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Understanding Your Commercial General Liability Insurance Will Absolutely Save Your Business From Financial Ruin

Most businesses who purchase commercial general liability insurance have little understanding of how it’s structured and what is important. Instead they focus on the amount of limits offered per occurrence and the premium being charged for those commercial general liability insurance limits for their comparison when making their purchase decision. We are here to tell you those are the last 2 data points ( coverage limit & premium) to consider when evaluating your current liability insurance program. It’s a classic price vs cost conundrum.

Over the next few paragraphs we will break down for you the critical components you should use when evaluating your commercial general liability insurance program. The goal here is not to provide a Master’s Class in understanding all of the nuance with respect to commercial general liability insurance. Instead it’s really to get you to consider engaging a Risk Advisor by clicking here to do the evaluation for you. Often times a RISK ADVISOR will not charge you to do the evaluation .

If the RISK ADVISOR is good at what they do they will first understand how you make your money, who your customers are , where you operate, and importantly the contracts that create both upstream and downstream obligations for your company. Understand, your Commercial Insurance Program is always a trailer , it never leads. It reflects and finances potential future losses more efficiently that using your own operating capital. To properly design ANY commercial insurance program both the broker and the customer need to spend time discussing in detail the operational components and risk profile of the business. Contingent on how , where and who you make your money from will determine this critical exercise. it can be fairly simple to pretty complex. You do the heavy lift once , then tweak it yearly to adjust or iterate as your business evolves.

QUICK TIP : You can tell how good the Risk Advisor is by the questions they ask, the process they put forth to understand your business. If it’s ad-hoc, only takes a few minutes that’s a big red flag. Did they analyze your loss runs, contracts, licensing agreements, laws you may be subject to in operating your business, future goals?

We say insurance is always a trailer because the real purpose of insurance is to transfer a future potential “net income loss” (defined as income you would have had except for a particular event), from YOUR balance sheet to the insurance carriers balance sheet for the lowest premium possible. Here is the key phrase AS MUCH RISK AS POSSIBLE for the LOWEST PREMIUM available. More on that later and why that is so important.

Here is the primer I promised before I went off on a tangent to frame this EXPLAINER.

COMMERCIAL GENERAL LIABILITY INSURANCE : The best way to remember this section; there is a reason it’s called “GENERAL LIABILITY”.  The reason, its general (non-specific) , kind of plain vanilla , designed mainly to cover the general public. It is NOT designed to cover for losses involving hiring , firing , management practices for your employees. It is NOT designed to cover your customers for specific errors , omissions , designated professional practices as it relates to the duties you perform.

It’s the most generic form of commercial liability insurance available to a business to insulate them from future 3rd party losses.  Commercial General Liability Insurance is designed to cover losses you may be responsible to ,a 3rd party, typically the general public for a loss or injury they may have suffered. Think of a pedestrian that slips and falls outside your retail store. They litigate against you and the building owner. The building owner will have their own commercial general liability insurance as will you. Who pays will be determined by the details of the incident and your lease which covers your business obligations.

If you want to understand what your commercial  general liability insurance policy covers start with what it DOESN’T COVER by going right to the EXCLUSIONS section of the policy. There you will uncover  how potentially woefully inadequate the coverage truly can be.

Without getting too much into the weeds here let me highlight a few key risks & exposures you may have that will NOT be covered in your commercial general liability policy.

CLAIMS BETWEEN YOU & YOUR EMPLOYEES: 

  • Harassment : Could be sexual, could be gender based, could be you just have a bad egg in your midst that is a bully to their co-workers or subordinates. It’s take very little for an employee to file a harassment complaint with the Department of Labor in your State, which will trigger a very expensive Dept of Labor audit. Worse they could lawyer up as they know or have heard it’s an easy way to make a quick buck. They are right, most of these claims come to some financial settlement where your business pays the employee money instead of expensive litigation.
  • Wage & Hour : These are hugely expensive to a business. Primarily because the audits are invasive, word spreads to ex-employees who want to be on the gravy train, the cost to defend (Employment Attorneys) are expensive. Finally the settlement, if it’s determined that you did not properly pay overtime or other wage related claims.

Just google WAGE & HOUR lawsuits in your industry to read some of the horror stories. It won’t take long for you to determine that having an employment practices liability policy is essential for the continuity of your business.

These are just (2) quick examples. There are far more, like discrimination. Bottom line you MUST transfer this risk to an insurance carrier for a premium as it’s too expensive to retain.

CLAIMS INVOLVING DIFFERENT TYPES OF SERVICES YOU PERFORM:

Examples here would be services that are technical and requiring licensing, specific training e.t.c. A specific example here might be a home healthcare agency that provides at home services for the elderly. If in their daily routine it’s asserted the home health aide fails in their duties or is negligent, a patient falls breaking their hip, the home healthcare agency may be held liable if they were negligent in their duties resulting in a significant injury. Even if you feel you were not negligent, the cost to defend yourself going to the matt on the suit will be crazy expensive , even if you win. Unless the Home Healthcare Agency purchased PROFESSIONAL LIABILITY INSURANCE  , they are funding this very expensive loss themselves. The cost to defend such an event is easily 6 figures, say nothing of the settlement.

Many non-profits perform services for their “clients” that require specialized services that are typically excluded on a commercial general liability insurance policy . They may provide elder care, youth services, counseling, legal services, placement services e.t.c. Much care needs to be taken to properly understand your risk and exposures to loss , then decide if you want to transfer that risk or exposure to  insurance carrier for a premium.

Often with non-profits we conduct a simple contract for services audit to understand what services they have been retained to deliver. Then we audit the professional liability policy to check if that exposure was contemplated . In a recent services audit for a local non-profit we determined that the  non-profIt , who was providing job placement services for disadvantaged youth , did NOT have the correct coverage for those services. Their Professional Liability policy did not include molestation coverage which could be critical if they placed that youth in a situation that led to an “event”. Just the assertion of the event could wipe out years of operating budget.

In the above example they did purchase Professional Liability coverage however without that audit , understanding their true exposure to loss , there was the potential for catastrophic failure if someone pointed a finger. Too often , without an audit these non-profits or other business organizations learn of the deficiency after they get the claim denied, making their education very expensive.

CLAIMS DUE TO AN ERROR OR OMMISSION :

In many service organizations, failure to perform a certain job function may result in damages to either your customer or the general public. An example might be a construction firm that improperly installed weep holes in the masonry facade of a building. Water built up behind the masonry wall going undetected for a period of time, ultimately resulting in the façade collapsing onto the street below. This actually happen to one of our clients.

Since they purchased Construction Errors & Omission insurance from us the loss defended and the damages covered. Mostly the re-purchase of new materials  and  labor to install the material  as well. Architectural fees, scaffolding, permits e.t.c. were also covered. The cash provided to investigate, defend and ultimately finance the repair was all paid from the construction errors & omissions policy. This had the affect of allowing the business to keep it’s cash flow, budgets and profits in tact. Errors & Omissions Liability Insurance is available to most service businesses, not just construction.

CLAIMS DUE TO A DATA BREACH :

This one can be fairly complex, with lots of potential for errors. Imagine you get an email from a Hacker stating that unless you pay them a ransom, they are going to slowly release all of your customers private information out into the web. Further they will tell your customers where they got the information and that you refused to pay the ransom which is why all their data is exposed. Imagine your a divorce attorney, a child psychologist, a financial advisor.

There are many examples I can give whereby your customers data or your customers systems are hacked due to a virus that may or may not have come from your network. The mere fact someone may point a finger at your company and make the assertion the hack started from an email your company sent is going to be a 6 figure event.  Further they can be very, very expensive to defend. In States like NY where they passed the SHIELD ACT the fines alone from a State or Federal government can put you out of business as the fines are well into the 6 figures.

In this situation you need a standalone Cyber Liability Insurance policy.

QUICK TIP : NEVER think you have coverage for Cyber liability just because your carrier added an endorsement onto your policy with a $ 1 mil limit stating they are covering  you for a cyber liability event.  Those endorsements fall woefully short of giving you proper coverage. They are hollowed out coverage forms that give the false impression you have coverage. This will only come to light when you file the claim , resulting in a denial.

CLAIMS DUE TO A FAILURE TO COMPLY WITH GOVERNMENTAL RULES & REGS: 

Sadly most companies aren’t aware that as a private company you have exposure to loss from rules , regs, codes that create obligations for your company for failure to comply. In this situation a Directors & Officers policy will help provide defense and in some cases help pay for the fines, or settlement due to these code infractions.

QUICK TIP : ON PRICING FOR ANY TYPE OF COMMERCIAL LIABILITY INSURANCE POLICY :

Pricing is predicated upon a “BASIS” ; a unit of measurement that the carrier determines best reflects their actuarial tables to determine the probability of a future loss. This is how they arrive at a premium. Some carriers are flexible with the “Basis” , others are not. They use one type of basis for determining the premiums they charge. You should determine up front what is the best possible “BASIS” for your company to yield the lowest possible premium.

Examples of “BASIS” would be :

  • Payroll
  • Sales
  • Units
  • Square Footage
  • Contracts

Contingent on the basis chosen the carrier applies a formula to the chosen basis to arrive at the premiums charged. A huge variable in that formula is your company’s loss pic (loss picture). This is the ratio of historical premiums charged versus claims paid out. Essentially , how much profit has your account generated over the previous 5 years based on incurred loss. For more on LOSS PICS , CLICK HERE.

We plan on doing a future piece just on pricing of Commercial General Liability Insurance as it’s way too much to tackle here.

A final thought  there are many risks and exposures that a typical commercial general liability insurance policy will disclaim. We cannot stress enough that a thorough evaluation with a qualified RISK ADVISOR of how you do business, where you make your money, how you make your money, from who you make your money is the ONLY way to properly insure the risk.

You cannot properly transfer risk or finance risk that hasn’t been indemnified. Further, unless you stress test your insurance program BEFORE a loss occurs you are setting yourself up for a very expensive lesson.

 

Claims Management, Commercial Auto, Construction Practice Group Content, Food & Beverage Practice Group Content, General Liability Insurance, Human Services Practice Group Content, Interview, Other, Risk Management, Transportation Practice Group Content, Workers Compensation Insurance, Workers Compensation Premium Audits

A Fireside Chat with A Claims Adjuster

Our Claims Advocacy Team got to sit down with a workers’ compensation claims professional who specializes in high exposure claims. They discussed a high exposure claim that wasn’t reported timely to the carrier after the incident occurred.  

 

Please Note: This article has been edited for clarification and to protect the identities of those involved in the interview.

 

We’ve decided to call this interview a “Fireside Chat with a Claims Professional”, please tell me, are you actually in front of a lit fire or a fireplace or at least a match? 

Yeah, I have a nice scented candle lit, some nice ambiance for the room. 

What is your current role in the claims process? 

I oversee about 500 files, not directly managing the day to day activities and tasks to move a claim forward, but looking at it from a strategic standpoint, whether it be return-to-work, a settlement, or the resolution of some litigated matters.  I also assist clients in resolving their existing claims files.

Can you describe what a heavy litigated file/high exposure claim is?

Yeah, high exposure is really like your catastrophic claims. For example, someone who might be a paraplegic, quadriplegic, someone that suffers from a traumatic brain injury, or spinal cord injury. Those are leaning towards your high exposure. 

Heavy litigated are files that are going to essentially set a precedent in future case law and how it can impact lawyers and insurers in the future. 

Is the insured involved in the process at all? Or by the time that the issue reaches your hands is it completely out of the insured hands? 

I feel like most of the time the employers (named insured) are aware that I’m working on their files as a resource. Oftentimes I can be involved in the claims review process to help bridge some of the gaps that may be present, with the knowledge to move that file forward. 

 

However, It depends on the account and the type of policy that’s written because they (the insured) may be hands-off. They may have paid their deductible and then the claim is no longer the named insured’s problem. So they leave the claim up to the carrier going forward. 

 

You mentioned once their deductible is paid they often have a hand-off approach because it is no longer ‘their money’. Does the claim, the amount paid on the claim, and the amount paid from the deductible have an effect on their insurance? 

 

It has an impact on their rating. It affects their E-Mod (Experience Modification factor rating). What this means is when the insured goes out into the market place the following year when they are up for renewal,  that claim may show up. the incurred (paid + reserve) impacts their ability to be written for new insurance and essentially tells them what premium they’ll be paying.

 

From what you just told me, it doesn’t make sense for the insured to take a hands-off approach? Does that sound fair? 

 

I certainly think that they (the insured) should be involved because this directly affects and impacts their future with Mod ratings and what they’re going to pay for in the future. But many people still take the backseat approach. 

 

Though this often depends on the level of comfort they have with their carrier. So while I say it’s a backseat approach. It may seem a little hands-off because they feel confident in their carriers’ ability and what we put forth.  They know that we’re going to mitigate their losses as much as possible to bring it to a resolution. 

 

That’s a great point. I imagine this is true with a long-standing client, a company who’s been insured with you for a long time, they know the team and have the same players handling their claims, and they can kind of step back because they know that your team has their best interest at heart.

 

Seasonal/Winter Claims

 

So you’ve seen it all, as you’ve climbed the ranks in insurance and the claims world. Is there one type of claim you encounter where you just roll your eyes when it comes because it is the most common type of claim? This could be a winter claim, an industry-specific claim. 

 

I call them your classic injuries. The two most common ones that are seasonally driven are your slip and falls. They are the most common denominator in terms of what you see for December, January, February March claim volumes that come in. Slip and Fall will rank really high for what we see. 

 

Aside from that, lifting injuries are common as well. 

 

Are these injuries specific to a particular industry?  Do you only oversee construction, real estate, healthcare or are these claims kind of general and not industry-specific? 

 

I think claims like these are industry-specific. Your transportation carriers/delivery services, you typically see slip and falls from the parking lots or while they’re making a delivery to someones’ home. The same goes for lifting injury, that’s primarily where you see those.

 

 Construction is a fall from heights, that’s typically the most common one.  

 

Then the healthcare we see lifting injuries because your home health aides, they’re typically assisting with a client/patient, having to maybe get them up out of bed. Some of those patients are unable to help themselves get up, and typically these employees have to just lift 150 pounds to 200 pounds by themselves with no assistive device to help them do that. We see a lot of lifting and back injuries & neck injuries from that.

 

It sounds like our essential workforce, especially during COVID times are the ones getting injured the most.

Yes. I can agree with that. 

Most Expensive Claim That You Personally Have Seen 

 

What is the most expensive claim you’ve seen? For clarification when I say the most expensive claim it can be a specific body part that is a high dollar amount.

It depends on how high you’re looking to go. I’ve seen some claims that are multi-million dollars.

 

What was that? A multimillion-dollar claim? What was that Injury? 

 

Without disclosing too much detail, one employee rode in the back of a pickup truck of another employee, as they departed the employer’s location and a severe injury was sustained. It’s a multimillion-dollar claim because this employee needs 24/7 care and will need to live in a facility probably for the rest of their life. 

 

That’s tragic and I don’t think many insureds think about claims on that level. Maybe large corporations, like the transportation organizations we discussed earlier (UPS, FedEx, DHL.) Those companies have a large workforce at a national level, so maybe they’re more familiar with those. But smaller commercial clients, don’t see or even think that this could even happen, and now they’re looking at a multimillion-dollar loss that they didn’t budget for when running their business. 

 

Absolutely, and when we start to look at what happened and gather the facts around the event we start to ask questions like “What is your policy about having employees on site after work?” and if there is any surveillance footage of the location and what was actually happening. 

Having that information and the punch cards to show when they came in and when exactly they left.  in a lot of states, there are a number of “coming and going” rules that would either support the acceptance of or denial of that accident/injury, being considered within the course and scope of employment.

 

This ties into my next question, from your side of things I’m sure it’s frustrating when these claims, and you see that more could have been done from the insured standpoint. How can the client help in the claims process so it doesn’t get to your level? At least so they do everything they possibly can to help your team out, to help the adjuster out before it gets to you and it becomes a multimillion-dollar claim.

 

What we see very often, and in the example, we just talked about this claim wasn’t reported to us until several months after the accident happened.

 

Wow. 

 

It is so important to get it to us, even if they are not sure if it would be covered under Workers’ Comp. Oftentimes they (the insured) might think it’s covered under liability or if it’s a motor vehicle accident they strictly put it in as an auto claim. 

 

My advice would be to file that incident report, that first report of injury as soon as the incident happens. Let the carrier investigate it and be sure to really partner with the carrier to ensure that you’re getting them the information that they’re requesting. Preserving any evidence is crucial as well. 

 

So if you have surveillance footage be sure to take that and send it over right away. Witness statements are critical.  When you speak to someone right after an event happens the event is going to be right fresh in their head.  As opposed to trying to track someone down a few months from now, or even a week from now, their recollection of the event might vary. These witnesses might have also spoken to other employees about things being said around the workplace and you risk getting a skewed version of what actually occurred. 

 

Even include the profile for the employee: what’s going on? Oftentimes you’ll see they’ve run out of vacation time and now they’ve filed this claim. Then, we learn from other employees that this person was just taking a vacation. So all that information about what’s going on in this employee’s life and other things they’re aware of like disability claims that were previously filed for this employee in conjunction with just responding to the investigation as soon as it happens is pivotal.

 

I gather that a lot of times in an instance where this doesn’t happen, the insured is afraid of the repercussions and the carrier is going to penalize them. However, you don’t get penalized for doing the right thing, which is if you know something happened, report it. This way the carrier can work with you and guide you and do the investigation early on instead of 4 months out. 

 

So circling back to the example you gave us. What happened in the time it took for that event to hit your desk? 

 

In this situation, it was a case of “Everything that can go wrong, did go wrong.” The insured originally never put it through to workers’ comp. Why? 1. They were trying to pay for anything out of pocket to avoid having the claim show up on their claim history. Secondly, they heard this employee had passed away. The employer didn’t realize that the employee had survived the accident. 

 

Once we finally did receive the claim, the employees that participated in the internal investigation before it reached the carrier were no longer available for comment. 

 

This sounds interesting.

 

I’m not sure if that answered your question, but I’m not sure if this approach helped anybody because the state where this incident occurred is a state that requires you to get prior authorizations, and the employee already incurred several million dollars worth of care before this claim even reached us. There was no direction and we couldn’t negotiate the rates with the home healthcare. At this point, we’re trying to go backwards to try to project what could occur in the future. 

 

What a mess. 

 

This approach doesn’t work well from the financial standpoint either because it doesn’t help the injured worker and then the carrier is trying to quickly piece together to make a decision before the state’s deadline for when you have to file a decision. There is a lot of scrambling. 

 

This sounds so stressful. The insured may be able to self-pay but those accidents need to be very minor. Even if the insured does self-pay there are still forms that need to be filled out and the insured is required to keep them on hand but it sounds like in this instance it was a major accident, to begin with. 

 

Thank you so much for sharing. This touches on what a lot of clients are asking and are worried about. At the end of the day, they all want the best insurance rates and the best insurance coverage, but the only way to achieve that is cooperation and reporting things timely when an employee is injured. 

 

It sounds like in this instance the insured didn’t try to reach out to the injured employee because they didn’t know if he was still alive.

 

There was no contact made. In fact, it was asked for us to not contact the family until we (the carrier) had the full scope of what was going on because at that point we didn’t want to contact the family and give them unrealistic expectations of what would be covered.  The insured definitely learned a lesson on what not to do next time. 

 

Something as simple as reaching out to the employee who was injured, or reaching out to the family if you can’t get the employee,  and they’re not showing up to work is a big step and a huge help to the claims team and to the employer as well. They should know where their employees are. 

 

I find it very important for the employer to be engaged in this process. Whether they are a short-term or a long-term employee. Following up and showing that area of concern, asking them when they might return to work. It makes that employee feel valued. It could also result in a quicker return to work.

 

A great point you’ve touched on. 

 

The employer/employee relationship  

 

I ran into an issue where I was trying to encourage one of my clients to reach out to an employee that had gone MIA for a little bit. Their response was they didn’t want to because they were afraid that the employee would consider it harassment and the employer’s view was “this employee is out on workers’ comp. We have no right to speak to them.”

 

I think a lot of insureds feel this way:  once the employee is out on workers’ comp they’re not allowed to speak to the employee. But, what you’re telling me is this is not truly the case. 

 

To my knowledge, there is no employment law that prevents the employer from checking in on their employees. Disability does that to check in with their employees to check-in and see how they’re progressing and how they’re healing. The employer may not be able to ask directly “When are you returning to work” but they can ask how they’re progressing. 

 

Depending upon the relationship between the employer and the employee, the employee may be forthcoming with more information. 

 

A lot of times these folks are just home and don’t have many other people to talk with. A lot of them are isolated, working-class individuals. So their family, friends, and everyone else is at work, so they’re longing for social interaction. The employer reaching out shows the employee that they’re concerned about their wellbeing and the employee can be eager to come back.

 

It sounds like this is just the kind thing to do. 

I don’t know of any law that stops someone from doing that so we encourage reaching out to the employee. 

I wasn’t meaning this from any legal standpoint. I just meant a lot of employers are like “Well they’re out on workers’ comp. We’re not talking to them”. They’re still your employees.

Especially when some of these employees have been with the company for 15+ years. How do you let this accident happen and not show empathy or concern for how the employee is doing? I think from the carrier side of this we’re in situations where we can’t have direct contact with the employee because they’re attorney represented. Therefore the employer is our outlet to keep us updated.

 

Oftentimes they (injured workers) go to a doctor’s appointment and they give their employer a call with an update: “I just went to my  Dr.’s appointment and I’m going to be out for another 4 weeks. I need to go to physical therapy and then go back to the Dr.’s.” 

 

As a carrier, it takes us a longer route to get this information because we have to call the provider to get information, and sometimes it takes two weeks plus to get the office notes, depending on how long it takes the physician’s office to have their notes dictated. 

 

It’s often helpful to the carrier if the employer maintains that relationship with the employee. It can help get that person back to work sooner, which benefits the claim. 

 

You’re detailing a really important dynamic which we try to communicate to our clients, and it’s nice to hear the same from you, another claims expert. It’s a group effort and the insured is a key player in how these claims can end up. It starts with keeping in contact. Once the adjuster loses contact with the claimant due to attorney representation it sounds like the employer is the key person to maintain that contact and relay important information to you guys. 

 

I think that this is something a lot of people often overlook because it’s not common knowledge.

 

Exactly what I was saying. 

 

This has given us a lot to think about, to share with our clients. Is there anything else that I didn’t touch on that you were hoping to talk about? Any inside scoops.

 

You know, I gave an example of a catastrophic claim and there are other claims out there. What I think is always a challenge for employers is the accident description itself. Sometimes that’s where they start scratching their head. The employer starts asking themselves “Do I report this? Do I not report this? Should I be taking a hands-on approach? Do I let the claims team just handle it?”

 

The employer may not want to reach out during the investigation period, because the employee may start asking questions that they don’t have the answers to. 

 

Right. 

 

I’ve seen all sorts of things, and the issue is that there are various grey areas in claims that can affect whether or not the claim will be accepted by the carrier. 

 

You mentioned some of the more common areas of claims and can some of those be prevented? 100% Yes, but some will inevitably happen. The other side of this is the quicker we can get these resolved, and the greater involvement we can have earlier on, the more likely we will help the injured employee return to work sooner. The more we can do to prevent these accidents from occurring, the safer the staff is and the better things can be. 

 

Risk Management 101. Preach! Thank you so much for your time. Our fireside, Vanity Fair-esque interview. This was a lot of fun! I may be reaching back out to you for a summer edition of this!  

 

Claims management is an integral part of your insurance purchasing process. If you have any questions or need help with claims management within your organization contact one of our Metropolitan Risk Risk Advisors for information on our available programs. 

Construction Practice Group Content, Food & Beverage Practice Group Content, HR Challenges, Human Services Practice Group Content, New York, Risk Management, State Law, Transportation Practice Group Content, Workers Compensation Insurance, Workers Compensation Premium Audits

New York State’s Updated Sick Leave Law

New York State’s Paid Sick Leave policies were introduced on April 3, 2020, and went into effect on Sept. 30, 2020.

On January 1, 2021, employees may start using their accrued leave. 

The number of sick leave hours required is based on the number of employees that work within your organization:

0-4 Employees:

If your net income is $1 Million or less, employers must up to 40 hours of unpaid sick leave. If net income is greater than $1 Million, employers must provide up to 40 hours of paid sick leave 

5-99 Employees: 

Employers must provide 40 hours of paid sick leave per calendar year.

100+ Employees:

Employers must provide up to 56 hours of paid sick leave in a calendar year. 

How sick leave is accrued 

Employees begin accruing leave on September 30, 2020. Leave must be accrued at the rate not less than one hour of leave accrued for every thirty hours worked. 

An alternative to the accrual of sick leave by hours, employers may choose to provide the full amount of sick leave at the beginning of each calendar year (ex. An employer with 50 employees may choose to provide 40 hours of sick leave starting Jan.1 of yea year or at the beginning of a 12-month period determined by the employer. NOTE: Upfront sick leave cannot be subject to later revocation or reduction if the employee works fewer hours than anticipated by the employer.). 

Who is eligible

All private-sector employees in New York State are covered, regardless of industry, occupation, part-time status, and overtime-exempt status. Federal, state, local, and government employees are NOT covered, but employees of charter schools, private schools, and not-for-profit corporates are covered.

Permitted Usage of Sick Leave 

After Jan 1, 2021 employees may use accrued leave following a verbal or written request to their employers for the following reasons impacting the employee or a member of their family for whom they are providing care or assistance with care. 

Sick Leave: 

  • For Mental or physical illness, injury or health conditions, regardless of whether it has been diagnosed or requires medical care at the time of request for leave
  • For the diagnosis, care, or treatment of a mental or physical illness, injury or health condition, or need for medical diagnosis or preventative care.

 

Safe Leave:

  • For an absence from work when the employee or employee’s family member has been the victim of domestic violence as defined by the State Human Rights Law, a family offense, sexual offense, stalking, or human trafficking due to any of the following as it relates to the domestic violence, family offense, sexual offense, stalking, or human trafficking: 
    • to obtain services from a domestic violence shelter, rape crisis center, or other services program; 
    • to participate in safety planning, temporarily or permanently relocate, or take other actions to increase the safety of the employee or employee’s family members; 
    • to meet with an attorney or other social services provider to obtain information and advice on, and prepare for or participate in any criminal or civil proceeding; 
    • to file a complaint or domestic incident report with law enforcement; 
    • to meet with a district attorney’s office; 
    • to enroll children in a new school; or 
    • to take any other actions necessary to ensure the health or safety of the employee or the employee’s family member or to protect those who associate or work with the employee. 

Leave Increments 

Employers are permitted to require that leave be used in increments (e.g., 15 minutes, 1 hour, etc.) but may not set the minimum increment at more than 4 hours.

Employers must notify employees of these leave increment policies in writing or by posting a notice in the worksite prior to leave being acured, any restrictions in their leave policy affecting the employees’ use of leave, including any limitations on leave increments 

Rate Of Pay

Employees must be paid their normal rate of pay for any paid leave time under this law, or the applicable minimum wage rate, whichever is greater. No allowances or credits may be claimed for paid leave hours, and employers are prohibited from reducing an employee’s rate of pay for sick leave hours only. 

An employer cannot retaliate against an employee in any way for exercising their rights to use sick leave. Furthermore, employees must be restored to their position of employment as it had been prior to any sick leave taken. Employees who believe they have been retaliated against for exercising their sick leave rights should contact the department of labor’s anti-retaliation unit.

Record Keeping

Employers are required to keep payroll records for 6 years, which must include the amount of sick leave accrued and used by each employee on a weekly basis.

Employers are required to provide within three business days a summary of the amount of sick leave accrued and used by the employee in a current calendar year or any previous calendar year, at the request of the employee.

 

Employees who believe that they have been retaliated against for exercising their sick leave rights should contact the Department of Labor’s Anti-Retaliation Unit at 888-52-LABOR or LSAsk@labor.ny.gov. 

 

If you still have questions, contact a Risk Advisor at 914-357-8444. If they cannot help you they’ll direct you to an employment lawyer that can. 

Construction Practice Group Content, Food & Beverage Practice Group Content, Human Services Practice Group Content, Marketplace News, Risk Financing, Risk Management, Transportation Practice Group Content, Workers Compensation Insurance, Workers Compensation Premium Audits

How Workers’ Compensation Class Code #8873 “Telecommuter Reassigned Employees” Can Help You Save Money On Your Insurance Premium

The New York Workers’ Compensation Insurance Rating Board (NYCIRB) has released a new class code for ‘Telecommuter Reassigned Employees’.

If you are a business owner you might be wondering how do I adjust my workers’ compensation rates for employees that we kept on the payroll, but did not actually perform their duties? It doesn’t make sense to pay workers comp premiums for an expensive labor class during a workers comp audit when those employees were essentially paid to sit home. 

 

Over the past eight months, we have experienced difficult and trying times due to the pandemic. One critical aspect of the first few months of the pandemic was the ability of employers to keep their employees on the payroll whether or not they were actually performing their duties. The PPP program went a long way in helping employers achieve that important concession. 

 

The question that has come up recently with many employers is how do we properly account for that portion of payroll we paid our workers when they actually didn’t perform their actual duties. In industries like construction or healthcare, the insurance costs basis can generate a lot of insurance premiums because the class codes for those labor components have a high insurance rate tied to it. 

Now there is a relief for workers compensation premiums for these “reclassified” employees.

The New York Workers’ Compensation Insurance Rating Board (NYCIRB) has released a new class code for ‘Telecommuter Reassigned Employees’.

Temporarily Reassigned Employees, which establishes new classification code 8873, Telecommuter Reassigned Employees, requires that it be applied to the payroll of employees who, during New York’s stay-at-home order related to the COVID-19 pandemic (and future stay-at-home orders), are reassigned to either (a) not perform any work duties (idle), or (b) perform clerical work duties at home that they otherwise would not perform. The rate per $100 of payroll for Classification 8873 will mirror the rate for Classification 8810 (clerical office employees).

Further, this provision is applicable at the start of New York’s stay-at-home order and for up to 30 days after its conclusion. Employees who are classified to code 8871, Telecommuter Clerical Employees, are to remain classified as 8871.

In other words, the new 8873 classification only applies to employees who are reassigned and meet one of the two conditions described above. These amendments are effective for all new and renewal policies effective May 1, 2020, as well as to all in-force policies as of March 16, 2020.

We have provided the NYSIF Q&A sheet of commonly asked questions about this new workers’ compensation class code.

We would be happy to review the parameters of the new class codes and the impact it may have on your business. Please contact one of our Risk Advisory to discuss further.

Human Services Practice Group Content, Marketplace News

New York’s DOL Introduces New Notice Of Pay Rate form for Home Care Providers Under New York Wage Prevention Act Updates

Effective October 1, 2020, New York State’s Department of Labor requires a new Notice of Pay Rate form for employers.  The form is required to be used by home healthcare aide under the Wage Parity Law. The updated changes to the New York Wage Theft Prevention Act  (WTPA) states the new Notice of Pay Rate Form must now include “the benefits portion of the minimum rate of home care aide total compensation.”

The amendment to New York’s Wage Parity Act requires that home healthcare employers include notice of the benefits their employees are receiving under the Wage Parity Law. The form requires employers to break down each benefit provided to the employee, and the home care agency must provide contact information for the person or entity providing the homecare aid benefits.

Home care agencies are now required to keep these records for at least six years.

What is required under the New York Wage Theft Prevention Act (WTPA)?

The WTPA requires employers to provide wage notices and pay stubs to their New York employees. The law requires written wage notices to be delivered to employees in English and the employee’s primary language, signed and dated by the employee and maintained for a period of 6 years. You must provide the notice at the time of hire and upon changes to the data.   The forms must include the following information on the written wage notice:

  • Rates of pay;
  • How the employee is paid (e.g., hourly, salary, commission, etc.);
  • Any allowances claimed as part of the minimum wage (e.g., tip, meal, or lodging allowances);
  • Regular payday;
  • The official name of the employer and any other “doing business as” names used; and
  • Address and phone number of the employer’s main office.

The employee wage statement or pay stub on each payday must include the following data:

  • Employee’s name;
  • Employer’s name, address, and phone number;
  • Dates covered by the payment;
  • Hours worked (both regular and overtime);
  • Rates of pay;
  • How the employee is paid (e.g., hourly, salary, commission, etc.);
  • Gross and net wages;
  • Itemized deductions; and
  • Itemized allowances and credits claimed by the employer.

Failure to comply with the new requirements of the WTPA in a timely fashion is punishable by penalties of up to $10,000 per affected employee. 

Click here to download the New Form

If you’re an employer in the home healthcare industry, you must revise your new hire notices & pay stubs to ensure they reflect the latest updates to WTPA. Failure to comply can subject your business to substantial penalties. Metropolitan Risk is closely monitoring Home Healthcare legislation in New York, New Jersey, Connecticut, and Florida. If you need additional information, contact a risk advisor at 914-357-8444

 

Source: New York Employers Must Comply with Updated Wage Notice Requirements

 

Employers Practice Liability Insurance, General Liability Insurance, Human Services Practice Group Content, Line of Insurance, Loss Control, Transportation Practice Group Content

Adult Day Care Considerations for Your Business

Running an adult daycare seems to be one of the harder gigs. Between keeping employees in check and fully trained and clients safe, it is a hard organization to manage. Our adult daycare inspection considerations list should help you keep insurance claims and deductions down. One less thing to worry about!

Insurance Considerations when Choosing which Adult Daycare Services to Provide

 

When running an adult daycare, you must understand that there are multiple types of insurance to cover you, your employees, your property, and your business. Some that you should consider when deciding on setting up your daycare center are:

  • Professional Liability – Covers your business from the negligence of employees and other defense/legal costs
  • General Liability – Liability for any incident that occurs within your business (slip & fall hazards or a loose handrail)
  • Auto Liability – For your workers who may transport clients/services to and from other locations
  • Abuse and Molestation Coverage – If the worker physically, sexually, mentally, or emotionally abuses a client

 

Adult Daycare: Safety Inspection Checklist 

Adult Daycares are meant to help adults who cannot supervise themselves during the day & may need help with basic care functions. This naturally means that these workers are constantly focusing on keeping patients/clients safe. Worker’s may overlook small issues, like a cracked sidewalk or an unsteady handrailing as their main focus is on the client, not their surroundings. A Supervisor should focus on making sure safety is a priority for employees & that the surrounding areas also well maintained & safe.

Here are just a few things you might want to keep constantly asking/monitoring:

  • Is the loading/unloading area clearly marked?
  • Are there any potholes in the parking lot?
  • Are there cracks in the pavement that needs to be repaired?
  • Do you have wheelchair-accessible ramps & handrails leading up to the main entrance clearly marked?
  • Are these ramps and handrails in good condition?
  • Are the emergency exits clearly marked and free of obstructions?

Safety Tips for Your Adult Daycare Center

 

While having a safety inspection checklist is definitely important, having certain safety parameters in play is just as necessary. This includes, but is not limited to:

  • Rigorous, continuous safety training – your employees are dealing with real-life adults that can be unable to perform simple functions without supervision. This means your employees need training to the max. Rigorous training with in-depth expert advice is important. What is also important is that this training never stops and is not just a 3-day course. It is a continuous learning process.
  • Safety Guideline/Handbook – Having a written word on the safety parameters and rules already gives the employees a better idea of how to handle their clients.
  • Mechanical Lifts & Safe Patient Handling
  • Handrails on stairways
  • Handicapped Bathrooms
  • Proper Lighting
  • Large, spacious areas
  • Medical supplies ready for immediate use

 

Adult Day Care Transportation Considerations 

When running an adult daycare, you need to think about how the adults in need of assistance will come to the daycare facility. If their caretakers at home do not have the time or resources to drive them there and back or make trips to various other locations to aid the adult, this is where your daycare service can flex its muscles. Having a transportation wing of your facility will make your daycare more profitable immediately. Offering the transportation of clients from home to daycare and back is the most important, but you can also offer trips to the grocery store, hospital, and sources of entertainment.

 

Before setting any of this up, you might want to think about the potential risks of implementing this transportation system. Who will be driving? Will they be using their own vehicle or a vehicle provided by your organization? Are they a good and safe driver? Do they need a specific type of license to drive an organization owned fleet vehicle? Will their actions cost me thousands of dollars? We suggest following these tips to make sure you have the necessary guidelines set to open up your transportation service.

 

Have a Motor Vehicle Record open for every single driver. Essentially, a MVR is a small summary of the driver’s previous record and any information pertaining to tickets they may have received. This report includes driver’s license info, date of birth, previous driving history, violations, etc.

 

Obtain comprehensive automobile insurance with medical, property, and liability damage included. That means if you/your driver is liable for an accident, you are protected and covered. If your car receives damages or is stolen (your property), you are covered. And if there is a medical injury due to a crash, you are also covered.

 

Contracting a professional driving company may be worthwhile for your company’s success. If you are unsure of your workers serving as part or full-time drivers, hiring professionals is worth it. They are experienced and bring less risk into the equation. Spending more on their services may cost you less in the long-run.

 

Conclusion

To conclude, running a daycare for adults is not easy. There are a lot of risks and potential costs to consider. But taking our adult daycare inspections tips into consideration will help your organization to succeed.

 

Still, need help? Still, have questions? Contact a risk advisor today at 914-357-8444. Or, visit our website here.

 

Human Services Practice Group Content, Line of Insurance

COVID Nursing Home Crisis

As COVID-19 continues to spread across the country, those who have serious health problems or are at risk continue to search for ways to avoid coming in contact with the virus. For the over 1.3 million people currently living in nursing homes in the United States, COVID-19 is not something to take lightly. These individuals are more at risk than almost anyone else when it comes to contracting and spreading the virus. Nursing homes are not only full of at-risk individuals, but they’re crowded. Healthcare professionals are doing their best to stop the spread of the virus, but much like almost every other industry, they are struggling to contain the virus. 
 
The disproportionate death rate to society’s most vulnerable and fragile population has put nursing homes into a precarious financial future as wrongful death lawsuits begin to mount. The liability that nursing homes carry is going to be a huge concern going forward. These professionals are doing their best to contain the spread of the virus. But it is nearly impossible with finite resources in these facilities. Previously in these assisted living facilities patients would share common areas and eating areas. Now with social distancing guidelines, limited space is becoming an issue. It would be almost impossible for these facilities to accommodate every single person. 
 
One of the biggest liabilities for nursing homes is wrongful death lawsuits. The number of wrongful death lawsuits has climbed dramatically since the start of COVID-19. While professional liability insurance normally provides coverage for defense costs and settlements, insurance companies are currently adding COVID-19 exclusions for all new business.

Healthcare Professionals Hard at Work

Front-line health care workers at hospitals have been rightfully hailed as heroes, but don’t forget that these employees are also susceptible to burn out.  While those working in senior living facilities working around the clock to manage their employees and the risk. The large death toll has translated to mean that facilities mismanaged the situation. 
 
If you still have questions, you can contact a risk advisor today at 914-357-8444. Or, you can visit our website here.

 

Claims Management, Human Services Practice Group Content, Other, Workers Compensation Insurance

COVID-19 on NYS Workers Compensation

The COVID-19 outbreak has spread all throughout America, but most notably in New York. Considering America’s largest metropolitan hub is New York City, when the disease hit it was bound to be catastrophic. Due to the heavy outbreak in New York, Governor Cuomo ordered a stay-at-home rule for nearly three months. This resulted in higher unemployment and less in-person work happening.

Increase in COVID-19-Related Workers Comp Claims

What exactly does this mean for Workers Compensation claims? It depends on what types of workers comp claims. Considering health care workers and essential first responders are eligible for workers comp, the workers comp claims due to the contraction of coronavirus have been large in quantity and amounts paid out. Coronavirus claims have been costly for insurance carriers per claim for two reasons.

First, the medical bills related to treatment of the virus are hefty: 6 days of hospitalization can cost $40,000. Second, insurance carriers set a high standard for respiratory Workers Comp claims after the 9/11 attacks. Respiratory diseases lime coronavirus can have permanent or long-term impacts, meaning more money out of insurance carriers. And because the coronavirus is a temporary pandemic and is no fault of the employer, premiums can not necessarily increase, meaning greater losses for carriers due to the costly COVID-19 workers comp claims.

Decrease in Non-COVID-19 Related Workers Comp Claims

However, the COVID-19 impact on NYS workers comp does not end there. Because of the lock down, the number of non-COVID-19 workers comp claims has significantly shrunk these past 3 months. So, financially, while the COVID-19 claims are more expensive than regular workers comp claims, the number of COVID-19 claims is still not as large as the average amount of workers comp claims, meaning that both of these effects of the outbreak have offset each other financially.

The question is now whether insureds will protest that due to there being less workers on payroll and claims being filed, WC premiums should decrease, meaning insurance carriers charge less on premiums to pay out almost the same amount of money. It is important to know the outbreak is not over and these figures may change when the pandemic finishes. Keeping up to date with the official NYCIRB and NY officials is the best way to keep track of insurance on workers comp effects from the pandemic.

Still confused? Still have questions? Call a risk advisor today at 914-357-8444 or visit us here at our website.

Note

*All of these statistics and findings were found in a June 2020 report on COVID-19 and Workers Comp claims written by the NYCIRB. The link is mentioned in the article, and can be found here.

Construction Practice Group Content, Food & Beverage Practice Group Content, Human Services Practice Group Content, Transportation Practice Group Content, Workers Compensation Insurance, Workers Compensation Premium Audits

Who Is Exempt From Workers Compensation Coverage?

The New York workers’ compensation insurance law requires the majority of employers to have appropriate workers comp insurance coverage in place. However, there are three key exemptions.

Sole Ownership

If you run your business alone and don’t have any employees, you may not need to have workers’ compensation coverage.  You should note, however, that in order

not to inadvertently break the law, you must not use the services of volunteers, such as family or friends.

Partnership

Partnerships set up under New York laws may also be exempt, but only where they comply with the provisions applicable to businesses in sole ownership outlined above.

Small Corporation

Where one or two people have set themselves up as a corporation, hold all the offices and own all the stock, they might also be exempt, as long as they have no employees of any kind, as per the other two exempt categories above.

Sub-Contractors

It is important to note that should your otherwise exempt business use the services of sub-contractors, you should make sure they have their own insurance coverage. Otherwise, the New York Workers Compensation Board may rule that they are employees. Similarly, when a sole owner, partner, or small corporation owner works as a sub-contractor, he or she is required to hold personal New York workers compensation insurance.

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