Important Updates to Minimum Wage Policies for 2023

Author, Megan Lockhart, Media Communications and Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

As businesses ring in the New Year, it is important for owners to note some key changes to state and local wage policies taking effect January 1, 2023. 

Established by the Fair Labor Standards Act (FLSA), the federal minimum wage rate stands at $7.25. However, changes to minimum and tipped wages will impact individual states and local areas. In California, the State minimum wage as of January 1, 2023 is $15.50 regardless of tips. Be sure to check the updates to your specific location to ensure your company is best prepared for the New Year.

Local Minimum Wage Rates for California

Locality	Coverage	Minimum Wage as of January 1, 2023 Increase
Alameda City		$15.75
Belmont		$16.75
Berkeley		$16.99
Burlingame		$16.47
Cupertino		$17.20
Daly City		$16.07
East Palo Alto		$16.50
El Cerrito		$17.35
Emeryville		$17.68
Foster City	Employers that have a business license from Foster City	$16.50
Fremont		$16.00
Half Moon Bay		$16.45
Hayward	Employers with 25 or fewer employees	$15.50 (state rate)
Hayward	Employers with 26 or more employees	$16.34
Long Beach	Hotel employers (100 or more guest rooms)	$16.73
Long Beach	Employers of concessionaires at the Long Beach Airport and Long Beach Convention Center	$16.55
Los Altos		$17.20
Los Angeles City	General	$16.04
Los Angeles City	Hotel employers with 150 or more guest rooms	$18.17
Los Angeles County (unincorporated areas)		$15.96
Malibu		$15.96
Menlo Park		$16.20
Milpitas		$16.40
Mountain View	Employers that are subject to the Mountain View Business License Tax or that maintain a facility in Mountain View	$18.15
Novato	Business with 1 – 25 employees	$15.53
Novato	Business with 26 – 99 employees	$16.07
Novato	Business with 100+ employees	$16.32
Oakland	General	$15.97
Oakland	Hotel employers (50 or more rooms) with qualifying health benefits	$17.37
Oakland	Hotel employers (50 or more rooms) without qualifying health benefits	$23.15
Palo Alto		$17.25
Pasadena		$16.11
Petaluma		$17.06
Redwood City		$17.00
Richmond	Employers that offer qualifying health benefits	$15.50 (state rate)
Richmond	Employers that don’t offer qualifying health benefits	$16.17
San Carlos		$16.32
San Diego		$16.30
San Francisco		$16.99
San Jose		$17.00
San Mateo City		$16.75
Santa Clara City		$17.20
Santa Monica	General	$15.96
Santa Monica	Hotel employers	$18.17
Santa Rosa		$17.06
Sonoma City	Employers with 25 or fewer employees	$16.00
Sonoma City	Employers with 26 or more employees	$17.00
South San Francisco		$16.70
Sunnyvale		$17.95
West Hollywood	Employers with 49 or fewer employees	$17.00
West Hollywood	Employers with 50 or more employees	$17.50
West Hollywood	Hotel employers	$18.35

Clients can login to the RM365 HRAdvantage™ portal to review the full local minimum and tipped wages for all states and counties under the New Chart: 2023 State and Local Minimum and Tipped Wages.

Managing Your Surety Relationship for 2023 and Beyond

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

Over the past two years, there has been a lot of talk about a looming recession. If a recession happens, its severity remains to be seen, but regardless, it is important for contractors to be taking an active approach in building their relationship with their bond company and utilizing the services of a surety specific agent. 

Surety companies are conservative and err on the side of caution when it comes to providing bonds, which makes it imperative that the contractor build a strong relationship with their management and underwriting teams. Annual meetings should be conducted, as this provides the underwriter valuable insight into the company while also allowing them to build a more personal relationship with the contractor. Additionally, it is important that there is regular communication between all parties throughout the year regarding the contractor’s financials and performance on jobs, as this type of discussion can help build trust between both parties. This may seem pretty standard, but it is not easily accomplished unless a contractor is working with a surety broker that specializes in the bonding industry.    

The surety industry is specialized and relationship driven, which makes partnering with the right broker even more critical as the country moves into unprecedented financial times. Effective brokers know each carriers’ appetite; they have relationships with those underwriters and should be able to easily determine which surety will be able to provide a program to match the contractor’s needs. This type of knowledge and experience can greatly benefit a contractor in the event the economy begins to turn and surety markets begin to limit capacity and/or pull back from offering bond programs.    

In this most uncertain time, contractors should begin building and, in some cases, re-building their surety relationships. With considerable work lined up in Southern California over the next few years, strengthening these bond programs can allow for maximum capacity and potentially profitable growth. 

For any questions about managing your surety relationships or to discuss if we can assist with any bond-related needs, contact me at aroberts@ranchomesa.com or call my direct line at (619) 937-0166.

Employers Adapt to New Pay Transparency Requirements

Author, Lauren Stumpf, Media Communications & Client Services Specialist, Rancho Mesa Insurance Services, Inc.

Pay transparency is becoming more common for companies, especially as laws are being passed making variations of it a requirement. Pay transparency is the idea that employers should be open, or transparent, about what they pay their employees, and how they decide on compensation for specific roles.

More employees are wanting clarity about their own pay and how it compares to their peers. According to HR and recruiting experts, employees may leave or give less effort at work if they feel they’re not being paid fairly.

Job recruiters are also finding that people searching for job opportunities want to see pay ranges on job postings, and some will not apply if that information is not available.

As of January 1, 2023, California employers with 15 or more employees must include base pay ranges in job postings and ads. Colorado, Washington, and soon to be New York, are among other states to pass similar laws.

Employers should be aware that employees already have a legal right to discuss their pay. Under federal law, employers may not keep their non-supervisory employees from discussing their wages with each other. In addition to rights under federal law, many employees and including supervisors have protections under state laws that allow them to freely discuss their wages. It is recommended that employers eliminate any policy telling employees that discussion of wages is discouraged or prohibited, or that wages are confidential.

Utilizing Rancho Mesa’s RM365 HRAdvantage™ Smart Employee Handbook Builder is a great way to ensure that your company policies are compliant.

Being open with salary expectation up front can save companies time and money on recruiting. Hiring managers can waste a lot of time on interviews if they wait until after they have conducted multiple interviews to finally reveal the salary, only to learn that it does not meet the expectations of the candidate.

Job postings that include pay transparency are shown to have significantly more applicants than those that do not. In the tight labor market that we are currently facing, especially in the construction industries, employers should be willing to try anything that will set them above the rest.

For additional resources on pay transparency, our clients can visit the RM365 HRAdvantage™ portal.

Employers Prepare to Submit OSHA Form 300A

Author, Lauren Stumpf, Media Communications & Client Services Specialist, Rancho Mesa Insurance Services, Inc.

The time is here for you to submit your company’s OSHA 300A Form. The OSHA 300A Form is a company’s summary of work-related injuries and illnesses within a given year. Employers must electronically submit their 2022 OSHA Form 300A data to Federal OSHA by March 2, 2023.

Along with electronically submitting the data, the form must also be posted in the workplace, in a place visible to employees from February 1st to April 30th. To ensure employee confidentiality, the Form 300A does not include personal information such as employee names.

According to OSHA, establishments with 20 to 249 employees in designated industries are required to submit the 300A data. Establishments with 250 or more employees that are required to keep OSHA injury and illness records must also submit the data.

Companies under Federal OSHA jurisdiction can use the ITA Coverage Application to determine if they are required to electronically report their injury and illness information to OSHA. Establishments under State Plan jurisdiction should contact their State Plan. 

There are three options for injury and illness data submissions. You can manually enter your data, upload a CSV file to add multiple establishments at the same time, or transmit data electronically via an API (application programming interface).

OSHA’s Injury Tracking Application (ITA) is using a new login format for submitting the Form 300A data. Those who have used the old login in previous years will need to make a new Login.gov account using their same email address in order to access the application for the 2023 collection of Calendar Year 2022 Form 300A data.

For additional information and detailed instructions on creating a new account, please visit OSHA’s Injury and Reporting webpage.

If Rancho Mesa clients have entered their 2022 incidents in the Risk Management Center, they will be able to generate their 300A Summary along with the .CSV file to upload to the Federal OSHA’s Injury Tracking Application website. Please refer to our video for instructions on how to do this.

Closing the Installation Floater Coverage Gap for Landscape Contractors

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

Landscape contractors have varying levels of exposure when it comes to installation projects. However, they virtually all share the same common coverage gap for trees, plants, shrubs, and lawns. 

An installation floater covers property being installed by a contractor. For landscapers, this could be a number of different items depending on the scope of work: irrigation systems, hardscape, low voltage lighting, and plant material to name a few. Most installation floaters will exclude plants, trees, shrubs, and lawns within the policy under “property not covered.” 

The property being installed is generally insured under a few different scenarios. Temporary storage at the yard, at the jobsite, in transit, and installation at the jobsite. Common losses include fire, theft, and accidental damage.

The obvious concern is a scenario in which plant material is damaged or stolen and the insurance policy denies the claim due to the common exclusion. 

When considering the limit for your installation floater, you will want to estimate your average job value for material cost and labor cost to install the product. You will also need to know if the policy is written on blanket coverage or scheduled location. If a project comes up that is out of the ordinary, you can always increase the limit for that specific project by engaging your insurance provider in advance of take-off.

The cost of plant material and labor changes each year. The broker price index for the nursery, garden, and farm supply stores has increased by about 43% since 2019. Wage inflation has continued to drive payroll cost. Be sure to re-evaluate your exposure and ensure that plants, trees, shrubs, and lawns are covered for your installation exposure by working with your insurance professional and carrier to remove the exclusion completely, or amend the limit to provide a max dollar amount per tree, plant, shrub, or lawn being installed.

To discuss this coverage or review your current policy, contact Drew Garcia at (619) 0200 or drewgarcia@ranchomesa.com.

Cal/OSHA Adopts New Non-Emergency COVID-19 Regulations

Author, Lauren Stumpf, Media Communications & Client Services Specialist, Rancho Mesa Insurance Services, Inc.

On Thursday, December 15, 2022 the California Occupational Safety & Health Standards Board (Cal/OSHA) voted on newly proposed COVID-19 regulations during a public forum meeting. With a 6 to 1 vote, the Non-Emergency COVID-19 Prevention Regulations were passed and adopted. The regulations will take effect once they are approved by the Office of Administrative Law in January 2023. They remain in effect for 2 years thereafter. However, the recordkeeping subsections will remain in effect for 3 years.

Previously, the proposed standards had the word “permanent” in the title despite it having the two and three year expiration dates. Cal/OSHA is now referring to the regulations as the “COVID-19 Prevention Non-Emergency Regulations.”

These new regulations include some of the same requirements found in the current COVID-19 Prevention Emergency Temporary Standards (ETS), but there are some new provisions.

First, let’s begin with pointing out some key requirements that are staying the same.

• With the new regulations employers will still need to make COVID-19 testing available at no cost to the employee and during paid time to employees after a close contact.

• Employers will still need to provide their employees with face coverings and respirators upon request.

• Employers must still report information about employee deaths, serious injuries, and serious occupational illnesses to Cal/OSHA.

Some key difference between the current ETS and the new regulations include:

• Employers are no longer required to maintain a standalone COVID-19 Prevention Plan, as long as COVID-19 requirements are addressed within a section of their Injury and Illness Prevention Program (IIPP).

• Employers must now report major outbreaks to Cal/OSHA.

• Exclusion pay for employees has been removed from the new regulations. This means employers will no longer be required to pay employees while they are excluded from work due to COVID-19. Instead the employer would only need to provide employees with information on the benefits they would be entitled to under state, federal, and local laws.

• There are also some definition changes to what is considered “close contact” and “exposed group.” “Close contact” is now defined by looking at the size of the workplace in which the exposure took place. For indoor airspaces of 400,000 or fewer cubic feet, “close contact” is now defined as sharing the same indoor airspace with a COVID-19 case for a cumulative total of 15 minutes or more over a 24-hour period during the COVID-19 case’s infectious period. For indoor airspaces of greater than 400,000 cubic feet, “close contact” is defined as being within six feet of a COVID-19 case for a cumulative total of 15 minutes or more over a 24-hour period during the COVID-19 case’s infectious period. The term “exposed group” was clarified to include employer-provided transportation and employees residing within employer-provided housing that are covered by the COVID-19 Prevention standards.

Information provided by Cal/OSHA. For a full and detailed list of regulations please refer to Cal/OSHA’s Title 8 Proposed State Standard.

In order to be best prepared for these changes, it is recommended employers review the California Department of Public Health (CDHP) and Cal/OSHA guidance on requirements for things such as the use of face masks. Employers must also develop, implement, and maintain effective methods to prevent COVID-19 transmission by improving ventilation. It’s important to review CDPH and Cal/OSHA Interim Guidance for Ventilation, Filtration, and Air Quality in Indoor Environments.

NIAC Reimbursing for Damage to Employees Personal Vehicles

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

Many employees of non-profit organizations use their personal vehicles while performing work-related duties. Following an auto accident, the employee’s personal auto insurance will respond to a third party liability claim. Only once those policy limits are exhausted will the organization’s non-owned auto liability coverage respond.

But who is responsible for physical damage to the employee’s vehicle?

Below, we discuss the impact of California Labor Code 2802 and one insurer’s response.

If an employee’s vehicle is damaged while performing work-related duties, the responsibility of the repair cost falls to the other driver or the employee’s auto insurance. An issue arises, however, when a personal auto lines carrier adopts exclusions that eliminate coverage for an employee involved in a business-related activity.

Complicating matters, California Labor Code 2802 states that “an employer must indemnify an employee for all necessary expenditures or losses that the employee incurs in direct consequence of performing work-related duties.” Non-profit leaders must understand the organization’s obligation to reimburse the employee for the cost to repair a personal vehicle.  

This unexpected expense can be challenging, especially for smaller organizations with employees driving personal vehicles to help fulfill the mission.

Fortunately, Nonprofit Insurance Alliance of California (NIAC), an insurance risk sharing pool for 501(c)3 organizations, has developed a useful coverage to address this issue. If coverage is elected, NIAC will reimburse the employer’s expense for physical damages to a California-based employee’s personal vehicle. Coverage offers $5,000 per claim with a $25,000 policy aggregate limit, thereby easing the financial burden created by Labor Code 2802.

Understanding these types of coverages and their exclusions are key for non-profit organizations. If you’re unsure how your policy would respond to this scenario,  contact me at (619) 486-6569 jmarrs@ranchomesa.com for a policy audit to see if your organization is covered.

Construction Death Rate Not Decreasing as Expected

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

With the heightened safety regulations and OSHA guidelines over the past decade, many would think we are working in a much safer environment with fewer fatalities. Despite the rising number of employees and using a standard based off deaths per 100,000 employees, the data is showing that the number of fatalities are the same as they were a decade ago.

With a much larger workforce, OSHA is severely understaffed compared to the previous decade. The agency does not have enough inspectors to visit nearly enough jobsites. They have been more reactive in the sense that they are imposing fines on companies after they have had losses. These fines represent a fraction of what it would take to motivate construction companies to revamp their respective safety programs. Employers have factored these fines into the cost of business to a certain extent.

OSHA is now contemplating whether it is worth doubling the jobsite inspections annually and/or increase fines drastically. There is no solid data to link an increase in jobsite inspections to fewer fatalities, so the logical answer would be heavier fines and a push for more negligent death claims to be criminally prosecuted.

Either of these options will lead to more oversite or more fines for the construction industry as a whole. One critical approach you can take is to prepare yourself as a business owner. Be proactive. Consider working with the consultation branch of OSHA to visit your operation and jobsites. This division within OSHA does not issue fines or violations. They do, however, offer recommendations and advice on how to make your operation safer. With the potential of OSHA’s fines increasing, it is time to make sure that your company is on the forefront of safety. A great first step is reaching out to your insurance broker to help you meet requirements and push you to exceed. With a potential recession looming, it is important to make sure you have insulated your company from risk, so you have the best chance at thriving.

If you have any urgent questions on this topic, you can reach me directly at (619) 438-6900 or email me at ccraig@ranchomesa.com.

Utilize Payment Bonds as a Backstop for Getting Paid

Author, Anne Wright, Surety Relationship Executive, Rancho Mesa Insurance Services, Inc.

Contractors may do their work and meet their contractual obligations, but on some jobs it’s harder to get paid than on others. As in any business, your collection activities are key to getting your money. Don’t be afraid to be a squeaky wheel. There are a couple of things I’d like to share as either a reminder, or perhaps an education, that all contractors should know and consider.

Know where your money is coming from. If you are working on a public works job, it is of course coming from the public agency/owner of the job. If you are working on a private job, there are more questions to be asked.

If you are working as a general/prime contractor or a sub-contractor on a private works project, always confirm the financing – always. Make sure you document your job file with information as to where the money is coming from, and specifically cover your scope/line items of work. There may be a construction loan. If so, you will typically obtain that information for your preliminary notice purposes. If not, don’t hesitate to ask for some verification as to where the funds are held. Your surety will commonly pursue the source of the financing, if you are asked to bond the job. 

What do you do if you are struggling to collect what you are owed? First and foremost, be aware of what your basic payment protections might be.

Your most likely assurance of payment for undisputed work would be the payment bond. Payment bonds are a primary protection to sub-contractors and suppliers if they are working for a prime contractor who has had to provide their bonds to the owner. There is an investigative process in the event of a claim against the bond, but the surety is there to make sure all valid claims are paid.

Sub-contractors, if you are working for a general contractor, you will want to make sure you get a copy of any payment bond that might be held by the owner for the general contractor’s work.  

Suppliers, you may have payment bond protection as well, depending on who you are working for on the job and the type of job (i.e., federal, public or private).

Public works project bonds are required on most public works jobs of $35,000 or more (but can vary by agency) and Federal jobs of $150,000 or more.

Private works project bonds are rarely required of the general contractor, but it is important to ask if they are to document your job file. Otherwise, your best options are the stop notice to the lender and/or mechanic’s lien.

Best practice here is to always ask for a copy of the payment bond from your general contractor. Confirm one has been provided to the owner if you are a sub-contractor or supplier. If you are a lower tier sub-contractor, find out if the sub-contractor you are contracted with had to provide a bond and obtain that for your job file! If you are a supplier, ask about those payment bonds that might protect you as well.

What if a payment bond isn’t in place to cover you? There are various remedies short of litigation that may be available to you. These include mechanic’s lien filings, and/or stop notice to the lender/owner of a project. 

Mechanics lien can be used if the job is on private property (needs to be recorded with the county recorder). At the very least, this puts you in a generally secured position on the title of the property when it is sold. It’s not a quick remedy, or even guaranteed payment, depending on other liens already filed ahead of you.

Stop notice may be useful if the project is for private works (filed against the construction lender). This notifies the lender that you are owed money. You will have to file a bond to accompany your stop notice, but when properly filed, it requires that the lender withhold monies until your matter is resolved. Again, there is a process involved here and it’s often not a quick remedy, but it should be considered.

If you are working on a private job and there is no payment bond filed on the project, the stop notice and/or mechanics lien are key.

It's important that you know your lien rights and filing times whether you are working on a public or a private project (the various protections have certain timetables, e.g. after notice of completion, etc. that have to be considered for you to have rights to these various remedies). If you are a member of a trade association, you no doubt have a member who is an attorney. They can provide the current timelines for the various lien rights. We can also offer referrals to construction attorneys who can provide you with the timetables for the purposes of these various filings or related support.

Pursuing these remedies are best practices. It doesn’t hurt to file the preliminary notice on any job when you begin your work. Everyone is entitled to managing their relationships the way they see best for their business, but hopefully some of this information will be helpful.

If you have questions about payment bonds, contact me at (619) 486-6570 or awright@ranchomesa.com.

Key Elements of a Lessor’s Risk Policy

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

As a landlord and owner of commercial property, you have exposures like fire, theft and bodily injury that must be addressed to protect your investment and, in many cases, a family asset from risk. As you look to finance these properties, most lenders will require checks and balances to ensure that your property is properly insured and that the mutual investment is protected.  

The Building and Property Area Must Be Protected

A lessor’s risk insurance policy, also known as an LRO, is set up to protect the replacement value of the building from fire, theft, and damage caused by a vehicle, third party, water/burst pipe and vandalism to name some common areas of coverage. There are extensions that will add ample benefits to LRO policies for building owners like ordinance and law coverage which would cover any needed updates required based on city code when rebuilding. Or an “Increased replacement cost limit up to 125%” which would protect a building owner from inflationary costs. There are several solid options for lessor’s risk policies but it is always wise to speak with a broker that can guide you through the process.

Liability Insurance in Case You Are Sued as the Building Owner

The second and equally important part of a lessor’s risk policy is the business liability portion. As a landlord/building owner, if someone were to slip and fall in front of your building or in your parking lot, you may be named in a lawsuit. The second key component to a lessor’s risk policy should include business liability. LRO policies will typically offer $1,000,000 per occurrence and $2,000,000 aggregate. If you are a landlord who is renting your building to a business, you would need this liability policy in the event you are sued for injuries sustained by your tenant as the builder owner.

If you own a Building, Avoid this Mistake

Do not only rely on the sole procurement of a standalone property insurance policy. If you own a building, it is critical that you procure a lessor’s risk policy. A lessor’s risk policy is the best alternative in protecting your family asset through the risk transfer process.

Rancho Mesa has access to several A+ rated lessor’s risk carrier options. So, if you have any questions or need help securing this coverage, reach out to me at (619) 438-6874 or khoward@ranchomesa.com.

All Licensed California Tree Care Companies Now Required to Carry Workers’ Comp. Insurance

Author, Rory Anderson, Account Executive, Rancho Mesa Insurance Services, Inc.

Within the last few weeks, all licensed tree care companies received a notice in the mail from the California State License Board (CSLB) stating that effective January 1, 2023, the CSLB is requiring that all companies with a D-49 Tree Service Contractor License must have workers’ compensation insurance, regardless of whether they have employees.

Currently, licensed tree care companies without employees are exempt from having workers’ compensation insurance. This new requirement comes after Governor Gavin Newsom signed Senate Bill 216 into law on September 30, 2022 which requires all contractors (not just tree service contractors), with or without employees, to have workers’ compensation insurance by January 1, 2026.

According to an article by Red Bluff Daily News, “The California State License Board research confirms that many of the approximate 50 to 60 percent of licensed contractors who currently claim an exemption to workers’ compensation insurance do use employees.”

This not only puts the non-insured tree workers and the public at risk, but it also poses an issue of unfair advantage to the companies who do not carry workers’ compensation. This creates a disadvantage for tree service contractors who play by the rules, as they are subject to higher business costs.

This new requirement will hold every tree service contractor accountable to the same standards by leveling the playing field, and it will protect the tree workers and our public.

How does this impact you, as a licensed tree service contractor?

• If you currently have workers’ compensation insurance in place, confirm with your broker that they have properly provided a certificate of insurance to the CSLB to show proof of insurance. You may also check your license status with the Department of Consumer Affairs to confirm it is up to date.

• If you are a tree care company that does not currently have employees, contact me to explore workers’ compensation insurance options for your business, effective January 1, 2023.

If you would like to discuss further, please reach out to me at randerson@ranchomesa.com or call me at (619) 486-6437.

Five Things to Know Before Your Annual Surety Meeting

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

November is the month that I meet with our contractor clients to discuss how the current year will end up and begin planning for the next year. We will also touch base regarding the items our surety carrier partners will want to hear about when we schedule our annual meetings (after the December 31, 2022 financial information is available).

Similar to having an open book test, if our contractor knows in advance what will be requested, they can prepare accordingly and anticipate any “red flag” type items that might be of concern for the bond company. Below is a general list:

1. Items on the balance sheet with an emphasis on cash, accounts receivable, borrowing against the bank line of credit, and equity.

   An aging schedule of the accounts receivables will be very helpful to determine what amount is in excess of 90 day collections.

2. The revenue and net profit or net loss from the income statement to reflect if 2022 was a profitable or losing year. Also, a discussion of any Paycheck Protection Program (PPP) money that was loaned to the contractor and if the entire amount was forgiven in 2022.

3. They will review the work in progress and completed contract schedules to discuss which projects were successful and others that lost money. Be prepared to provide additional detail on any problems connected with losing projects and steps taken to correct this on future work.

4. Potential new opportunities you anticipate in 2023. Will any of these projects exceed your current program, contain work outside your normal scope or geographic territory? Be prepared to address how you will manage additional risk that may be a concern to the bond company.

5. Tax Planning. What additional withdraws do you anticipate to cover taxes, etc.?

If you would like more information on how your bond carrier might analyze your 2022 financial information, please contact me at (619)937-0165 or mgaynor@ranchomesa.com.

Training Supervisors on Workplace Injury Protocol Can Improve Claim Outcomes

Author, Sam Brown, Account Executive, Rancho Mesa Insurance Services, Inc.

California employers work hard to maintain a safe workplace, but accidents and injuries can occur. While human resources professionals typically have an excellent understanding of the workers’ compensation claim process, proper supervisor training can improve workers’ compensation outcomes for employers and their injured workers.

Supervisors are often the first to become aware of a workplace injury. Without proper training a supervisor may have the best of intentions, but can create problems by not following company protocols. Sound supervisor training may include:

• How to Get the Injured Worker Medical Attention
  Supervisors should know the designated medical provider or understand how and when to direct an employee to use telephonic nurse triage services. The supervisor should know what information the provider will need and, if necessary, how the injured worker should be transported to the medical provider’s physical location.

• Internal Communication
  Supervisors must know how to initiate documenting a workplace injury and how to notify the proper parties of the incident. What incident report should be used? Are witness statements important? Who needs to know of the incident as soon as possible? Whose responsibility is it to report the claim to the insurance company?

• Effective Communication
  A supervisor setting a tone of empathy immediately following a workplace injury can lead to positive outcomes and reduce the likelihood of litigation. Effective communication can even reduce claim frequency. A study by Shaw, et al., shows how four hours of supervisor training on communication skills and accommodation for workers reporting health concerns produced “a 47% reduction in new claims and an 18% reduction in active lost-time claims.”

Well-designed training can greatly improve workers’ compensation claim outcomes when supervisors follow company protocols, get injured workers medical care, and practice effective communication in the workplace.

Rancho Mesa has developed downloadable forms for the Supervisor’s Report of Employee Accident or Near Miss, and Witness’ Statement to help collect important information about an accident.

For more information on effective workers’ compensation programs, please contact me at sbrown@ranchomesa.com or (619) 937-0175.

Cal/OSHA Proposes Permanent COVID-19 Standards

Author, Lauren Stumpf, Media Communications & Client Services Specialist, Rancho Mesa Insurance Services, Inc.

With the COVID-19 Emergency Temporary Standards (ETS) scheduled to expire at the end of the year, Cal/OSHA has proposed new permanent standards.

The proposed permanent COVID-19 standards will be voted on during the December 15, 2022 Occupational Safety and Health Standards Board meeting. If passed, despite the word “permanent” being in the title, the standard will be in effect for the following two years. However, the record keeping requirements of the standard will apply for the following three years. So, with an effective date of January 1, 2023, the COVID-19 requirements can be expected to lift on January 1, 2025 and the recordkeeping requirements expected to lift on January 1, 2026.

Some proposed changes within the permanent COVID-19 standards include:

• Employer Notice Requirements - The proposed permanent standards edits what information employers need to include in exposure notices to employees and the acceptable ways in which employers must distribute those notices.

• Definition Changes - There are definition changes to what is considered a “close contact,” an “exposed group,” an “infectious period,” an “outbreak,” a “returned case,” and more.

• Removal of the Exclusion Pay Policy - Under the current ETS, employers have to provide exclusion pay before requiring employees to exhaust other forms of potential paid leave. With the new proposed standards this is eliminated and employers would only need to provide their employees with information about local and federal COVID-19 benefits.

• Reporting and Recordkeeping Requirements - Employers will no longer need to keep a record of close contacts and will no longer have to report information about workplace cases and outbreaks to their local health department. However, in a major outbreak setting, employers must report the outbreak to Cal/OSHA. That being said, employers still need to be aware of their local health department’s requirements.

For a detailed look at the proposed changes please refer to Cal/OSHA’s formal proposal document.

While there appears to be few differences between the current temporary standards and the new proposed permanent standards, it is recommended for businesses to locate and review their COVID-19 Prevention Program to ensure it can be readily updated. The new proposed permanent standards removes the requirement for employers to keep a separate COVID-19 Prevention Program, as long as their Injury and Illness Prevention Program (IIPP), includes COVID-19 policies. So even if you decide to only have an IIPP, it will still need to be updated with the latest COVID-19 procedures. Rancho Mesa has a COVID-19 Prevention Program template, that can be downloaded here.

Rancho Mesa will update its clients and readers with the status of the final rule once Cal/OSHA votes on December 15, 2022.

Auto Insurance Carriers Struggle With Effects of Inflation

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

Inflation continues to plague our nation with no end in sight. With a consumer price index (CPI) reaching as high as 9.1% in July of 2022, the trickledown effect is far reaching. In the second quarter of 2022, the auto insurance marketplace saw a loss ratio of 78.4%. This is quite a spike compared to the average loss ratio of 65% between the years of 2016-2020. Inflation is not the only contributing factor to the challenges within the auto insurance marketplace; we’ll discuss medical inflation, supply chain shortages, and labor shortages.

A continual rise in medical inflation has resulted in the increased cost of treating injured drivers and passengers. Since 2020, healthcare spending has increased by 9.7%. In the first quarter of 2022, the average bodily injury claim was up 24.2% with medical inflation being a significant factor. Because insurance companies are having to pay more due to medical inflation, consumers are seeing increased premiums.    

Also, in the first quarter of 2022, the average collision claim cost reached a record of $5,743. This is a 36.5% increase since the first quarter of 2020. Much of this increase can be attributed to supply chain shortages and disruptions.

COVID-19 shutdowns caused decreasing demand for good and products. There was also an ice storm in February of 2021 that knocked out factories across the South. The Suez Canal was blocked for six days, and there was a semiconductor shortage due to the United States’ reliance on companies overseas.

Now that things have opened up post-pandemic, there are still shortages of available parts and supplies which continues to affect our economy. These supply chain factors have contributed to the average cost of a new car increasing 11.4% and the average used car jumping 7.1%. With the costs of cars increasing and the shortage of available parts, the result is a huge uptick in the cost of repairs and/or replacement of damaged vehicles, as well as the insurance costs.

Labor shortages are another important factor impacting the auto insurance marketplace. Simply put, the shortage has made it difficult to find skilled workers to make vehicle repairs. While the unemployment rate is back to pre-pandemic rates, many people are still testing the waters as they return to their jobs and, in some cases, taking completely different career paths. With the increased demand for workers, employers are offering and paying higher wages, which also leads to higher costs for goods and services, which further increases overall insurance costs.

As auto insurance premiums continue skyrocketing as a result of these inflationary factors, now is the time to focus on improving your business’ auto program. 

For help in developing a Fleet Safety Program that will improve your company’s risk profile and policies and procedures, please feel free to reach out to me at (619) 937-0174 or jhoolihan@ranchomesa.com.

Don’t Overlook the Importance of Fleet Safety

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

From an insurance premium standpoint, one of the largest cost for any landscape company would be the auto policy, and for good reason. According to the National Highway Traffic Safety Administration, a motor vehicle crash happens every 12 minutes. Of course, not all those accidents are from landscapers, but it’s still a staggering statistic none the less. 

For all auto insurers, their combined ratios (claims dollars/premium) for this line of insurance is typically above 130%. Thus, for every dollar collected in premium they are on average paying out $1.30 in claim costs. These high claim costs are due in part to larger settlements being paid out for bodily injury, higher replacement costs (parts/labor) for the vehicles, etc. As a result, auto insurance premiums are rising overall and in some cases those increases are significant.

While an individual company can have little impact on the industry as a whole, there are a few areas landscape or other businesses can be aware of that will help defer or reduce premium increases for them.

The following are a few common mistakes landscape drivers are making to create an unsafe driving environment:

• Distracted Driving – This is by far the most common mistake any driver can make. It is imperative that your employees remain focused while operating a vehicle. The number one cause of distracted driving comes from cell phone use while driving a vehicle.

• Traveling at unsafe speeds

• Following too closely behind another vehicle

Best in class landscape companies understand the importance of fleet safety and really hone in on their fleet safety procedures. 

Some of the things the top landscape companies are doing to help keep auto accidents to a minimum include:

• Maintain your vehicles - Always take care of your vehicles, making sure everything is running properly. Complete regular inspections (daily, weekly, and monthly). Keep accurate maintenance logs and check for tire and brake wear. Vehicle maintenance and care is an important safety component, and helps reduce the chance of an auto accident.

• Fleet Safety Program -  Create a written company Fleet Safety Program and provide driver safety trainings to all employees. The Fleet Safety Program must detail leadership’s expectation of what is required to be a driver for the company and what the consequences will be if the procedures are not met. Driver trainings should not be a “check list” item, meaning you do it once and then you forget about it. 

For the Fleet Safety Program and the driver trainings to be effective and successful, they need to be a recurring training topic. 

Watch our Fleet Safety: Above and Beyond Compliance webinar to help you get started with your Fleet Safety Program. Your Client Services Coordinator will be happy to provide tools to help assist you in building your program.

By taking a serious look at your current fleet safety procedures and making necessary changes, you will not only lower your annual premiums on your auto policy, but you will also create a safer environment for your employees.

If you have any questions or want to discuss your risk management needs further, please reach out to me at ggarcia@ranchomesa.com and I will be happy to help you.

Contractors Prepare to Bid for $1.2 Trillion in Government Infrastructure Contracts

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

Last fall, the federal government passed the $1.2 trillion Infrastructure Investment and Jobs Act to rebuild and modernize America’s roads, bridges, transit, rail, airports, broadband and wastewater infrastructure. With this tsunami of public funds starting to become available, state and local government agencies will require contractors to enter a pre-qualification process in order to bid upcoming projects. Many of these entities will look closely at the contractor’s Experience Modification Rate (EMR or ExMod).

The EMR is a numeric representation of a company’s payroll and claims history, compared to businesses in the same industry or standard industry classification. EMRs create a common baseline for businesses while allowing for a surcharge when employers' claims are worse than expected and credit when employers' claims are better than the industry average. More specifically, companies with an EMR rate of 1.00 are considered to have an average loss experience. Factors greater than 1.00 are considered worse than average, while less than 1.00 are considered better than average.

Pre-Qualification Process

In the highly competitive world of construction bidding, it has become more common that contractors can be precluded from the pre-qualification process due solely to above-average EMRs. This represents an oversight as many companies have strong, well-developed safety programs, yet their EMR is holding them back. Some examples of this are:

• EMRs are lagging factors. They only factor the last three policy periods, not including the current policy period.

• EMRs can include claims that may have been unavoidable and do not represent a lack of safety (i.e. an employee is rear-ended by an uninsured motorist).

• Large severity claims from smaller sized companies can impact the EMR much more negatively than a similar sized claim at a larger firm.

• The effectiveness of claims handling may vary from one insurance company to another, thus impacting certain employers when cases remain open with high reserves.

Rather than placing such a critical importance on the EMR Rate, owners and contractors designing the pre-qualification document should include frequency indicators like incident and DART rate (i.e., days away, restricted or transferred) forms. These measuring tools incorporate current year totals and can provide up to 5 years of historical data. Incident rate calculations indicate how many employees per 100 have been injured under OSHA rules within the specific time period. The DART rate looks at the amount of time an injured employee is away from his or her regular job. Lastly, contractors attempting to become pre-qualified should have the ability to provide a detailed explanation should their EMR exceed 100.

This can include loss data, a summary of the company’s Illness and Injury Prevention Plan (IIPP) and code of safe practices, and more information on what exactly the company is doing to reduce future exposure to loss.

Given the importance of the pre-qualification process and the potential for contractors to be precluded from new opportunities to bid work, we’ve developed a Best Practices approach to assist companies in managing their EMR.

Managing Your EMR With Best Practices

The Best Practices approach to high EMRs includes a total claim physical, safety KPI dashboard, claims advocacy, and implementation of risk management tools.

Total Claim Physical
The total claim physical accurately identifies your company's strengths and weaknesses, and then scores the company against others in the industry. It includes an audit of the EMR, analysis of claim frequency and severity, claim trends and determine root causes, provide quarterly claims reviews, and conduct pre-unit stat meetings.

Safety Key Performance Indicators (KPI) Dashboard
A tool companies can use to strategically manage the underlying components that directly impact the experience modification rate and help project future experience modification deviations.

Claims Advocacy
Utilizing a claims advocate can decrease existing claim costs, reduce excessive reserves, and expedite claim closures, which can reduce the EMR.

Risk Management Tools
Our Risk Management application provides access to safety training materials and tracking, analysis of incidents and OSHA recordkeeping, and monthly risk management workshops and webinars.

For more information on managing your EMR before the pre-qualification process, contact me  at (619) 937-0167 or sclayton@ranchomesa.com.

Benefits of Offering Modified Work to Injured Workers

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

There are many things the employer is required to do after a work related injury occurs. There are also additional things an employer can and should do after an employee is injured, though not required by any regulatory agency, like offering modified work. 

Obviously, there is the immediate need to address the injury itself. This is usually done by the lead, foreman, or supervisor and would include stopping the bleeding, placing ice on the injured area, etc. The injured worker’s injury then needs to be assessed by a medical professional. There are options for having the injury medically assessed. For minor injuries, it may be by calling a triage service or having a medical triage specialist (nurse or paramedic) go to the injured worker to determine if this minor injury can be taken care of with self-care or if the injured worker needs to be seen at an occupational medicine clinic. With referring your injured worker to a clinic, you should determine if the injured worker can drive themselves or if they need a company representative to drive them.

After the injury is properly addressed, focus on the reporting of the claim. Gather the forms and reports that need to be completed or obtained to provide to the insurance adjuster. Your next decision comes after the treating physician completes their initial evaluation. The physician should provide doctor notes, the mechanism of injury, how the injury occurred, and any other additional information. The physician may also provide wound care, sutures, x-rays, ace wraps, medications, ointments and make referrals for physical therapy, acupuncture and/or chiropractic treatment, etc.

The treating physician then provides their recommendations on the injured worker’s ability to return to work. For more severe injuries, the treating physician may want the injured worker to remain off work completely and could recommend temporary total disability. After some time off work and with some provided treatment, the doctor usually recommends that the injured worker return to work, but with some restrictions, such as not lifting over a certain amount of weight, not exceeding so many hours of weight bearing, etc. The restrictions provided are usually consistent with the body part(s) that were injured.  

So, the treating physician is releasing the injured worker to return to work but not to full, physical capacity. This is called a release to modified work, restricted duties, or light duties. From the insurance claims perspective, this is referred to as temporary partial disability. The modified work restrictions are usually slowly decreased while the injured worker continues the treatments and recovers from the work injury. This gradual recovery continues until the injured worker is able to resume all their physical work activities. This is called being released to full work activities, unrestricted duties, or to their usual and customary duties.

When the injured worker is released to modified work (i.e., restricted, light) duties, the employer decides if they can provide the injured employee duties that allows them to work while avoiding certain physical activities consistent with the doctor’s return to work recommendations.  

Benefits to the Employee

Providing modified, restricted, light duty work serves many purposes. First and foremost, providing modified work can reassure an injured worker that their employer cares for them personally, professionally, and psychologically. A work injury can be a very traumatic event, and returning to work as soon as possible after a work injury can help the injured worker feel confident their employer will be there for them and their family as they recover from the accident. This is one of the ways the employer can show their support of, and gratitude for, their employees and all the hard work they provide.  

Many studies have shown that providing modified work results in injured workers recovering quicker and more completely. It allows the injured worker to maintain their earnings and usual working schedule, while maintaining their relationships with the foreman, supervisors, and co-workers. Modified work also allows the injured employee to remain physically and mentally active while also allowing them to focus on their treatment and recovery.

Effect on the Business

For a business, a work injury can be very disruptive. The disruption of a work injury usually causes employers to move employees around to compensate for a lost employee. Employees working together as a team would see a change in work partners. Crews would be short a person who would be responsible for a certain part of an assignment resulting in changes in each crew member’s responsibilities. A work injury may affect how quickly the team can complete a job or project, how quickly the crew completes their daily tasks, and even how the employer is able to bid on future jobs or projects. 

Work injuries are stressful for an employer and the remaining employees. Besides the lost productivity from an injured worker, there may also be an emotional strain to other employees, or concerns about their own safety, about how they would be able to handle such an injury or how they would be treated if they were injured. 

Assigning an injured worker to modified work allows the employer to address other items of their business that may not get addressed when all employees are working at full capacity or when there are not enough employees to address these other areas. Assigning an injured worker to modified duties can allow an employer get caught up on cleaning certain areas, re-organizing a storeroom, updating inventory, etc. 

Benefits to the Business

Providing modified work allows an employer to have a direct impact on the overall cost of a work-related injury claim. By providing modified work, the employer pays the injured worker’s wages instead of the claims adjuster paying temporary disability benefits. If the employer does not offer modified work for an injured worker, instead of being temporarily partially disabled, the injured worker is then considered temporarily totally disabled. The claims adjuster would then be required to pay the injured worker temporary disability benefits at 2/3 of the injured worker’s average weekly wage. This is calculated from the 52 weeks of previous earning information you provide the adjuster when the claim was being created. This is also a tax-free benefit. 

However, getting these temporary disability benefits can also be a disincentive for injured workers to return to their normal work duties sooner than they are required. There is an increasing trend of injured workers refusing to return to modified work offered by their employers. Whether they want to stay home and collect temporary disability benefits, complete a side job they were working on while concurrently working for the employer, or if they believe they will recover quicker by simply staying home, injured workers can make it difficult to provide modified work. They can be disruptive, argumentative and provide poor quality of work while performing modified work. They can be insubordinate while performing modified work and can arrive late, leave early, take too much time for doctor or treatment appointments, etc. They can frustrate the employer so much that the employer may want to reconsider offering modified work to this injured worker. If the employee declines the employer’s modified work offer, the injured worker would no longer receive any wages from the employer and they would not be entitled to any temporary disability benefits/payments from the adjuster.   

Injured workers retain legal counsel for work-related injuries for a wide variety of reasons. Disagreements over returning to modified work is one of the most common of these reasons. When an attorney becomes involved in a workers’ compensation claim, there are usually disagreements over a number of issues, but the modified work dispute from the attorney is usually that the employer did not properly advise or instruct the injured worker about their responsibilities related to modified work offers. 

The lost time from work issue, after modified work is declined by the injured worker, usually becomes a monetary issue that is documented at the time, then later becomes one of the issues to negotiate or resolve when the claim is being settled. Usually a dispute like this is negotiated somewhere between the full value of the time lost from work and zero. This adds to the overall cost of a workers’ compensation claim. The development of this issue, however, can be completely avoided if the employer were to document the offer of modified work in writing. The employer can draft their own offer of modified work letter. The claims adjuster, their return to work specialists, or your claims advocate can also provide assistance with drafting of this letter. 

When an injured worker declines modified work offers, they sometimes get state disability benefits from the State of California Employment Develop Department (EDD), who in turn file a lien (or bill) for the lost time benefits paid to the injured worker on the workers’ compensation claim.  If the attorney and the claims adjuster are unable to resolve this issue, the documentation obtained (The Modified Work Offer letter) when the modified work was offered will usually be sufficient evidence for not reimbursing EDD for any of their lien, and/or for the workers’ compensation judge to agree with the employer and claims adjuster on this issue. 

Offering modified work is a very good thing to do for injured workers, for their recovery, and for the employer. It is also a very effective and proven strategy for handling workers’ compensation claims. Offering modified work can speed up the injured worker’s recovery. This allows the workers’ compensation claim to move quicker through the claim process to resolution or settlement. This usually results in the injured worker’s return to their normal work activities, their continued employment with the employer, and in reducing the cost of the workers’ compensation claim.

Safety and Training Make It Easy to Do the Right Thing

Joe Lewis is the COO of Yard Solutions, a design build and maintenance company servicing residential and commercial customers in and around the Groveport, Ohio region. He also serves as the head chair of the National Association of Landscape Professionals’ (NALP) Safety Committee.

Joe brings unique perspective to the landscape industry due to his previous career in the Unites States Marines from 1997 to 2014. 

In this podcast episode Joe and Rancho Mesa’s Landscape Group Leader Drew Garcia discuss the importance of training that makes it easy for employees to do the right thing in safety.

You will hear Joe explain instilling sound habits for safety, reinforcing these habits through engaged leadership and relevant feedback, and then validating them based on the company’s resulting performance in safety, profitability, and quality.

Roofing Contractors Prepare for the Dual Wage Threshold Increase

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

There is a lot at stake for roofing contractors in California. Many of us recall playing the game “would you rather” as kids. Would you rather jump into a freezing cold pool in December or eat the world’s hottest chili pepper with no milk available?

For roofers across the state, the question for them is, “would you rather give strategic pay raises to key employees or pay higher than necessary worker’s compensation premiums?” The ideal solution would be to give appropriate pay raises to help retain quality employees and to pay less for worker’s compensation.

To get into the math, the Workers’ Compensation Rating Bureau (WCIRB) has increased the dual wage threshold for the roofing class codes 5552 and 5553 by $2. The prior wage threshold was $27 per hour. The change that went into effect September 1, 2022 adjusted the new wage threshold to $29 for these same codes.

So, any roofers renewing on or after September 1, 2022 will need to explore what makes the most sense regarding the hourly wages of their employees.

This increase for roofing contractors is critical to understand because of the massive rate difference between class code 5553 ($29 or more per hour) and (under $29 per hour).

To drill down further, we analyzed the base rates for class codes 5552 and 5553 from 10 different worker’s compensation carriers. The average delta in base rates was 65%. That is a huge swing in cost for any roofing contractor who is not familiar with the cost benefit analysis that must take place.

As an example, we will use $1 million in payroll for 3 different scenarios to help paint a picture of this wage threshold change.

SCENARIO #1:

ABC Roofing has $1 million in payroll and all employees make $27 per hour. Using a hypothetical net rate of $40 for class code 5552, the insurance premium for scenario #1 would be $400,000.

SCENARIO #2:

XYZ Roofing has $1 million in payroll and all employee make $29 per hour. Using a hypothetical net rate of $14 (which is 65% less than $40), the projected workers’ compensation annual estimated premium would be $140,000.

SCENARIO #3:

ABC’s insurance agent made them aware of the new wage threshold increase well in advance of their renewal. They gave appropriate wage increases to 75% of employees and now have $250,000 of payroll in class code 5552 and $750,000 in class code 5553. Using the same hypothetical net rates from scenarios #1 and #2, the worker’s compensation annual estimated premium would be $205,000.

In conclusion, the massive delta in base and net rates for the roofing class codes 5552 and 5553 requires a proactive approach with your broker in advance of your upcoming workers’ compensation renewal. Laying out options that can include strategic pay increases can and will ultimately bring significant premium savings to your roofing company. With inflationary costs across all trades trending upward, build a plan now to help offset these rising costs.

To learn more about this topic or have a conversation with us, please email me at khoward@ranchomesa.com or call (619) 438-6874.