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Are You a Natural-Born Risk Manager?

By Risk Management Bulletin

Some people — managers and business owners included — are just better at managing risk. Maybe it has something to do with personality or natural ability, maybe it has something to do with a more developed skill set or greater understanding of the risk management process — most likely, it’s a little of both. Management consulting firm Accenture decided to explore the question of just what makes a business owner or manager truly effective at handling risk, and here’s what they found:

Top-performing owners and managers:

* rely more on their chief risk officers (CROs) for guidance and advice when developing and maintaining risk management programs and activities
* are involved more with their boards of directors in discussing potential risks and how to handle them
* focus more on emerging risks and strategic risks than day-to-day management of known weaknesses, leading to greater effectiveness and responsiveness when new risks emerge
* are at the head of the pack when it comes to analytics
* excel at recruiting and retaining employees, as well as training them
* face fewer obstacles with regard to board buy-in, employee skill and even budgets

Some of these factors are advantages that not all businesses enjoy. For instance, most managers and even owners find themselves up against budget constraints more often than not, especially where risk management is concerned. But other factors are clearly skills that can be developed and honed. For instance, getting bored buy-in might be easier if you take the time to develop ways to reward your board members in meaningful ways to let them know they’re valued. We’re not talking kickbacks here — just simple ways to let them know you appreciate their time, like a phone call or a thank-you card.

Likewise, learning how to screen employees during the hiring process and implementing effective ways to retain good employees are skills that can be learned. In fact, both of these factors — dealing with the board and handling employees — are people skills that involve a certain degree of insight. If you’re lucky, that insight comes naturally; if not, it’s certainly a skill worth cultivating.

The Affordable Health Care Act and Workers Compensation

By Workplace Safety

It’s a great debate among workers’ compensation carriers and underwriters. What is the effect of the Affordable Health Care Act (AHCA)on workers’ compensation.

No agreement so far as to whether it will raise costs or reduce them. One school of thought has employees going through their AHCA benefits for on the job injuries. The opposing view suggests better service through the workers’ compensation benefit arrangements and moving medical bills to workers’ compensation.

Some predictions:

1. The ACHA will increase awareness among individuals about health care in general and the result will be greater usage of health care facilities.

2. Raising demand will tie up current health care assets and create new ones to meet demand.

3. Companies will need to arrange access to emergency health care needs to assure worker benefits are delivered.

4. Other government health care concerns will be incorporated into business response plans. Americans with Disabilities Act requirements for both employees and visitors will be fully integrated and combined to the highest level of compliance. The Family Medical Leave Act will be somehow combined into workers’ compensation plans to allow the second income time to care for the first.

Whichever direction this new law pushes the workers compensation benefits, or perhaps ultimately absorbs the medical benefits portion of the coverage, businesses must be prepared to provide medical attention for their injured people.

Even the nature of illness and disease is under review. Very recently, obesity became a disease. Twenty percent excess body weight is now a disease which employers must consider in an overall health benefit decision.

Contingency planning should include first response medical attention, alternative transportation, available providers, and rehabilitation services.

A policy of light duty work requires planning before any claim.

Since the workers’ compensation and AHCA begin to merge medical payments arrangements and responsibilities, business must view these traditionally separate benefits as one

Specialty Workers’ Compensation Coverage

By Workplace Safety

The Migrant and Seasonal Agricultural Worker Protection Act does not require employers to maintain workers’ compensation coverage, but allows workers to sue in its absence. Employers are required to insure vehicles in which workers ride to a federally mandated standard.

Federal Employers’ Liability Act (FELA) concerns railroad workers who work on interstate railroads or intrastate rails which connect ti interstate systems. The interstate nature of the rail system required a non-state application of workers’ compensation laws.

FELA allows workers to sue their employers for negligence without allowing the employer the traditional common law defenses like assumed risk or contributory negligence. A comparative negligence standard is used.

The Merchant Marine Act of 1920, better known as the Jones Act, essentially extends FELA benefits and standards to maritime employees. The same recoveries and rights are available to employees and their survivors.

Death on the High Seas Act adds remedy for the survivor family members when an employee dies more than three miles off shore from any state. Seaworthiness of the vessel, negligence, wrongful acts or other torts generally cause this act to be enforced. Remedies are similar to the Jones Act and FELA.

Remedies for injured employees include Maintenance and Cure. Essentially, since the vessel at sea provides food and shelter for the employee, an injured employee is entitled to food, lodging and medical care until the maximum medical cure has been achieved. This standard of care is no fault in nature. The employee does not need to sue to perfect this remedy.

Most companies will not be effected by these special situations; however, consider the globalization trend and worldwide commerce of very small firms. Be aware of maritime compensation or railroad shipping if you plan on using these conveyances, or invest in them. Other industries that cross state or national lines may be subject to specialty remedies in the future.

What are “Conditions” in a Workers’ Compensation Policy?

By Workplace Safety

The conditions enumerated in a workers’ compensation policy define rights and obligations to the parties. They outline governance of the day to day relationship between a carrier and an insured.

Typical conditions include:

1. The first named insured is solely responsible for all insured parties concerning premium payment, communications such as cancellations, refunds, or additional audits.

2. The insured cannot transfer rights or duties to a third party without written consent from the insurance provider. For example, in the case of a merger of two companies, the selling company cannot assign coverage to the buying company, or transfer a favorable experience modification.

3. Policies are considered as one year terms for administrative purposes. Premium rates, modifications or any administrative concern is handled as though the term were one year. Three year policies are fairly rare in the modern era of workers’ compensation. Fixed rate three-year policies have a modifying clause to eliminate this condition. Three-year retrospective plans are calculated on an annual basis, and as such, have lost their appeal to potential buyers.

4. Inspections. The insured must allow inspections of premises and operations so the insurance company can assess safety and loss control concerns.

5. Cancellation. Policies can be cancelled, for example non-payment of premium, under conditions outlined by the state authority. Usually, the cancellation condition includes a front end period, like two months, for the insurance company to decline the risk. The carrier usually must cancel at least some minimum time prior to renewal or the policy automatically renews. Of course, non-payment has a statutory warning and time to correct.

These conditions are important to understand and honor. They protect the insured and the carrier so the governance of the policy is smooth. Typically, conditions establish a mutual respect between the insured and carrier. The right to inspect but the obligation to report back, and offer advice. Mutually beneficial management.

Back Pain – how to reduce the risk

By Workplace Safety

Exercising regularly. Create a fitness culture in your company, maybe provide gym benefits. For back pain prevention, weight control, abdominal muscles and stretching are key.

Stop smoking. Smokeless workplaces have gained in popularity for environmental reasons, but an additional consequence is fewer back issues.

Take a break. Repetitive motion or long periods of idleness create back stress. Sitting for an hour or lifting for an hour can cause back pain. Bending and twisting should be avoided. Bend at the knees and pivot, don’t twist the back, particularly when lifting.

Take a break while driving too. A short walk awakens your mind and neutralizes the cumulative effect of road vibration on your body.

Proper posture. Whether driving, lifting, or completing repetitive tasks, use the proper posture to protect your back.

Safe Lifting. The lower back is particularly susceptible to injury and pain from poor lifting techniques.

* Lift with your legs. Squat and lift rather than bending forward and lifting.
* Proper posture means a straight upper back with a natural lower back arch.
* Test load weight. Push the load with your foot first. Do you need a helper?
* Lift close to your torso, waist level.
* Do not twist your back while carrying anything.
* Use devices like dollies, forklifts, or conveyors.

Back injuries occur in the morning more frequently. Stretch and start light. Get your back ready for more strenuous work.

Back injury prevention requires awareness, so train your employees properly. Those workers who will likely lift should do stretching exercises first.

Design your operation for lighter lifts. Create smaller loads of frequently purchased, used or stored. Don’t store heavy objects higher than the waist.

Pre-hire qualifying should include assessing the weight which can be safely lifted and carried by the individual. And, use a mandatory weight restriction for lifting for all employees.

Motivate the Demotivated

By Your Employee Matters

Employer after employer is faced with hiring low wage earners who are seldom motivated toward high performance. Except for workplace newbies, most low wage earners are there precisely because of their lack of motivation, creating a classic Catch-22 for employers. If it’s true, as the saying goes, that “I’d rather have ignorance on fire than knowledge on ice,” how can you turn up the burners on low wage earners without increasing turnover? Here are three suggestions:

  1. Pay them a bit more. There’s no better example than the In-N-Out hamburger chain located throughout the Southwest. They attract the best in terms of low-wage talent largely by advertising that they pay at least a dollar per hour more than their competitors. Because low wage earners are motivated by survival, security, and the need to belong (in that order) the extra pay makes far more difference to them than it might to someone earning three to five times that amount. Pay them the extra money with the understanding that they’ll be excellent employees. Take a look at their web site www.in-n-out.com.
  2. Show them that there’s a way up. Whether it’s a landscaping business, a retail operation, or telephone bank, every company needs managers and supervisors. Show employees that there’s a career path for them if they follow guidelines and expectations, including training and experience. Offer examples of other employees who have climbed the corporate ladder and the path they had to follow. Have those employees act as spokespeople for career motivation.
  3. Help them belong to something larger than themselves. A classic example is Service Master: They don’t just clean buildings; they provide Service. A sense of belonging enhances cohesiveness and communication, whether it comes from a corporate theme, company uniforms, team sponsorships, or community activities. By the way, don’t assume that you know what your employees want to belong to: Ask them.

Don Phin, Esq. is VP of Strategic Business Solutions at ThinkHR, which helps companies resolve urgent workforce issues, mitigate risk and ensure HR compliance. Phin has more than three decades of experience as an HR expert, published author and speaker, and spent 17 years in employment practices litigation. For more information, visit www.ThinkHR.com.

FMLA and Continued Benefits

By Your Employee Matters

This question was recently asked of the ThinkHR Hotline team: What benefits must be continued while an employee is on Family and Medical Leave Act (FMLA) leave? What should we do with an employee who is not making his share of the copayments while out on leave?

Their expert answer: Family and Medical Leave Act (FMLA) regulations require that employers continue to provide group health benefits under the same terms and conditions as if the employee was actively at work. There is no requirement under the FMLA to continue other types of benefits offered by the employer. Whether or not an employee’s other benefits continue depend on an employer’s established policy. Any benefits that would be maintained if the employee was on another form of leave should be maintained while the employee is on FMLA leave.

Part of the requirement to continue health insurance benefits “under the same terms” means that both the employer and employee must continue to pay their portions of the group health insurance premium, unless the employer has a different policy for managing premium payments during leaves. The employer is required to notify the employee of the payment requirements while on leave, including the amount of the payment, date due, and where the payment should sent. If the employee fails to pay his or her portion of the premium, the employer may be able to suspend group health benefits for the remainder of the FMLA leave.

In order to suspend benefits for someone on FMLA leave, the employer must allow the employee a 30-day grace period to make payment after the original payment due date. The employee must receive written notice at least 15 days prior to the actual suspension, and the best employer practice is to send a pending suspension notice once the employee is 15 days past the payment date. One important item to note is that even if an employer suspends an employee’s health coverage under these terms, the employer is required to restore coverage without penalty or delay once the employee returns from FMLA leave to a level of coverage that is equal to what the employee had prior to the leave and had not missed premium payments. If the employee does not return from FMLA, the employee whose coverage was suspended for failure to pay premiums during the leave would be eligible for COBRA continuation coverage.

Don Phin, Esq. is VP of Strategic Business Solutions at ThinkHR, which helps companies resolve urgent workforce issues, mitigate risk and ensure HR compliance. Phin has more than three decades of experience as an HR expert, published author and speaker, and spent 17 years in employment practices litigation. For more information, visit www.ThinkHR.com.

Rejecting Treating Doctor’s Opinion Could Violate ADA

By Your Employee Matters

An employer who rejected the return-to-work release issued by an employee’s treating physician in favor of its own doctor’s conflicting opinion may have violated the Americans with Disabilities Act.

Facts of the Case: In Williams v. Baltimore City Community College, an employee with a degenerative eye disease took leave under the Family and Medical Leave Act for surgical treatment of her condition. When her FMLA leave expired in September 2008, she was required to submit a doctor’s note substantiating the need for additional leave and to appear for a Workability Examination by the State Medical Director. Her treating physician recommended a return-to-work date of December 10, 2008. However, the State doctor determined that the employee’s symptoms were unlikely to improve enough in the foreseeable future to allow her to return to work on that date. The employee was subsequently terminated, and she brought suit against the employer for discrimination and failure to accommodate under the ADA.

The Court’s Decision. The Court rejected the employer’s argument that the employee was not disabled. Under the ADA, a person is disabled if she: (1) has a physical or mental impairment that substantially limits one or more major life activities; (2) has a record of such an impairment; or (3) is regarded as having such an impairment. In this case, the Court found that the employer could have regarded the employee as having such an impairment – although the employee’s own doctor stated that she could perform the essential functions of her job starting on December 10, the employer chose to discount that opinion and rely instead on the State doctor’s opinion that the employee could no longer perform her job.

The Court, however, dismissed the employee’s claim that the employer failed to accommodate her disability. Under the ADA, there is “no obligation to provide an accommodation to an employee who is simply ‘regarded as’ disabled.”

Lessons Learned. The ADA does not specify whether the doctor providing medical information to the employer should be the employee’s provider, or whether the employer may select the doctor to evaluate the employee and respond to the request for information. The EEOC expresses a preference for the employee’s own doctor, but acknowledges that the employer may choose the doctor if the employee’s doctor does not or cannot provide sufficient information to substantiate the disability and/or need for accommodation. An employer who has chosen to send the employee to its own doctor, in addition to receiving information from the employee’s doctor, faces a conundrum when the doctors’ opinions conflict. Under the EEOC’s approach, the employer should not simply reject the opinion of the employee’s doctor without any indication of why such opinion is deficient – and without giving the employee’s doctor a chance to address any such deficiencies.

Don Phin, Esq. is VP of Strategic Business Solutions at ThinkHR, which helps companies resolve urgent workforce issues, mitigate risk and ensure HR compliance. Phin has more than three decades of experience as an HR expert, published author and speaker, and spent 17 years in employment practices litigation. For more information, visit www.ThinkHR.com.

Editor’s Column: Frustrated with HR People

By Your Employee Matters

I find myself frustrated because companies and those in the HR Function won’t allow me to help them as much as I can. I’m frustrated when I see the trivial feud of HR Executives truly trying to make a difference and be excellent. I’m frustrated when I speak and exhibit at a conference and the attendees are more interested in getting their CEU credits and whatever you’re handing out at your exhibit than they are truly learning things from the speakers or the vendors. I am frustrated because HR Executives as a group have not exhibited the dedication, vision, nerve, defiance, edginess, etc. that I like to be associated with. And unfortunately, we have relegated the concept of relationships at our companies to these executives.

HR has to take it on the chin and realize that there’s good reason for the harsh criticism. They have to take it as a wakeup call and an opportunity. HR represents an incredible opportunity that few organizations or individuals are committed to. Those who are committed to the process of building human excellence will generate additional values at their companies and in their personal lives. So, there’s a choice, either you kick ass at HR and receive the rewards or you stay in your comfort zone and continue to get run over.

Perhaps the two greatest impacts on HR over the last few decades have been technology and the law. It’s gotten to a point where we can access all levels of data regarding our operations. Human Resource Management System and Human Resources Information Systems have been designed for every level of size and complexity. Technology has also been utilized to organize performance management. Managing a HRIS system is like managing information on steroids. The reality is that while many of these companies pump the time saving advantages of being able to pull various reports, few executives ever find the time or reason to pull them. As a result, the technology is utilized at its lowest common denominator.

The most drastic employment law changes in the workplace have occurred during my career. When I began my legal career in 1983 most of the law was concerning union work. Few people brought sexual harassment, discrimination, or other statutory claims. That was primarily handled by agencies such as the Federal EEOC and the California DFEH. Over the last 30 years, the amount of law that one has to know related to the HR function has easily quadrupled. Go to an HR conference today and you will see at least half of all presentations being related to compliance.

Don Phin, Esq. is VP of Strategic Business Solutions at ThinkHR, which helps companies resolve urgent workforce issues, mitigate risk and ensure HR compliance. Phin has more than three decades of experience as an HR expert, published author and speaker, and spent 17 years in employment practices litigation. For more information, visit www.ThinkHR.com.

Key Man Insurance

By Business Protection Bulletin

7655 Key Man Insurance

Small and medium-sized businesses often have employees that are “stars.” Sometimes the star is the CEO or president, other times there is a salesperson who consistently outsells every other sales team member by a two to one margin. A software company has a star coder whose ideas led to your product being a number one editor’s choice. The point is that most companies have an employee or two that helps their business thrive. What happens to your business in the short-term if a star employee, referred to by the insurance industry as a “key” employee dies?

Death is an issue that most people do not like discussing; so, many small and medium-sized businesses do not have detailed succession plans, and key person life insurance remains an unresolved issue. It is a discussion that helps your company survive hard times that follow the death of a key person.

What is Key Person Life Insurance?

Keyman life insurance protects a business from economic loss relating to the death of a key employee. The company buys the insurance, owns the policy, and is the beneficiary of the policy in the event of the sudden death of the insured. Payment from the insurance company to the business is a lump sum, and there are no restrictions on how the company uses the money. Most companies use the money to stabilize the business until they find the key person’s replacement.

Types of Keyman Life Insurance

Businesses gravitate to two kinds of policies for key employee life insurance.

Term Life Insurance: startups favor this type of policy. As startups always try to conserve cash, term life insurance is cheaper than any other kind of personal life insurance.
Policies that build cash value: Whole life or universal life insurance builds cash value that increases the cash value of the policy and is an asset on the company’s book. The company can get access to the excess cash value of the policy at any time for any purpose as the money from the cash buildup belongs to them.
Life insurance premiums vary between companies and smart companies comparison shop for the best insurance program.

The discussion is uncomfortable, but, if you do not have key man insurance, act now.