question at the end in light of the interviews they went through.

4. You are hiring people to solve problems. Most problems have two aspects to them: strategic (ideas) and tactical (actions). Put your biggest problems in front of candidates and ask them what strategic and tactical steps they would take to help you solve it. You should gain a lot of valuable information- even from those candidates that you failed to hire.

5. Do a committee interview of the three final candidates. Depending on your circumstances, include a mix of panelists with employees, managers and others on it. Keep the panel to three people. Then have that panel prepare three interview questions they will ask of all three candidates. This means that a total of 27 questions will be asked at a minimum.

When doing this committee interview, you are not just focused on the candidates’ answers, but how those candidates treat each other through the competitive process. It will tell you a lot about their personality and how they will treat fellow employees once they are hired.

Fun bonus idea – Ask job applicants to provide a joke with their resume. That’s right, a joke. It will tell you a lot about their personality. If they don’t supply a joke, well, they can’t follow instruction and you don’t hire them. When they do supply a joke, it will let you know if they are capable of political correctness in the workplace. Anyone who provides a racy joke should be reconsidered, unless that’s the type of culture you are nurturing. Lastly, it will help the interview process go much faster and you’ll get a few laughs along the way.

In the comments section below, don’t hesitate to add some of your great hiring ideas.

THE CAUSES OF WORKERS COMPENSATION RETALIATION CLAIMS

By Your Employee Matters

Ohio-labor-law-workers'-comp-articleEmployer can get in trouble when their managers retaliate against an employee who files a workers compensation claim. In some states the employee may bring wrongful termination and other lawsuits. In other states, like California, the remedy is within the work comp system, known as a 132(a) claim. When filing a Section 132(a) claim, “in addition to establishing that the industrial injury has resulted in some detriment, the worker must also prove that he or she was singled out for disadvantageous treatment because of the injury.” This is typical of language found in other states.

Conduct that will not result in a retaliation claim:

Where there is truly no work available.
Where the employee is unfit for duty because they will risk further injury or aggravation to an injury.
Where there are safety issues related to the employee or third parties.
Where there’s a business necessity (such as lack of funds or a change in company direction).
If they were terminated for cause (and consistently with how others were treated in engaging in similar wrongdoing).
If there’s a layoff or reduction in force.

Conduct that can generate claims:

If there/s a change in pay, hours or duties without a legitimate business justification.
Where they were “singled out” or otherwise treated “differently” than others causing discrimination claims.
Where the company makes return-to-work or light-duty decisions without medical proof.
Where employees are placed in demeaning light duty positions.
Forgetting the ADA and FMLA also impact on return to work decisions.

QUESTION: TRAINING: WHO PAYS?

By Your Employee Matters

Question:
Do we have to pay a nonexempt (hourly) employee to complete training courses outside of his normal working hours when it is a requirement for the job?

Answer:
The following information is excerpted from the U.S. Electronic Code of Federal Regulations:

Employees who spend time at lectures, work courses, employer-sponsored training programs or employee meetings must count that time as hours worked for pay purposes unless all of the following criteria are met:

  • Time is outside of normal working hours.
  • Coursework is unrelated to the employee’s regular job, such as learning the requirement of a new or higher-rated job.
  • Attendance is strictly voluntary (except for continuing education training).
  • No production work is performed.

Here are additional pointers on the legal obligations involved:

  • An employer must compensate for mandatory training time unless it’s directly related to professional licensing;
  • If an employee is required to attend training on a day not normally scheduled they must receive at least a half day’s pay;
  • Time spent on voluntary training is not compensable if it’s outside normal working hours and not directly related to the employee’s job. For example, training a programmer on using a current application is compensable; paying for an MBA program so the employee can become a future manager is not;
  • Training that directly benefits an employer is always compensable. For example, new-hire training on welding procedures on an object eventually purchased by a client is compensable; voluntary welding training that results in no end product is not.
  • Training expenses can be reimbursed on a pro-rata basis if an employee agrees to do so beforehand and leaves the company a short time afterwards. So, if the employee goes through a year-long training program that costs the company $10,000 and they take another job a month later, it’s appropriate to demand reimbursement for most, if not all, of this expense;
  • An employer that operates a for-fee training program cannot use completion of the program as a condition of hire.

To learn more go to http://www.dol.gov/whd/regs/compliance/WH1312.pdf

Editors Column – US Supreme Court Rules Employers Cannot Refuse to Hire Applicants Based on Religious Belief or Practice, Even If Not Specifically Asked for an Accommodation

By Your Employee Matters

DonPhin (1)Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc.
In 2008 Abercrombie refused to hire 17 yr. old Samantha Elauf, a practicing Muslim, because the headscarf that she wore pursuant to her religious obligations conflicted with Abercrombie’s employee dress policy which prevented the wearing of “caps”. Interestingly Ms. Elauf was a customer of Abercrombie and wore their clothing during the interview.

In 2009 the Equal Employment Opportunity Commission (EEOC) filed suit on Elauf’s behalf, alleging a violation of Title VII of the Civil Rights Act of 1964. That case went to trial where Ms.  Elauf obtained a $20,000 jury verdict. On appeal, the 10th Circuit in 2013 reversed the trial result ruling that Ms. Elauf did not request an accommodation for her religious practices.

Last week, the U.S. Supreme Court overruled the 10th Circuit opinion and held in an 8-1 decision written by Justice Antonin Scalia that an employer may not refuse to hire an applicant if the employer was motivated by avoiding the need to accommodate a religious practice. Such behavior violates the prohibition on religious discrimination contained in Title VII of the Civil Rights Act of 1964.

EEOC General Counsel David Lopez hailed the decision. “At its root, this case is about defending the quintessentially American principles of religious freedom and tolerance,” Lopez said. “This decision is a victory for our increasingly diverse society and we applaud Samantha Elauf’s courage and tenacity in pursuing this matter.”

According to the Supreme Court, “An employer who acts with the motive of avoiding accommodation may violate Title VII even if he has no more than an unsubstantiated suspicion that accommodation would be needed.” The court continued that “…to accommodate a religious practice is straightforward: An employer may not make an applicant’s religious practice confirmed or otherwise, a factor in employment decisions.”

“I was a teenager who loved fashion and was eager to work for Abercrombie & Fitch,” said Elauf. “Observance of my faith should not have prevented me from getting a job. I am glad that I stood up for my rights, and happy that the EEOC was there for me and took my complaint to the courts. I am grateful to the Supreme Court for today’s decision and hope that other people realize that this type of discrimination is wrong and the EEOC is there to help.”

To assist employees and employers in understanding their rights and obligations about accommodations for religious observances, the EEOC has a fact sheet on Religious Garb and Grooming in the Workplace. Religious Garb and Grooming in the Workplace

The only dissent was by Justice Thomas who used to be the head of the EEOC. He said the Court has drastically changed EEO law by turning this into a direct discrimination case as opposed to analyzing it as an indirect, disparate impact case, which turns on business necessity analysis.

Practical pointers:
1.      Otherwise “neutral” policies on their face (no caps, no beards, requirement to work on Saturday) can create direct discrimination claims even if there is no intent to discriminate. If any part of the decision not to hire implicates religion the employee or job applicant can sue. In addition the employee has no obligation to request a religious accommodation.

2.      Under ADA law, individuals with disabilities get preferential treatment. For example, someone who can’t drive to work may be accommodated by working from home, even if the company has a no-telecommuting policy. The only “out” for the employer is to prove undue hardship. Same thing applies to religious discrimination and accommodation. In this case Ms. Elauf gets preference over other “cap” wearers. Interestingly, accommodation didn’t really come up in the case because it was never discussed at the time of the no hire decision.

3.      The case leaves many questions unanswered. For example, let’s say she was applying to be a bikini model. Would she have the right to appear in ads wearing her headscarf? What if she wore a skull cap to hide the fact she was bald from undergoing chemotherapy treatment? What if he wanted to wear a full burka to work? What if you have a no tattoos showing policy and they are being asked to cover a cross they have on in support of their religious beliefs? Drawing the line will be difficult for employers. Also unanswered is whether there would be no liability if in fact the employer had no clue the garb was for religious purposes (which was not the facts in this case)?

4.      If an employee or applicant violates a dress code or “look” policy make sure to rule out religious or disability accommodation concerns. Sometimes you will simply have to ask that person if they dress that way for religious reasons.

5.      Train your managers. Make sure they understand not just about race, age and sex discrimination but also religious discrimination and accommodation.

Exclusions to Your Renters Insurance Policy

By Personal Perspective

Renters insurance covers your personal belongings in case they’re stolen, damaged or lost. There are exclusions to your renters insurance coverage, though. While you don’t want the exclusions to keep you from buying a policy, do know the facts as you ensure you have the coverage you need.

Excluded Items

Nearly all the items you own are covered by your insurance policy if they’re lost, damaged or stolen. However, valuables like jewelry, antiques and furs may require a rider or endorsement. Likewise, any items you use for business purposes may not be covered by your renters insurance policy because it’s typically reserved for personal not commercial property.

Excluded Events

Certain events are also covered, including fire, smoke, lightning, hail, some water damage, certain types of wind storms, explosions, riots, broken glass, falling objects and more.

You’ll need to read the fine print of your policy to find exactly what’s included. Typically, your personal property is not covered if there’s an:

Earthquake
Hurricane
Flood
Power failure
Neglect
Intentional act
War
Nuclear hazard

Most insurance companies do offer riders or endorsements that can cover your property if an earthquake, hurricane or flood strikes. Talk to your agent to learn more about your options.

Limits on Renters Insurance Policies

In addition to considering the exclusions to your renters insurance policy, consider limitations, too.

1. Your property is only covered for the amount of the policy even if they’re worth more.
2. Remember that you’re responsible to pay the deductible.
3. If you chose Actual Cash Value replacement, you’ll receive the equivalent of the item’s current value minus depreciation. Replacement Coverage allows you to replace the item at its current cost no matter how old or in what condition your property was at the time of damage, theft or loss.

When choosing renters insurance, ask about exclusions. Use that information to make sure you’re adequately insured for all the challenges you face.