Workers compensation is a form of insurance that protects business owners from the common accidents on job sites of employees that lead to expensive injuries. These risks are transferred to a carrier for a flat fee.
In our opinion, there is no better time to consider alternative risk transfer as a strategy to get more cost-efficient with respect to your current commercial property insurance, commercial liability insurance, workers compensation insurance, & commercial auto insurance.
As I write this the country and the world are about to exit the covid pandemic. If we frame the current conditions in terms of where we are in the property insurance, liability insurance & workers compensation insurance buying cycle; conditions couldn’t be more favorable to give your company a significant competitive advantage.
Taxes :
Since all 3 branches of government have changes hands in the last several years there are strong tailwinds pushing for significant tax increases which will erode corporate resources. We suggest utilizing a Captive Insurance strategy can give you significant tax efficiencies allowing you to keep the dollars inside your company to help reduce your variable cost structure. DOWNLOAD our Guide to Utilizing Captives by CLICKING HERE.
Coverage Availability & Rates :
Currently, we are in the through of a “HARD MARKET”; where conditions favor the insurance carriers as they restrict coverage and increase rates. Insurance buyers are frustrated because they have limited options. Further, they feel squeezed, and rightly so. The carriers are pointing to the “Social Inflation” of liability and commercial auto claims due to the insane jury awards. Buyers are pointing to “profits” earned and surplus growth to counter that claim. We think the buyers have a legit gripe.
Risk As Strategy :
Smart forwarding thinking CFO’s and C-Suite Executives understand that if they can leverage their balance sheets by increasing their retentions EFFICIENTLY, they can gain significant cost advantages that they can bake into their COGS (Cost of Goods & Services). If done properly they can reduce their insurance program costs by 35% which allows them to grow profits, market share, or both. Remember every dollar you save in your insurance program falls directly to the bottom line.
To understand if your company could benefit from a partial or full-on program restructuring CLICK HEREto schedule a 15-minute call. In 5 questions we can figure out if the strategy has legs for your org.
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 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 Advisoryto discuss further.
On July 1st, 2019 New York construction payroll limitation will increase. The New York Compensation Insurance Rating Board has made an update to the construction industry payroll limitation. Effective July 1st, 2019 the limitation will increase from $1,401.17. This new limitation applies to policies effective on or after July 1st, 2019. For policies effective before July 1st, 2019, the limitation remains at $1,357.11 per week
What is the construction payroll limitation?
Construction employees working under specific classifications will earn higher than average wages. Location, skill level, and working on a prevailing wage job are reasons for this. This means employers paying higher wages for the same work end up paying higher premiums. The Rating Board started the payroll limitation in 1999 to bring fairness to insurance premiums by evening out the playing field. Each week, payroll for qualifying employees is established at the limitation set by the Rating Board for audit purposes.
What does this mean?
If a qualifying construction employee earns more than the limitation throughout the week, their payroll is capped at the limitation for audit purposes. Additionally, the limitation applies from week to week. If an employee earns more than the limitation one week, the rule applies. The full wage is included that week if an employee earns less than the limitation.
Does this apply to me?
If you are in the construction industry and have employees in the qualifying classes, this will apply to you. You can find a list of the eligible codes on the State Insurance Fund website.
Furthermore, if any of your employees earn more than the limitation, your workers compensation insurance might cost more than it should.
What About Wrap Ups?
Good Question! The payroll limitation also applies on Wrap Ups too. Your certified payroll reports may not have a provision to report limited payroll. As such, you should not assume the wrap admin is making the adjustments for you.
Still need help? A Risk Advisor can help make sure the limitation is in your favor.To learn more, click here.
A return to work (RTW) program allows employees to come back to a job while they are still injured. These employees aregiven a light or modified work instead of not working while they are injured. This workers’ comp cost control tactic has one of the best ROIs because it benefits the company as well as the employee.
Workers’ compensation costs can be expensive. Having a RTW program is a cost-effective way of returning employees to work sooner. Returning these employees to work allows for workers’ comp claims to close sooner. Closed workers’ comp claims help to lower experience modification numbers. Experience Modification Numbers directly affect insurance premium rates.
Benefits of a Return to Work Program
A return to work program benefits more than just the line employees. When implemented properly, a return to work program benefits the entire organization.
Employer benefits of a Return To Work Program:
A Return to Work Program opens the door to more insurance markets. Some insurers will not quote on accounts that do not have modified duty/light duty programs in place
Return to Work programs can significantly cut workers comp costs.
Alert employees that the organization will not tolerate malingering.
Reduce indirect injury costs, such as overtime, temporary workers, and production decreases
Boosts employee morale
Employers must provide meaningful work to employees to avoid incurring employment liability and potential class action litigation. This is in compliance with the Americans with Disabilities Act of 2008.
Employee benefits of a Return To Work Program:
Employees spend less time on short term disability
Employees recognize that their employer values them both as employees and as people.
Help employees avoid post-injury depression
Improved employee’s economic outlook
Employees retain valuable employment skills and remain a vital part of the workplace
Implementation of A Return To Work Program
Before implementing the RTW program, an evaluation of your company’s culture will determine the attitude towards workplace injuries and returning to work after the injury. Knowing your organization’s culture will determine how and when you implement a return to work program. A company culture that promotes employee wellness will have an easier time implementing a RTW program.
Having a strong RTW program culture is critical. To have a strong return to work culture, make sure everyone within your organization is on board. There can be problems with implementing a RTW program if the managers and the line employees do not agree. The program’s success is dependent on senior management (all the way up to the chief executive officer) embracing the return to work philosophy.
For example, if an employee is working in a particular division, they should be given light work within that division. However, if there is no light duty work available in that division, the organization should place the employee in a different division. This can only happen successfully with the support of senior management. When statistics demonstrate the shrinking costs when employees return to modified work, management’s support grows.
More Information
Organizations with strong safety records start each management meeting with a ‘safety’ meeting. At these meetings, they host a discussion of who is off of work and why. This conveys the message that returning employees to work with light duty work is supported and safety is paramount. As insurers withdraw from the excess workers’ compensation market, remaining insurers will tighten underwriting standards. A strong RTW program is one of the best defenses against rising workers’ comp costs.
Did you know, depending on your company structure, you can pay your employees their regular wages in lieu of workers compensation?
If an employee is accidentally injured during their employment, a claim is reported to the workers compensation insurance carrier. The carrier initiates lost wage payments to the employee once the claim becomes accepted until they are released to return to work.
At Metropolitan Risk we teach our clients that workers compensation insurance is essentially a very expensive credit line.
Contingent on the size of the claim, quite often our Claims Advocates espouse paying the lost wages for the injured worker. They pay this directly instead of through the workers compensation insurance. On claims under $50k, for every $1 the carrier pays, they can charge up to $1.70. They charge this through an experience modification factor surcharge over a 3 year period from date of loss. That’s like taking a loan from the bank at a 70% interest rate. By making a small adjustment, you can save a small fortune over the long term.
We suggest paying the worker their full wages for the first day or two of the injury.
Your carrier will receive your claim once you submit it if they are not back to work. At this point you can begin to pay the employee at 66 ⅔ of the calculated average weekly wage. An option is paying their regular wage. We don’t recommend paying their regular wage as we want to create an incentive for them to come back to work. Please be sure to communicate all of your payments to the assigned claims adjuster and or your claims advocate. This will avoid any discrepancy and overpayment. Written confirmation from the adjuster will help you understand the plan. You do not want to double pay your work as that creates a messy situation. This runs counter to your main objective―to get that injured worker back to work at full duty, if not alternative duty. You’ll want to forward copies of the pay-stubs to the adjuster as well.
We suggest you draw a hard line somewhere that you are comfortable.
Next, a hearing will be requested, and the judge will order a reimbursement the employer. Saving money on your workers compensation insurance is not a product of one large silver bullet but small incremental improvements like tracking near misses and not claims, getting employees to report injuries ASAP , even minor ones, and lastly managing every aspect of the workers compensation claim until you action plan and get that injured worker back on the job. This does not happen by accident. It’s a function of a well thought out, strategically run plan like our COMP CARE platform that is turn key for employers looking to gain a competitive edge on their competition by having a substantially lower risk costs like insurance. For more information on COMP CARE, please CLICK HERE.
With the new year comes new laws, regulations and revisions to existing laws. Staying in front of the new minimum wage requirements is an operational imperative. Here is a concise overview from our Think HR Humanresource tool for our existing clients.
Overview :
The current federal minimum wage rate is $7.25 per hour. However, many states have adopted minimum wage rates higher than the federal rate. When the state rate and the federal rate are different, employers must pay their employees the higher rate. The following states have adopted new minimum wage rates for 2018:
· Alaska
· Maryland
· Oregon
· Arizona
· Michigan
· Rhode Island
· California
· Minnesota
· South Dakota
· Colorado
· Missouri
· Vermont
· Florida
· Montana
· Washington
· Hawaii
· New Jersey
· Washington D.C.
· Maine
· New York
Action Steps
Affected employers should review their employees’ pay rates and update their minimum wage poster notices as necessary to ensure compliance with local wage and hour regulations.
New York – Minimum Wage as of 1/1/2018
Affected Employers
New Rate
Effective Date
New York City (NYC) large employers: At least one employee in NYC and 11 or more employees among all other worksites at any time during the current or prior calendar year. (This minimum wage rate is payable to any employees that work in NYC.)
$13
Dec. 31, 2017
NYC small employers: At least one employee in NYC and 10 or fewer employees among all other worksites at any time during the current or prior calendar year. (This minimum wage rate is payable to any employees that work in NYC.)
$12
Dec. 31, 2017
Employers in Long Island and Westchester
$11
Dec. 31, 2017
Employers in the remainder of the state of New York
$10.40
Dec. 31, 2017
California :
Affected Employers
New Rate
Effective Date
Employers with 26 or more employees
$11
Jan. 1, 2018
Employers with 25 or fewer employees
$10.50
Jan. 1, 2018
Other States :
State
2018 Rate
New Rate Effective Date
Tip Rate/Notes
(Employees must qualify for tip rate before the rate applies)
Alabama
$7.25
N/A
No state minimum wage rate. The federal rate applies.
Alaska
$9.84
Jan. 1, 2018
Tips do not count toward the minimum wage.
Arizona
$10.50
Jan. 1, 2018
$3 below minimum wage rate for tipped employees.
Arkansas
$8.50
N/A
$2.63 rate for tipped employees.
Colorado
$10.20
Jan. 1, 2018
$7.18 rate for tipped employees.
Connecticut
$10.10
N/A
36.8 percent gratuity allowance for waitpersons and 18.5 percent for bartenders.
Delaware
$8.25
N/A
$2.23 rate for tipped employees.
D.C.
$13.25
July 1, 2018
$3.89 rate for tipped employees.
Florida
$8.25
Jan. 1, 2018
Rate for tipped employees follows federal guidelines (currently $2.13 per hour).
Georgia
$5.15
N/A
The $7.25 federal rate applies to employers covered by the FLSA.
New Mexico
$7.50
N/A
$2.13 for tipped employees.
North Carolina
$7.25
N/A
$2.13 for tipped employees.
North Dakota
$7.25
N/A
$4.86 for tipped employees.
Ohio
$8.30/$7.25
N/A
$4.15 for tipped employees. The $7.25 rate is for employers grossing $299,000 or less.
Oklahoma
$7.25/$2.00
N/A
The $7.25 rate applies to employers with 10 or more full-time employees at any one location and employers with annual gross sales over $100,000; all others are subject to state minimum wage of $2.00.
Oregon
$10.75
July 1, 2018
No tip credit allowed. The minimum wage rate for the Portland metro area will increase to $12 per hour and to $10.50 in nonurban counties.
Pennsylvania
$7.25
N/A
$2.83 for tipped employees.
Rhode Island
$10.10
Jan. 1, 2018
$3.89 for tipped employees.
South Carolina
None
N/A
South Dakota
$8.85
Jan. 1, 2018
$4.425 for tipped employees.
Tennessee
None
N/A
Texas
$7.25
N/A
$2.13 for tipped employees.
Utah
$7.25
N/A
$2.13 for tipped employees.
Vermont
$10.50
Jan. 1, 2018
$5.25 for tipped employees.
Virginia
$7.25
N/A
$2.13 for tipped employees.
Washington
$11.50
Jan. 1, 2018
No tip credit allowed.
West Virginia
$8.75
N/A
Employers can take a tip credit of up to 70 percent of the state rate.
Wisconsin
$7.25
N/A
$2.33 for tipped employees
Wyoming
$5.15
N/A
$2.13 for tipped employees. The $7.25 federal rate applies to employers covered by the FLSA.
Georgia
$5.15
N/A
The $7.25 federal rate applies to employers covered by the FLSA.
Hawaii
$10.10
Jan. 1, 2018
$9.35 for tipped employees.
Idaho
$7.25
N/A
$3.35 per hour for tipped employees.
Illinois
$8.25
N/A
Credit for tips may not exceed 40 percent of the applicable minimum wage.
Indiana
$7.25
N/A
$2.13 for tipped employees.
Iowa
$7.25
N/A
$4.35 for tipped employees.
Kansas
$7.25
N/A
$2.13 for tipped employees.
Kentucky
$7.25
N/A
$2.13 for tipped employees.
Louisiana
$7.25
N/A
No state minimum wage rate. The federal rate applies.
Maine
$10
Jan. 1, 2018
Tip credit cannot exceed 50 percent of the minimum wage rate.
Maryland
$10.10
July 1, 2018
$3.63 for tipped employees
Massachusetts
$11.00
N/A
The service rate is $3.75.
Michigan
$9.25
Jan. 1, 2018
$3.52 for tipped employees.
Minnesota
$9.65/$7.87
Jan. 1, 2018
No tip credit allowed. Higher rate applies to large employers. Lower rate applies to small employers.
Mississippi
$7.25
N/A
No state minimum wage rate. The federal rate applies.
Missouri
$7.85
Jan. 1, 2018
$3.85 (half the current minimum rate) for tipped employees.
Montana
$8.30/$4
Jan. 1, 2018
No tip credit, meal credit or training wage is allowed. The lower rate applies to business with gross annual sales of $110,000 or less.
Nebraska
$9.00
N/A
$2.13 for tipped employees.
Nevada
$8.25/$7.25
N/A
The $8.25 rate applies to employees without health benefits. The $7.25 rate applies to employees with health benefits. No tip credit allowed.
New Hampshire
$7.25
N/A
Tipped employees must receive 45 percent of the applicable rate.
New Jersey
$8.60
Jan. 1, 2018
$2.13 for tipped employees.
For more information on minimum wage requirements in your state, contact Metropolitan Risk today!
Terms You Should Know When Building A Workers Compensation Cost Containment Program
There is a wide variety of workers compensation insurance terms anyone should be familiar with. Here are a few basic workers compensation claims terms to help you manage your workers compensation cost containment program.
Average Daily Wage (ADW) Average daily earnings of an employee before an injury. Use to calculate benefits payments in situations where AWW would not provide an accurate reflection of actual wages.
Average Weekly Wage (AWW) Average weekly earnings of an employee before an injury, which is used as a basis for determining weekly benefits payments.
Date of Injury (DOI) Date when injury or illness occurred or, in the case of repetitive exposure injuries or illness, when it first became apparent that symptoms were work related.
Independent Medical Examination (IME) Requested by an employer or insurer to serve as an objective evaluation of an injured employee’s condition. Use IMEs in situations where the findings of an employee’s self-selected doctor needs verification.
Maximum Medical Improvement (MMI) Point in an injured employee’s treatment when recovery has reached a plateau with no reasonable expectation of continued improvement.
Permanent Partial Disability (PPD) Benefits paid to an employee who has suffered compensable work-related injury or illness to one or more parts of the body. Most states have a preset payment schedule (Schedule of Injuries) based on specific body parts or conditions.
Permanent Total Disability (PTD) Benefits paid to employees who face lifelong total disability from compensable work-related injury or illness.
Social Security Disability Benefits (SSDI) Benefits paid to disabled individuals through the Social Security Administration, separate from workers’ compensation. Most state workers’ compensation statutes regulate whether an individual can receive both benefits at the same time. If both benefits are awarded, there are limits in place to ensure that an individual cannot receive more money than they are entitled to from either program independently.
Statewide Average Weekly Wage (SAWW) Average wages paid to workers in a set jurisdiction for a period of time, used to set the maximum and minimum for workers’ compensation benefits paid out to injured workers.
Temporary Partial Disability (TPD) Benefits paid to an injured worker who is temporarily unable to fulfill the full requirements of their job but is able to perform at a reduced level. Benefits paid in such instances are based on possible pay differences between the regular and temporary position.
Temporary Total Disability (TTD) Benefits paid to employees who are totally unable to work for a period of time but will make a full recovery. Though TTD payments stop when the employee is cleared to return to work, they may be eligible for TPD benefits if they still face some work restrictions.
The feed back we get most is ; yes this is helpful but we just don’t have the time to follow up on all our workers compensation claims. We hear ya! Our Comp Care program will do that for you as well as more. CLICK HERE if you want to know how.
Many companies are increasingly turning to staffing agencies where they lease employees to meet their needs for a variety of reasons, including increased workloads and high employee turnover rates. Companies that use staffing agencies can save money because they avoid selecting, hiring and training new full-time employees. In addition, using staffing agencies frequently offers companies peace of mind because they know that workers will show up and perform their duties consistently. The question becomes when you employ leased workers from a third party who provides workers compensation insurance for leased workers?
But what happens if one of the staffing agency workers is hurt on the job? Who is responsible for covering the injury? What if the injured worker wants to sue the staffing agency’s client company for negligence? Answering these questions requires a thorough understanding of the employment relationships between the staffing agency worker and the client company. And the way employees are classified affects how the staffing agency and the client company’s workers’ compensation and commercial general liability (CGL) policies apply to work-related injuries.
Workers’ Compensation Versus Commercial General Liability Insurance
Generally, companies are required to cover an injured employee’s medical treatment and lost wages through a workers’ compensation policy. This is a system of no-fault insurance that affords employees some security while recovering from work-related injuries. In exchange for these benefits, employees waive their right to sue their employers for negligence and related damages. Workers’ compensation provisions apply only where an employer-employee relationship exists between a company and its workers.
Commercial General Liability Insurance policies or CGL for short protect companies when third parties (non-employees) are hurt because of the company’s negligence or misconduct. The issue of liability is particularly important for companies with staffing agency workers because it is not always clear whether an employment relationship exists between the company and the staffing agency workers. To fully appreciate the complexity of the issue, companies must be able to properly classify staffing agency workers as either leasedworkers or temporaryworkers.
Leased Versus Temporary Workers Compensation
The definitions for leased and temporary workers vary from state to state, so an adequate classification of staffing agency workers requires a solid understanding of state and local requirements.
For CGL purposes, a leased worker is an individual leased to a client company by a labor leasing firm under an agreement between the company and the labor leasing firm to perform duties related to the conduct of the company’s business. The leased worker category does not include temporary workers. Under this definition, leased workers are considered employees of the client company and are, therefore, excluded from the client company’s CGL.
CGL policies define a temporary worker as an individual furnished to a client company to substitute for a permanent employee who is on leave or to meet the company’s seasonal or short-term workload conditions. Temporary workers are considered employees of the staffing agency and are covered by the staffing agency’s workers’ compensation policy and could be covered by the client company’s CGL.
The Coverage Gap
An insurance coverage gap exists when a leased employee is injured while in the client company’s employ. Leased employees are considered to be employees of the client company for CGL purposes, but they may not necessarily qualify as employees under applicable workers’ compensation regulations.
This results in employing individuals who could sue the client company for negligence (because they are not limited by applicable workers’ compensation provisions). A company with no CGL coverage must pay any court-ordered damages (because CGL coverage does not apply to the company’s employees).
Further it’s important to beware that many commercial general liability policies; especially construction general liability policies specifically exclude temporary or leased workers further exacerbating the commercial general liability coverage gap.
Solutions to the Coverage Gap
To bridge the gap created by leased workers and or temporary workers companies can look at shifting work-related injury liability to the staffing agency through an alternate employer endorsement or an extension of their CGL coverage to injury to leased workers.
Alternate Employer Endorsement
Client companies can negotiate with staffing agencies to include an alternate employer endorsement on the staffing agency’s workers’ compensation and employer liability policies. This endorsement protects the client company, providing coverage to the client company in the case of a tort action and by giving the client company all the workers’ compensation coverage the staffing agency enjoys.
Coverage for Injury to Leased Workers
This endorsement can be added to the client company’s CGL policy by changing the language that excludes leased workers and temporary coverage from CGL coverage. However, companies should recognize that insurance carriers will disfavor this solution as it effectively removes an exception they intentionally built into the CGL policy.
Lastly and most importantly it’s imperative that you speak with a Risk Advisor and lay out exactly what your plan is and why. Insurance is always a trailer and never a leader. Your insurance program should be designed to how you are effectively executing your business. If this is not properly communicated to your agent or broker chances are your current insurance program will fail when a claim occurs. If when you communicate your business plan to your broker the response you get back doesn’t bring clarity to a level of comfort that they understand this nuance it may be time to select a Risk Advisor instead of your current brokerage relationship.
As a business owner the responsibility of providing a safe, positive, and comfortable work environment falls on your shoulders. The unfortunate reality is that these responsibilities are not always upheld or maintained. To help protect businesses from harmful claims that may arise from a multitude of situations, the Employment Practices Liability Insurance (“EPLI”) policy would come into play. The EPLI policy provides coverage for wrongful acts during the
employment process, with the common claims being wrongful termination, discrimination, sexual harassment, and retaliation.
As part of this policy an insured business has the option to enhance coverage via the (unappreciated and undervalued) Wage and Hour Endorsement. This endorsement provides the named insured coverage for the cost of defending claims alleging failure to pay overtime to a nonexempt employee, with settlements of said claims generally excluded.
Why discuss this coverage now? In recent days President Obama has set his sights on raising the overtime pay threshold for wage and hour employees working 40+ hours per week, with plans for the change to take effect in 2016. Under the Fair Labor Standards Act employers are required to provide overtime pay to employees who work 40+ hours a week, with executives and managers being exempt from the requirement (these individuals are generally earning higher salaries). The target is to raise the threshold for the first time since 1975 from $23,660 to $50,440, more than doubling it.
With the increase in threshold we can expect to see an increase in wage and hour claims as many employers may not be immediately aware of their obligation. In an effort to better protect the company which you have worked so hard in growing, it may be worth:
Familiarizing yourself with the coverage
Discussing coverage options with an insurance professional
Exploring the market for coverage options and pricing
No business owner wants to enter a legal battle, but if required, wouldn’t you sleep better knowing that coverage is in place to help protect your investment?
