Promoting Safe Behaviors in the Workplace

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

Safety awareness is one of the most important factors in reducing workplace injuries. There are approximately three million workplace injuries, every year. This amounts to roughly 8,000 injuries per day, 350 per hour, or 6 injuries per minute. Many of these injuries are preventable. Unsafe behaviors or decisions are usually the most common contributing factors. If employees are unaware of hazards or not motivated to follow safety protocol, their behavior will expose them even more.

Promoting safe behavior in the workplace can be one of the most impactful ways of reducing injuries. I encourage business owners to go above and beyond the required controls and measures such as engineering, administrative, and personal protective equipment (PPE) and promote safe behaviors and a safe work environment. Below are examples of ways ownership and management can promote safe behaviors.

• Conduct frequent safety meetings with employees and encourage participation. Discuss previous injuries or near misses with your employees to identify the root cause and any corrective actions that are necessary. Be aware that not all corrective actions are readily accepted by employees, especially those seasoned employees that are set in their ways. It is important to listen to their concerns, analyze and modify the procedure or task so that the employee will buy into the changes and not be tempted to break the rules and work unsafely.

• Give recognition to employees who are performing tasks safely and demonstrate proper behaviors. A little bit of recognition amongst your peers can be extremely influential and can further promote safety in the workplace.

• Involve the employees in identifying and correcting hazards in the workplace. This can promote self-worth in an employee. Your employees are your eyes and ears in the field and they may identify an overlooked workplace hazard. It is especially impactful when the corrective action was a hazard they identified on their own.  

• Perform safety observations to encourage safe behaviors. While supervisory observations are important, business owners should also consider peer to peer safety observations. By collaborating with employees and involving them in the safety program, it will help them buy into any changes that are necessary further promoting workplace safety. 

• Having ownership and management consistently express their concerns for their employees well-being and safety is another way to promote safe behaviors. As a business owner, communicating to your employees that your main concern is their safety can drastically change the culture of a business. Reminding your employees that you want them to go home safely each day, goes a long way.  

Promoting safe behaviors in the workplace starts with ownership and management, but is executed daily by the workforce. Providing sound policies and procedures relating to safety, along with a strong collaboration between ownership, management, and staff can drastically improve safety in the workplace and promote a safety culture.

Rancho Mesa Insurance Services, Inc. is a strong advocate for workplace safety. We like to take a risk management approach with our clients and prospects to develop a program that fits their needs. Please feel free to reach out to me, Jeremy Hoolihan, at (619) 937-0174 to see how Rancho Mesa can improve your risk profile.

Protecting Employees from Third Party Harassment

The recent changes to California’s Anti-Harassment Training Requirements have prompted employers to take a closer look at their internal operations and how they can eliminate harassment from the workplace. A question that is frequently asked is “What happens if the harassment comes from someone other than one of my employees?” This is known as Third Party Harassment.

Third Party Harassment is when someone outside the organization harasses an employee. With a heavy focus on home care/home health care, third party harassment can arise between a nurse and an elderly client. In some cases, advances are made towards a nurse - further compounded in some cases by dementia or Alzheimer’s. Restaurants and bars are another common place where this type of harassment can occur when a patron or supplier harasses an employee. However, this type of harassment can occur in any industry where employees interact with people outside the organization. Several questions arise in these instances: As the employer, am I liable for third party harassment?  What can I do to address this? Can I insure against this type of harassment?

Is the employer liable for Third Party harassment claims?

The short answer is yes. An employer is responsible for creating and maintaining a harassment-free workplace for their employees. Failure to act on a third part harassment claim is not an option.

What can an employer do to address a potential situation?

If you become aware of an alleged act of harassment, act quickly. Engage the employee with sympathy. Not only will this show them that you care, but you need their input if you are going to maintain a safe work environment. Implement corrective actions immediately and ensure the employee will not be adversely affected. Investigate the incident through interviewing and evidence collection. Document all that was discovered and determine who is involved and what occurred. Depending on the seriousness of the incident(s), legal action may be necessary. In many cases, simply removing the employee from the situation and have a conversation with the alleged harasser is all it takes. For example, with the employee’s input, you may switch their schedule to work with a different client. If your employee is a sales representative, you might try switching accounts with another employee so they no longer need to work together.

If the harassment continues or is severe, you may need to stop doing business with the alleged harasser. While this might be difficult to do, the long term effects on employee morale and decreased likelihood of a harassment suit are worth it.

Does insurance cover these suits?

An Employment Practices Liability Insurance (EPLI) policy can cover against such claims, but only if it specifically includes “Third Party” in the wording. Some EPLI policies exclude or limit coverage. It is important when working with a broker that you clarify the coverage so you aware of what you are buying. 

Rancho Mesa Insurance clients have access to free online supervisor and employee Anti-Harassment training designed to educate the entire organization on the types of harassment, remedies, and the organization’s responsibilities.

If you have any questions, or any questions regarding California’s New Anti-Harassment Laws, please contact Rancho Mesa Insurance Services, Inc. at (619) 937-0164.

What is the General Indemnity Agreement & Who Has to Sign It?

Author, Andy Roberts, Account Executive, Surety, Rancho Mesa Insurance Services, Inc.

Most questions that we receive from contractors new to the industry or new to bonded work usually center around what is a General Indemnity Agreement (GIA) and why do they (ownership) and spouse(s) have to sign personally.

A GIA is a contract between the surety and the contractor (principal), where the surety agrees to provide bonds for the contractor. This is a standard document in the construction and surety industries. Its basic purpose is to protect the surety company from any loss or expense that the surety sustains as a result of having issued bonds on behalf of the principal.

Through the protections in the GIA contract, the principal will be required to reimburse the surety for any losses that they incur as a result of the principal not fulfilling their obligations identified in the job contract. This is why the GIA is signed both for the company and personally.

When executing this document, the surety will almost always require that it be signed by all owners, both for the company and personally, and their spouses, which can alarm some people. In the surety’s case, they need seek a complete indemnity package, with all owners and spouses, in order to protect themselves against a situation where one spouse may transfer assets to another spouse to prevent the surety from having access to them in the event of a loss. 

This article was designed to be a basic overview of a GIA and its purpose within the relationship between the contractor and the Surety. If you have any questions about this article or General Indemnity Agreements, please contact Rancho Mesa Insurance Services at 619-937-0166.

Understanding Your Claims: What Do You Have To Lose?

Author, Daniel Frazee, Executive Vice President, Rancho Mesa Insurance Services, Inc.

Claims happen. They come in all shapes and sizes, from all types of parties, and can cost your company in many different ways. An important aspect of managing the costs of risk start with gaining a clear understanding of your claims. Our clients are always looking to improve their bottom line. This article focuses on just one piece of the pie chart; workers compensation claims. Understanding the nuances of these cases can create measurable plans in the future to reduce frequency and severity of claims and ultimately lower your costs.

DIG UP THE ROOTS

Perhaps the most common problem solving method for identifying causes of problems or faults is referred to as a “Root Cause Analysis.” As someone who likely manages many facets of your business, developing systems that analyze failures of a process makes complete sense. Once a claim occurs, initiate an Accident Investigation that is meant to uncover all of the small details that ultimately led to the injury or incident. In many cases, a Best Practices approach involves this same process for “near miss” incidents. That is, perform the same process despite the fact than injury did not actually result from the incident. This allows your company to refine the approach, improve the analysis, and develop training modules addressing the failure(s).

MORE QUESTIONS LEAD TO ANSWERS...

When claims occur, proactive business owners build a list of specific questions that deliver uncensored facts. Those facts build a story and allow your team a clear view of what really happened. Some examples of questions that can be used by your team are listed below:

• How long had this injured worker been employed with us before the claim occurred?

• Was the employee following protocol when the injury occurred?

• Did the claim occur at the beginning or end of the day?

• How quickly did our team provide assistance and get him or her the care they needed?

• How quickly was the claim reported to our insurance company?

• Have we had incidents like this in the past?

ROLE PLAYING EXAMPLES

While role playing actual incidents and scenarios is not factual, it helps your team walk down a path to understand “what if” scenarios and forces discussion on how to address issues.

Example: Employee ‘A’ was injured when he fell from a ladder and fractured his leg. He had been employed for only two months. The injury that occurred was caused by a lack of proper training as the ladder was not properly secured. This claim occurred in the early morning and the area surrounding the ladder was wet. The team reacted quickly and was able to transfer the injured worker to an emergency room in less than an hour. The claim was reported 3 days from the incident. There have been two other similar “near misses” with ladders that did not result in injury.

Understanding your claims is a vital step in preventing future incidents. An investigation of an incident or near miss can uncover the root cause, explain the circumstances surrounding the incident, and help to identify scenarios and prevention plans. To learn more about understanding your claims, register for the Accident Investigation and Analysis training in Rancho Mesa’s Risk Management Center.

Stay Off OSHA's Radar with an Effective Ladder Safety Program

Author, Casey Craig, Account Executive, Construction Group, Rancho Mesa Insurance Services, Inc.

Year after year OSHA publishes the “Top 10 Most Cited Violations” and it always seems to include violations dealing with falls. Fall protection, scaffolding, ladders, and fall protection (training requirements) all made this list and all of them have been on this list perennially for over a decade. How can a company that is using ladders keep from becoming just another name on the list of violators? How can you ensure that your employees are using provided equipment properly?

The biggest mistake made with work at height is letting your employees perform their work using materials that are not meant for that job. Employees finding a chair, bucket, or truck to stand on to get those couple extra feet are the easiest ways to lead to an accident. From A-frames to extensions and step stools, there is a perfect tool for the job at hand. It does take a little preparation before sending your employees onto the job site. Having your supervisors make sure ladders are properly set up and fully functional to ensure your employees safety is as important as training your employees how to use a ladder.

Ladders have not miraculously become safer over the years. The materials used in making ladders may have changed, but the injuries that occur from using them have been the same. Here are some common misuses:

• Trying to overextend reach at the top of a ladder, instead of taking the time to get all the way to the bottom to move the ladder and maintain three points of contact.

• Stepping off from the third rung instead of keeping three points of contact all the way to the ground.

• Setting the ladder at the wrong angle before climbing (70-75 degrees is desirable).

• Trying to move a 70 pound ladder without asking for help and losing control.

There are countless ways that rushing or not paying attention to detail can leads to injuries. The American Ladder Institute (ALI) claims all injuries that occur on a ladder are preventable with the proper attention to detail. If you know that a ladder has a bent rung, or the frame is compromised, the risk is not worth having an employee get on that ladder. Ladders are manufactured to withhold four times the weight they are rated for, but if damaged there is no telling what could make it catastrophically defective. Make sure that there is enough tread on the foot of the ladder to keep your ladder in place while working at height.

Now that we know a little about our exposure, let’s see what we can do to fix the problem. Making sure you have the right equipment is by far the most important step to keep you from running into a violation. Keep your employees trained in proper ladder safety, and only let the employees that have been trained on a ladder. Properly tie off ladders, maintain your equipment over time, and attend ladder safety seminars regularly. One huge tool that is underutilized in the construction industry is having a consultation meeting with OSHA. Have them come out and inform you of things you could be doing better without the worry of being fined. OSHA is meant to be a tool to keep your employees safe, don’t hesitate to use them.

For questions about ladder safety seminars or what policies may match your company’s risk, please contact Rancho Mesa Insurance Services, Inc. at (619) 937-0164. We look forward to helping better your risk profile.

Pollution Liability for Landscape Contractors

Author, Drew Garcia, Vice President, Landscape Group, Rancho Mesa Insurance Services, Inc.

Most landscape contractors believe their exposure to pollution is limited to the herbicides, pesticides, and fertilizers they apply. In order to provide some limited coverage for this it is common to see the Herbicide/Pesticide Endorsement added to the Commercial General Liability Policy. Although the endorsement extends some coverage, Contractor’s Pollution Liability would help fill the gaps created by the General Liability Policy for all of the landscape contractor’s pollution exposures. 

Remember, General Liability Policies do not provide coverage for pollution. Contractors Pollution is protecting your environmental liability, and in today’s world the awareness to preserve the environment has never been stronger. A landscape contractor’s exposure to environmental liability is considered “high” and classed as “high” along with drilling, subsurface, site/dirt work, paving, mechanical and electrical contractors to name a few. 

Landscape contractor operations are almost exclusively performed outdoors in the environment which is the result of the high exposure. Beyond herbicide, pesticide, chemical applications and the property damage or bodily injury that may arise from such operations, other material exposures would include but are not limited to; fuel, oil, fumes, hydraulic fluids, silica, foundry sand, manure, dust, waste, water, natural gas, propane and mold. 

The Herbicide Pesticide Endorsement is an essential piece to any landscape contractor’s insurance program; however, a Contractors Pollution Liability policy is the best way to transfer your environmental exposure. Not all pollution policies are the same: capacity, coverage, exclusions and deductibles need to be examined. Making sure you have a policy that fits your operations and your exposure is critical.

For questions about which policies may match your company’s risk, please contact Rancho Mesa Insurance Services, Inc. at (619) 937-0164.

What Does the Employer Do After a Work Injury?

Author, Jim Malone, Workers’ Compensation Claims Advocate, Rancho Mesa Insurance Services, Inc.

A work related injury can be a very traumatic event for the injured worker, but also for their
co-workers, employer, family and friends. Some injuries occur from a specific event when everybody knows the injury occurred. Other times, incidents occur during the work day, or repeatedly over time, where the employee needs to report these incidents, accidents or developing symptoms to his supervisor, manager, or human resource manager according to company protocol. 

Prompt reporting of a work injury is very important for the employer and their continued responsibilities. The employee reports the injury or accident to his supervisor, manager, or appropriate employer representative. The employer than has 5 days to report the incident to the insurance carrier.

Once reported, the employer can examine the scene of the accident and verify the mechanism of injury. Witnesses can be identified and their statements can be obtained. If the cause of the accident was another person, that person can be identified and their information can be obtained. If caused by a tool or apparatus, that tool or item can be removed from the work place and kept in a secure area for future reference. If caused by a dangerous condition, the condition can be corrected or barricaded to prevent additional injury. 

Work injuries usually result in instances where the injured worker reports the injury to their employer and they are interviewed and referred to an occupational medicine facility. There are companies that provide medical professionals that triage, the injury with the employee via telephone, or a visit to the workplace. The employee may be allowed to drive themselves to this facility or may have to be driven by a supervisor or foreman. The employee is instructed to provide the employer the Work Status form from the physician immediately after each and every examination or follow up visit.  If he is released to work, his employer needs the physician’s release to allow a return to work and if they are released to modified duties, the employer then determines if modified work is available. If modified work is not available, the employer than sends the injured worker home until his next visit or until modified work becomes available. 

When the injury is addressed, there are forms that need completed for the work related injury. The most important document is the DWC 1 Claim Form. This form MUST be provided to the injured worker within 1 DAY of when the employer knows of the injury. This form starts the claims process with the insurance company. It is a two part form where the employee completes the top part and the employer completes the bottom. Upon completion, the form is submitted to the insurance company and copies are provided to the injured worker and kept by the employer. The employer is then to complete the Employer’s First Report of Occupational Illness of Injury Report (ER’s 5020 form). Then, they obtain the Supervisor’s Report of Work Injury Report and any witness statements that may have been obtained. All these forms and reports are submitted to the insurance adjuster upon receipt and/or completion.

Now that the claim has been created, the employee is obtaining medical treatment, and all the forms have been completed and submitted, the employee’s progress will be monitoring during their recovery.  Maintaining good communication with the employee and claims adjuster is very important for helping the employee get through this recovery process. 

For additional information, please contact Rancho Mesa Insurance Services, Inc. at (619) 937-0164.   

What Do You Mean My Deductible Is Infinity?

Author, Kevin Howard, CRIS, Account Executive, Rancho Mesa Insurance Services, Inc.

Employment Practices Liability Insurance (EPLI)

Employment Practices Liability Insurance (EPLI) can protect companies from claims related to wrongful termination, discrimination, defamation, unfair hiring/firing practices, and wage and hour lawsuits. EPLI policies may also provide defense costs associated with responding to employment related lawsuits.

HIGHER THAN AVERAGE DEDUCTIBLES

With the increasing frequency of EPLI claims and 40% of California claims occurring within companies with less than 100 employees, deductibles have risen to previously unseen levels. It is now common to see per claim deductibles at a $10,000 starting point and jumping as high as $50,000. These higher retentions can, at times, deter many employers from securing coverage when they might need it most.

YOUR DEDUCTIBLE IS INFINITY

For those employers who elect to self-insure this exposure and go bare without a policy, there is a question that needs to be asked. What is your deductible without EPLI coverage? The simple, very possible answer is that it can be infinity. That is, an employer is responsible for the first dollar to defend along with any future negotiated settlement. That unknown is why many of our clients ultimately purchase EPLI as their balance sheet cannot absorb an infinite loss.

ATTENTION BUSINESS OWNERS!!!

In this unsettling time, across various workforces, it makes good business sense to consider EPLI options with varied deductible ranges. Having that clarity brings comfort to many clients who have worked years to build their business, acquire assets, and improve their net worth. Exposing their business to what could very well be unlimited costs creates considerable risk moving forward.

COMMON MISCONCEPTIONS

Misconception: “If I file an EPLI claim, I will owe the entire deductible upfront.”

Truth: When a claim is filed, policy holders will team up with an attorney who will bill hours until your self-insured retention is met. This could run the course of years with small bills being paid out over time.

Misconception: “I can’t afford to pay an entire annual premium at once, on top of my other insurance renewal premiums.”

Truth: Rancho Mesa can generate a finance plan that will allow you to pay your premiums over a 12 month period.

Misconception: “If I ever have a claim occur, I will just purchase a policy at that time to protect my business.”

Truth: EPLI carriers include prior acts exclusion for this very reason. Any claim that has been made, even in its infant stages, will be declined. You must have a policy in place in advance in order to protect yourself.

Misconception: “I have never had an EPLI claim. Why would I have one now?”

Truth: The California mandate AB 1825 and SB 1343 have increased awareness and visibility of employment related lawsuits. In light of workplace discrimination concerns and the #MeToo movement, the State of California requires all employers with more than 5 employees to conduct Sexual Harassment Prevention Training.

Misconception: “My general liability policy covers EPLI.”

Truth: General liability carriers exclude employment practices liability. If you were to file a claim they would deny coverage.

Business owners deserve a clear explanation of ways to protect themselves from insurable risk. If you would like to discuss how your business is protected, please contact Rancho Mesa Insurance Services, Inc. at (619) 937-0164.

4 Essential Tools For Managing Your Company's Risk

Author, Alyssa Burley, Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

Risk Management is the identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. Companies manage their risk through what is known as an Injury and Illness Prevention Program (IIPP). As a business owner, supervisor or manager, there are tools available to assist in risk management endeavors.

“Injury and illness prevention programs are systems that can substantially reduce the number and severity of workplace injuries and illnesses while reducing costs to employers,” according to OSHA.

Below are four tools your company can use to proactively manage the IIPP.

Training

Access to a robust bilingual database of both online and offline trainings is essential to ensuring employees are up to date on required and supplemental training. Weekly training shorts (e.g., tailgate topics, safety shorts) that are industry specific and relevant keeps employees focused on safety and reinforces a safety culture within the company.

“Training in the safe way for workers to do their jobs well is an investment that will pay back over and over again in fewer injuries and illnesses, better morale, lower insurance premiums and more,” according to OSHA’s training requirements document.

Tracking of Employee Training

Maintaining employee training documentation is vital for ensuring employees are trained on required topics and in regular intervals. Having an electronic tracking system can streamline the process and allow management to generate reports and search records from any device with internet access.

According to OSHA’s documentation, “it is a good idea to keep a record of all safety and health training. Documentation can also supply an answer to one of the first questions an incident investigator will ask: ‘Did the employee receive adequate training to do the job?’”

To learn more about OSHA training requirements, review Training Requirements in OSHA Standards.

Incident Tracking and OSHA Reporting

Documenting near-misses, injuries, and accidents can keep your company OSHA compliant while helping to prevent incidents in the future. Making sure supervisors complete a thorough investigation and collect witness statements at the time of the incident can also ensure hazards are addressed immediately. Electronic documentation of a near-miss or incident creates a standardization of data that is collected, allows for trend reporting, and electronic submission of OSHA 300A Summary data.

Written Job Hazard Analysis

A job hazard analysis (JHA) identifies the dangers of specific tasks in order to reduce the risk of injury to workers. JHAs are important for managing risk because they help to identify hazards which can be reduced or eliminated before an employee is hurt. Once a JHA is established, management should observe and document their findings and any remedies that are made.

Risk Management starts with a written IIPP, but it is up to management to implement and utilize the available tools to make it effective. Contact Rancho Mesa’s Client Services Department at (619) 438-6869 to learn more about the Risk Management Center platform.

Group Captive Insurance 101

Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.

The property and casualty market over the last decade has been what we consider “soft.” Overall, insurance premiums have remained relatively flat, or in the case of workers’ compensation rates have decreased considerably. However, we are seeing significant pricing pressure in commercial auto. In the next few years we expect to see the same pressure in workers compensation. One alternative risk financing strategy that you may want to consider before the coming hard market is a “Member-Owned Group Captive.”

A member-owned Group Captive is an insurance company owned and operated by captive members, strictly for the benefit of those members. This structure enables middle market companies the ability to increase their underwriting credibility through the collective purchasing power of the group. These groups can be related or homogeneous, like a trade group or association, or unrelated/heterogeneous which could be companies similar in size.

Advantages of a Group Captive

• Lower Insurance Premiums over time

• Financial Incentives for strong Loss Control

• Increased control over claims management

• Long term control of your Insurance Pricing

• Investment Income

Who should consider a Group Captive?

• Companies that have shown long term financial strength.

• Owners who are committed to safety and have strong safety programs in place.

• Loss histories that are significantly better than average in their respective industries.

• Annual insurance premiums of $150k or more for workers compensation, general liability, and commercial auto.

• Businesses that are seeking long term control over their risk financing costs.

To learn more about Captives, register for our workshop held on April 16, 2019 from 9:00 a.m. to 11:00 a.m. at the Boys & Girls Club of East County administrative offices in Santee, CA. Doug Hayden from Captive Resources, LLC will provide an informational presentation about Captives and if it is the right fit for your business.

For other insurance-related questions, please contact Rancho Mesa Insurance Services at
(619) 937-0164.

Painters Stretching Can Lead to Reduced Premiums

Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

Having played professional baseball for several years, I know the importance of stretching to prepare oneself for the day. My team would stretch when we got to the field, then again before batting practice, and once more before the game started. Most people reserve stretching for sporting events. They forget the importance of stretching before work — feeling they will “loosen up” as the day goes along. However, there are countless ways for employees to become injured and those medical bills can grow all too fast.

While there are things that can be done to try to mitigate the claims after they occur, the best way to save on your premium is to prevent injuries from ever happening. If you can set aside just 5 minutes a day for your employees to stretch their muscles that will be used throughout the day, that could reduce strain and pull claims dramatically.

As recent as 2015, the WCIRB has broken down the most common injuries that occur in the 5474/5482 class codes. 57% of the injuries could have possibly been prevented by allotting just a few minutes a day for stretch and wellness. The most common injuries for painters are to their lower extremities, back, and upper extremities (not including the hand). It is easy to see, that with all the bending down and painting above their heads, cumulative injuries are going to happen if no precautions are taken. An average claim for these types of injuries can cost just shy of $35,000. Having multiple claims of these types can be crippling for a company.

Having employees stretch when they get to the jobsite, and after lunch is the best way to reduce soft tissue claims. Making sure the legs are ready to bend, the back and neck are stretched out, and shoulders are prepared for the work at hand, is as important as anything they will be doing that day.

Your employees may need a little extra energy in the morning, but caffeine reduces blood circulation and can lead to stiffness when returning from lunch. It is important to get the blood flowing again with some trunk twists, toe touches, and arm swings. This will increase blood flow throughout the body. Finally, inflammation can worsen as the day progresses, and having leafy greens reduces inflammation. Providing a healthy lunch can help to build morale and keep that nagging soreness away while increasing productivity.

Rancho Mesa has put together a Mobility and Stretch Program™ for their clients. The program has reduced the number of reported strain and pull claims, and has significantly helped drop clients’ MODs. Please reach out to Rancho Mesa Insurance Services, Inc. with any questions you may have.

The Benefits and Risks of Third Party Indemnity

Author, Andy Roberts, Account Executive, Surety Division, Rancho Mesa Insurance Services, Inc.

For a contractor that is wanting to bid a job, or has won a job that requires a bond they are not able to qualify for on their own, one option to increase their bond capacity and ability to qualify would be to have a third party indemnify to their surety. While there are definite risks, this type of agreement can be very beneficial to both parties.   

For the contractor, the main benefit is the additional financial backing provided by the third party that will help alleviate concerns of a surety that might lead to the contractor running out of money, therefore, not being able to complete the job as contracted. For the third party, they can negotiate what their compensation will be through the contractor, since they are taking on a financial risk by signing the indemnity agreement. This type of agreement should not be entered into lightly because there are risks for both the contractor and the third party.

A Surety Bond Indemnity Agreement is a signed agreement which states the principal will indemnify the surety company, should a claim occur. When a third party also signs this agreement, they are opening themselves up to the risk of having to indemnify the surety should the contractor that is doing the work fail to complete it, forcing the surety to step in to complete the job. This becomes even more likely if the contractor becomes insolvent, making the third party next in line for indemnity purposes. While there is risk associated with this type of agreement, there are ways to mitigate that risk and that is for both the contractor and the prospective third party to thoroughly review each other’s businesses.   

When a third party is providing indemnity to support another businesses project, it is vitally important that they have a firm grasp of that company’s current capacity, capital and character, and this is the same for the contractor. The contractor needs to know that if they do get into trouble on the job, the third party does in fact have the ability to help them out of the situation.

For any questions regarding third party indemnity, please contact Rancho Mesa Insurance Services at (619) 937-0164.

3 Ways for Nonprofits to Opt Out of Unemployment Tax

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Nonprofit leaders who want to reduce overhead and tax burdens should consider revisiting their organizations’ unemployment tax status. More to the point, thanks to the Federal Unemployment Tax Act of 1972, nonprofits can eliminate the unemployment insurance tax and outsource the headache of claims administration. Let’s investigate further.

Traditionally, the state charges a nonprofit employer payroll tax to fund the state unemployment insurance program. Each nonprofit’s tax rate adjusts each year depending on employee turnover and unemployment claims. According to several sources, nonprofits pay an average of $2.00 in taxes for every $1.00 in paid claims. So how do we reduce this overage?

Now for the good news; nonprofits are not required to pay the state unemployment tax. Provision 3309a of the Federal Unemployment Tax Act allows 501(c)(3)s to choose whether to pay into the state program at the prescribed tax rate, or to pay into the program an amount equal to the actual unemployment benefits paid out by the state program. In other words, a nonprofit employer may “opt out” and reimburse the state.

Below are three “opt out” and administrative solutions a nonprofit should consider depending on its desired level of risk.

1. First Dollar Insurance: A private insurance company provides a fixed rate based on the nonprofit’s individual claims history and expected future claims. This option provides budgetary certainty with a low-risk product. If unemployment claims exceed expectations, there is no additional cost to the employer.

2. Customized Stop-Loss Insurance: For nonprofit leaders who want to accept more risk and realize higher savings, the employer pays an agreed upon self-insured retention, after which point the insurance company pays all benefits.

3. Nonprofit Unemployment Trust: For nonprofit organizations with high employee retention or low unemployment claims frequency, a trust can offer a high return in exchange for higher risk. In most cases, the trust protects the employer against unexpected, catastrophic charges. The nonprofit employer has a high retention that must be met before the protection is triggered.

Each solution presented above provides services to further reduce risk and unemployment expenses. These services include claims management, hearing representation, unemployment cost management training, and transparent billing and accounting.

Whether the nonprofit pays unemployment taxes or reimburses the state, there are advantages and disadvantages. Nonprofit leaders who understand these details and the nuances of each solution will have the confidence to move forward in the direction that best suits the organization.

Higher Workers' Compensation Premiums Linked to New Employee Injuries

Author, Drew Garcia, Vice President, Landscape Group, Rancho Mesa Insurance Services, Inc.

Based on Rancho Mesa Insurance Services’ clients’ information, we have been able to identify that the majority of work-related injuries occur within the first year of employment. During the first year, the majority of these claims occur in the first six months. Having a system for on-boarding and training new hires is a critical component to dealing with the heightened risk of injury during this time period.                                                                                                                       

New Hires Effect Risk Exposure

During the workers’ compensation underwriting process, companies are commonly asked if their payroll will continue to grow, stabilize, or decline. Underwriters can assume that with growing payrolls, the company will be hiring new employees. New employees will likely increase the probability of work-related injuries. Underwriters must take this information into consideration when justifying a premium that will cover the company’s complete risk exposure.

Mitigating the Increase in Premium  

It is extremely beneficial for the owner and insurance broker to relay the measures that their company has committed to train, manage, and track new hires. If you are looking for a way to improve your safety efforts, consider focusing on proper new employee onboarding and training to minimize the potential impact claims can have on your company.

Please reach out to Rancho Mesa’s Client Services Coordinator Alyssa Burley at (619) 438-6869 to learn more about the Risk Management Center and how you can improve your safety training.

The Ticking Time Bomb for Plumbing and Mechanical Contractors: Lower Expected Loss Rates Can Mean Higher Experience Modifications

Author, Kevin Howard, CRIS, Account Executive, Rancho Mesa Insurance Services, Inc.

The Workers Compensation Insurance Rating Bureau (WCIRB) released the 2019 Expected Loss Rates (ELRs) in the 4th quarter of 2018. ELRs are the average rate at which losses for a classification are estimated to occur during an experience rating period. They are generally expressed as a ratio per $100 of payroll and can often have a dramatic impact on experience modifications. To support this point, the ELRs in the plumbing class code 5187 dropped 17% on January 1, 2019. This decrease is not getting significant attention, but could potentially create negative implications for California plumbing contractors and their respective experience modifications in 2019, 2020, and beyond. All plumbing and mechanical contractors should be made aware so they can prepare and make changes to protect themselves from the impact. Similar to a leak behind a wall, this could go undetected until the experience mods are released and then it is too late and too much damage has been done.

LINKING ELRs WITH YOUR PRIMARY THRESHOLD

The lowered expected loss rates also impact primary thresholds. Your primary threshold is the maximum primary loss value for each individual worker’s compensation claim. If primary thresholds move lower, one small lost time claim can cause a significant spike in an experience modification. An elevated experience modification can impact not only pricing, but opportunities to bid certain types of work within the commercial sector.

WHAT CAN YOU DO TO GET OUT IN FRONT OF THIS?

If these terms are completely new to you and your organization, lean on your insurance broker to provide the education needed to get up to speed. That can start with building a detailed service plan that focuses on controlling your experience modification. Some examples of critical elements that should be discussed would include:

• Addressing open reserves on claims that are impacting the future experience modification.

• How the timing of the unit stat filing will affect the future experience mod and cost.

• Ensuring that your safety program addresses the root cause of claim frequency and severity.

• Trainings that are aligned with OSHA compliance.

• Experience MOD forecasting up to 7 months prior to your firm’s effective date.

AVOIDING THE TICKING TIME BOMB

The ticking time bomb can be avoided by taking certain steps and actions that are strategically put in place with your insurance broker. If this article has created concern and/or these terms are brand new to you, pick up the phone and schedule an experience modification control meeting with an advisor from Rancho Mesa at (619) 937-0164. Their Best Practices approach to managing risk starts with a client-centric process that is focused on education and execution.

Cause of Concerns for Contractors: Implementation of Aerial Lift Standards

Author, Casey Craig, Account Executive, Construction Group, Rancho Mesa Insurance Services, Inc.

Beginning December 2019, standards for using and renting aerial lifts will drastically change, globally. As a result, contractors are concerned they will not be prepared for the changes which could lead to loss of production and fines.

Since the use of aerial lifts is becoming more frequent, the new standards were approved by the American National Standards Institution (ANSI) in an effort to align the United States and the rest of the world with having globally accepted safety standards. Canada published its standards last May and the United States is following suite with the release of the ANSI A92 .20 (equipment responsibilities), .22 (safe use), .24 (training). Further details can be found in Scaffold & Access Industry Association’s (SAIA) copy of the standards.

Moving forward, “Aerial Work Platforms” (AWP) will be referred to as “Mobile Elevating Work Platforms” (MEWP). The new standards are meant to address ongoing problems with:

• Effect of Wind on a Load

  • MEWP’s may be rated one of two ways; for interior use only or for exterior use, but those will have a maxim height limitation without consideration to the length the arm can be extended.

• Platform Capacity

  • The new equipment will automatically shut off if it exceeds the specified weight limit. Thus, in some cases, it may be necessary to use two lifts to do a job safely.

• Chassis Tilt  

  • Understanding the terrain where the lift will be working will be vital. Most equipment has been rated for firm or level ground, but new machinery will also take into account the tilt of the machine and will shut off if it is unsafe.  

Manufacturers are already taking heed and changing their product designs to accommodate the new requirements. Aside from the changes to the machinery, contractors will need to evaluate who is trained to operate the MEWPs. 

• Operators will need to be trained in how to use the machinery and walk their job sites to look for problems before using the lift.

• Supervisors must know how the machine works, its functionality, how much it weighs and how much weight it can handle, so that they are not relaying poor information to the operator.

• Additionally an occupant riding in an aerial lift (i.e., MEWP) must have a general understanding of how the machine works so if there is a problem they can safely get back down.

Previously, operators were only required to know how high the lift being used would need to go. As of December 2019, the operator will also need to know the terrain where the aerial lift will be operated, the load weight, and the lift’s reach under load for the job. When renting equipment it is likely the rental industry will issue a supplemental application to pre-qualify each job.

Machines built before the new standards will be grandfathered in and will not have to be updated. However, this could cause issues for contractors if they work on job sites that require the most current safety specifications. This could limit the use of older machinery.

While these standards will not take effect until December of this year, there is still a lot to be learned and will require proactive planning by all contractors to insure compliance. There are still many unanswered questions including exactly how involved OSHA will be in enforcing these new rules. Rancho Mesa will be providing updates regularly to assist you through these changes. 

For additional information, please contact Rancho Mesa Insurance Services, Inc. at (619) 438-6900.

Optimizing Risk Management While Reducing Gaps in Coverage

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

Working within the construction unit at Rancho Mesa for over 15 years, I have developed strong long-term business relationships with my clients. As an insurance advisor, I have an obligation to insulate clients from exposures and liabilities. Many of which may remain the same from year to year. However, it is vital that business owners meet with their insurance advisor frequently, especially prior to an insurance renewal, to avoid potential gaps in coverage.  Below are a few key topics that should be reviewed on a regular basis by a company’s insurance advisor. 

Review and Discuss Business Operations

It’s always a good business practice to have the insurance advisor review the business’s operations to see if there have been any changes that could affect its risk profile.  For example, I once had a client in the construction industry that specialized in commercial tenant improvement work. The company wanted to start a residential construction division. By understanding this change before it actually took place it provided us the time to adequately access the differences in the insurance exposures between the commercial and residential marketplace.  As a result, we were able to proactively and affordably place their coverage with an insurance carrier that was comfortable with both exposures.

Review Financial Projections

With the economy fluctuating year to year, it is vital that you meet with your insurance advisor and go over your financial projections for the coming policy term.  These items should include projected; annual sales, payrolls, subcontract costs and any changes in your surety requirements. These factors will help in not only negotiating the most favorable renewal terms for you but help to avoid any unforeseen expenses like a large final audit

Discuss Business Assets

Businesses routinely buy, sell, and upgrade their tools, equipment, and vehicles. While most are conditioned to notify their insurance advisor of any changes, it is always a good business practice to review assets with the insurance advisor at each pre-renewal meeting. It is common that there are items that were either sold (that need to be removed) or new (that need to be added to policies). By reviewing the assets on a regular basis, it minimizes the chance that items are missed and you either are paying premium on an item you no longer have or have an uninsured loss.

Discuss and Revisit Recommended Coverages

Recommended coverages may include an Umbrella, Pollution Liability, Professional Liability, Employment Practices Liability, and Cyber Liability policies. Even if you have discussed these coverages in the past with your insurance advisor and have declined them, they should not assume you will do so again in the future. The business climate is constantly changing; therefore, so are the risks you are facing.  Understanding where you have gaps  in your risk management profile and making informed decisions to either transfer the risk to an insurance carrier (purchase insurance) or retain the risk yourself (don’t purchase insurance) is always a Best Practices standard.

If you would like to discuss and learn more about Rancho Mesa’s proprietary risk management tools and explore our help in developing a Risk Management program based on your specific business needs, you can reach out to me at 619-937-0174.

Ensuring CA Sexual Harassment and Abusive Conduct Training is SB 1343 Compliant

Editor’s Note: This article was originally published on February 7, 2019 and has been updated for accuracy on September 12, 2019.

Author, Alyssa Burley, Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

In September 2018, former California Governor Jerry Brown approved Senate Bill 1343 (SB 1343) which expanded the requirements for Sexual Harassment and Abusive Conduct Prevention training within California workplaces.

“An employer who employs 5 or more employees, including temporary or seasonal employees, [is required] to provide at least 2 hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to all nonsupervisory employees by January 1, 2020, and once every 2 years thereafter, as specified,” according to SB 1343. 

On August 30, 2019, approved Senate Bill 778 extends the training deadline set in Senate Bill 1343 from January 1, 2020 to January 1, 2021. The changes made by SB 778 not only extends the due date to January 1, 2021, but also addresses concerns about supervisory employees and clarifies when temporary workers must be trained. Read about these changes here.

Ensuring the Training is in Compliance

In order for the Sexual Harassment and Abusive Conduct Prevention training to be compliant, it must meet the following requirements. The training must:

• Be administered in a classroom setting, through interactive E-learning, or through a live webinar. E-learning training must provide instructions on how to contact a trainer who can answer questions within two business days.

• Be conducted by an eligible trainer:

  • Attorneys who have been members of the bar of any state for at least two years and whose practice includes employment law under the Fair Employment and Housing Act or Title VII of the federal Civil Rights Act of 1964;

  • Human resource professionals or harassment prevention consultants with at least two years of practical experience in:

    • Designing or conducting training on discrimination, retaliation, and sexual harassment prevention;

    • Responding to sexual harassment or other discrimination complaints;

    • Investigating sexual harassment complaints; or

    • Advising employers or employees about discrimination, retaliation, and sexual harassment prevention.

  • Law school, college, or university instructors with a post-graduate degree or California teaching credential and either 20 hours of instruction about employment law under the FEHA or Title VII.

• Explain the following topics:

  • The definition of sexual harassment under the Fair Employment and Housing Act and Title VII of the federal Civil Rights Act of 1964;

  • The statutes and case-law prohibiting and preventing sexual harassment;

  • The types of conduct that can be sexual harassment;

  • The remedies available for victims of sexual harassment;

  • Strategies to prevent sexual harassment;

  • Supervisors’ obligation to report harassment;

  • Practical examples of harassment;

  • The limited confidentiality of the complaint process;

  • Resources for victims of sexual harassment, including to whom they should report it;

  • How employers must correct harassing behavior;

  • What to do if a supervisor is personally accused of harassment;

  • The elements of an effective anti-harassment policy and how to use it;

  • “Abusive conduct” under Government Code section 12950.1, subdivision (g)(2).

  • Discuss harassment based on gender identity, gender expression, and sexual orientation, which shall include practical examples inclusive of harassment based on gender identity, gender expression, and sexual orientation.

• Include questions that assess learning, skill-building activities to assess understanding and application of content, and hypothetical scenarios about harassment with discussion questions.

SB 1343 compliant trainings will be made available later this year via the California Department of Fair Employment and Housing (DFEH) website. However, employers can hire eligible qualified trainers to conduct the trainings at their convenience.

The DFEH has made available a sexual harassment and abusive conduct prevention toolkit, that includes a sample Sexual Harassment and Abusive Conduct Prevention training, certificate of completion and other resources for employers to use in conjunction with an eligible trainer.

Other training options include the online Anti-Harassment training Rancho Mesa offers to all of its clients’ supervisors and employees throughout the country in response to California’s Senate Bill 1343 (SB 1343) and Senate Bill 1300 (SB 1300).

For questions about this training requirement or to learn how to enroll your supervisors and employees, register for the “How to Enroll Supervisors and Employees in the Online Anti-Harassment Training” webinar or contact Rancho Mesa’s Client Services Department at (619) 438-6869.

Rancho Mesa Insurance will continue to monitor training options as they become available.

How Accurate Work-in-Progress Schedules Can Positively Affect Your Bond Program

Author, Matt Gaynor, Director of Surety, Rancho Mesa Insurance Services, Inc.

When meeting with new contractors looking to qualify for increased bonding capacity, one of the first items generally discussed is the work-in-progress (WIP) schedule. Understandably, the balance sheet and profit & loss statement get the most attention when compiling financial information for the bond company, but the WIP, whether on a quarterly or six month basis, allows the bond company to gauge how well the contractor has estimated their projects and how conservative they have been on a project’s profitability. Preparation of an accurate work in progress schedule is the only way to gauge the true profitability of the company.

The WIP or status of contracts schedule is used to track the progress of contractors’ projects from start to finish. The schedule discloses the details of each contract’s percentage of completion, and profitability to date in the current reporting period.

The major components of the WIP include:

1. The Contract Amount (which may go up and down throughout the contract based on change orders).

2. The Costs Incurred to Date (we recommend to charge as many costs back to the project as possible).

3. Total Estimated Costs (should be updated on a timely basis).

4. Billed to Date (billing the project on schedule).

The accuracy of the WIP schedule is extremely important since the bond company will provide capacity to the contractor based on profit to date for each project. The bond underwriter will track the projects over a certain period to determine if profits typically close higher or lower than the original estimate. For example, let’s look at a contractor who initially estimates his projects at 15% profit when they start up, yet historically closes them out at 20% at completion. If the contractor anticipates a $100,000 profit on a project and the work is 50% complete, the bond company may provide an additional $500,000 of capacity on that $50,000 profit (10% case) even though the project has not been closed out. 

On the reverse side, a bond company will have major concerns when they review a WIP schedule from a contractor that typically closes out projects at less than the original estimate.

If you would like a better understanding of how the work-in-progress schedule affects your Bond Program, please contact Rancho Mesa Insurance Services, Inc. at (619) 937-0165 to discuss ways to maximize your bond capacity.

Equipment Hazards and Ways to Reduce Exposure

Author, Daniel Frazee, Executive Vice President, Rancho Mesa Insurance Services, Inc.

The very nature of the construction business creates risk - from injuries in the course of employment, damage to property, third party liability, etc. One important area that can be overlooked is equipment security. While there is simply no way to eliminate 100% of risk to equipment, there are several steps a contractor can take to initiate proper controls and minimize losses in this area.

Managing Keys and Locks

Locks should be placed on all vehicles, storage sheds, portable equipment, and trailers. It is recommended that “high security” locks, which are pick-resistant or laminated in steel, be used in all cases. Chains should be case-hardened and thick enough to prevent cutting. Many contractors also use locking fuel caps on vehicles and passive alarm systems, for higher valued machinery, to disable equipment or sound an alarm when there is attempted theft.

Operating or Transporting Equipment

Drivers and/or operators of equipment must be screened prior to use. Requiring a valid driver’s license is a good start, but also consider asking for medical history, criminal background check, motor vehicle record, random drug screens, and sight and hearing checks. Employees should be trained properly in company safety procedures, rules, and emergency protocol. In loading or unloading situations, consider the angle of the ramp, how your employees are stabilizing the piece of equipment, placement of flags, and ensuring the ignition and brakes are locked.

Construction Site Security

Construction sites have always been attractive targets for thieves. The considerable value of equipment, product, tools, and machinery create strong appeal, particularly if that location is not properly secured. Stepping up the security at a jobsite can come in many forms but several best practice methods stand out. They include securing a specific area within the site for equipment storage. The more difficult it is for a thief to access equipment, the less motivated they will be to take the risk of accessing the site. Maintaining an equipment inventory control with photographs and “check-out” systems can be critical to holding employees accountable. Lastly, and perhaps the most logical task to improve security on a jobsite, are regular inspections. These can occur from superintendents, owners, managers, etc. This oversight shows all contractors performing work that your equipment is important and you are managing it regularly.

Fire Prevention

Managing the exposure to fuel is an important first step for preventing fire losses of equipment on a jobsite. Engaging an outside vendor to provide fueling services is always a possible solution, but may not be realistic. If the contractor is responsible for their own fueling, consider the flammability of different fuels, location of onsite fuel supplies, tank inspection, and methods for clean-up and disposal of the fuel. Regular intervals of visual inspections by the operator and any ensuing maintenance allow for easy fixes or repairs that minimize the development of bigger issues.

As the construction industry continues reaching strong post-recession levels, the use of equipment from trade and general contractors, across the board, is more prevalent. Developing a “safety net” around jobsites, pre-qualifying those using equipment, and prioritizing theft and fire mitigation lower your organization’s overall risk. Take some or all of the ideas above as your first step in integrating equipment security into your overall safety plan.

For additional information, please contact Rancho Mesa Insurance Services, Inc. at (619) 937-0164.